Is gold good for your portfolio? This is an often-asked question among investors, especially after gold’s remarkable performance in 2025. A good portfolio is one with a balanced design that will help it preserve wealth long-term, as well as endure economic downfalls. Gold is the key to getting that resilient, shock-proof portfolio. Over the past decade, gold’s monthly correlation with the S&P 500 sat near 0.1—almost no link. In fact, when stocks plunged, gold often rose, helping balance out the portfolios. This is why placing gold in your portfolio is a strategic and wise move.
In case of falling stocks, gold rises. As an example, we can take the 2008 crisis month — although stocks fell by 17%, gold rose 10%. Another real-life example is the March 2020 crash: stocks fell by 13% while gold rose 6%. Gold is the “safe asset“ that you can depend on. It acts as a kind of “shield“ when real yields fall. Few other assets provide that kind of cushion while staying liquid. Gold often moves independently of equity markets. This characteristic makes gold particularly valuable during market downturns.
Moreover, gold is in global demand and has high liquidity. Central banks bought over 1,000t of it in 2024 alone, and gold is traded around US$150B daily.
These traits let gold slot neatly into any strategic asset allocation aimed at taming volatility without giving up upside.
Finding the Right Balance — How Much is Enough?
Most studies land on 5-10% as the best amount of precious metal investments a person should have in their portfolio. Because below 3%, the hedge is too small to notice, while if you have over 10% gold in your investments, returns start to lag. Use the high end (around 10%) if you own lots of growth stocks or worry about inflation; use the low end (around 5%) if you already hold inflation-proof assets like TIPS.
Some institutional investors actually suggest higher than 10% allocations during periods of uncertain economic conditions. However, the perfect amount of gold investment should depend on a few key factors:
- Investment timeline and goals
- Personal risk tolerance
- Overall financial situation
It’s important that gold allocation should complement, not replace, core investment holdings in stocks and bonds. History supports these modest allocation ranges: portfolios with 5-10% gold exposure have shown the best performance in wealth preservation over long periods of time.
It’s important to rebalance your portfolio with gold depending on the market situation. A regular, strategic rebalancing requires a lot of patience and emotional discipline, but it pays off. Here are some best practices for rebalancing your portfolio with gold:
- Most professionals recommend rebalancing every three months or half a year.
- Set guardrails: they should be ±3 % around your target (e.g., trim if gold exceeds 11 %, add some if less than 4 %).
- When gold exceeds your target, sell some and invest in underperforming assets.
- When gold underperforms, add to your gold position while it’s cheaper.
This approach requires a lot of emotional discipline. However, it has repeatedly rewarded patient investors who stick to their long-term strategy.
Gold in Retirement Planning: Building a Long-Term Strategy
Gold retirement planning has gained popularity as investors seek to protect their long-term savings. The main concerns among retirees are inflation and currency devaluation over time.
The danger of bad markets early in retirement can exhaust even big savings. Adding a moderate amount of gold to your portfolio:
- Protects against purchasing power erosion over decades
- Provides wealth preservation during market risks and downfalls
- Offers stability when capital protection fails
While stocks may provide higher returns short term, gold’s wealth preservation becomes invaluable during retirement years. Many experts advise increasing the portfolio’s percentage of gold as investors get closer to retirement.
Here is what’s important to monitor during your investments to preserve wealth:
- Regular check-ups of global economic conditions
- Monitoring central bank policies
- Assessing geopolitical risks
Remember: The key to a successful long-term gold strategy is viewing gold as insurance for your portfolio. It’s not a get-rich-quick investment.
As gold becomes more in demand among central banks around the world, it’s important to make wise decisions about investing in it.
