You've probably seen the headlines. Gold and silver have had a remarkable run over the past couple of years, hitting record highs and delivering eye-catching returns. The financial press has been lapping it up.
It's only natural to wonder whether you should have owned more of this. Are you missing out?
The frustration is understandable. Watching an asset class soar when you're not heavily invested in it is genuinely uncomfortable. Commodities feel solid and real in a way that a stake in a global portfolio of the great companies of the world sometimes doesn't. Gold, after all, has been a store of value for thousands of years, and, until relatively recently, formed the backbone of global currencies. The story writes itself: the world is getting more uncertain, so own something you can hold in your hand.
Before making any knee-jerk changes, though, it's worth thinking carefully about what it would actually have taken to profit from this rally – and why chasing yesterday's winners so rarely ends well.
Hindsight bias
Our minds are wired to deceive us after the event. Psychologists call it hindsight bias – the tendency to believe what happened was predictable all along. But uncertainty cuts both ways. For every asset class that surges, others disappoint just as dramatically.
To have made serious money from gold and silver, you would have needed to place a large, concentrated bet before the rally got going. Back in early 2024, the case for a massive allocation was far from obvious. Gold had been drifting sideways. Interest rates were elevated. Silver had been bouncing around within a relatively narrow range for years.
There's a second bias worth naming: survivorship bias. We hear endlessly about the investments that came good. The big calls that went badly wrong? Those rarely make the news. The investors who piled into the last decade's “sure thing” and lost aren't writing columns about it.
Hindsight makes winners look inevitable. They never are.
Staying the course
There's a meaningful difference between owning commodities and owning businesses.
Gold and silver have genuine real-world applications – jewellery, electronics and various industrial uses. But as financial assets, they produce nothing. No earnings. No dividends. They simply sit there, and they actually cost money to store and insure.
Equities, by contrast, represent ownership in companies that create products, serve customers, and generate profits. Nobody knows exactly what challenges the next decade will bring, but human ingenuity has a strong track record of rising to meet them. Businesses adapt, innovate, and find a way through.
Gold's long-term role is far less certain. Will it still be the go-to inflation hedge in 20 years' time? The natural safe haven when markets turn volatile? These narratives shift, as we've already seen with the rise of Bitcoin and other digital assets. At the end of 2018, after four years of negative returns within a six-year stretch, gold was largely an afterthought. Today it's the flavour of the month. Tomorrow? Nobody knows.
What we can say with confidence is that businesses will keep solving problems and serving their customers. That's what sits at the heart of a well-diversified portfolio.
It's also worth noting that if you hold a diversified global portfolio, you didn't entirely miss the gold rally. Global equity funds typically hold positions in gold miners and other commodities companies. Your portfolio captured some of those gains – just not through a speculative bet that could just as easily have gone the other way.
Discipline matters more than predictions
Your financial life manager should be focused on protecting your financial security and helping you stay financially independent for life. Speculative positions – however well they perform in any given year – don't fit that picture.
Sound financial life management isn't about guessing which asset will top the performance tables next. It's about building portfolios that are robust enough to meet your goals across a wide range of possible outcomes. Portfolios built for decades, not for news cycles.
The next hot asset class will eventually cool off. Another will take its place in the headlines.
Through it all, our approach stays the same: remain diversified, stay disciplined, and trust the process.
The advice provided in our columns does not constitute legal or financial advice and is provided for your information only. Readers should seek appropriate independent legal and financial advice from a regulated professional
