Why Advisors Should Add Gold to Client Portfolios Now
(Bloomberg) — Got gold? If not, maybe this is the year to get some. While the last five months haven’t been great, with the price off by about 19%, look back over the last few decades and you will see that being a gold bug has been very much a winning strategy. Physical gold has outperformed the US stock market since 2000 and is up close to 122% over the last five years.
The long-term story of gold holds. As a place to store wealth, it’s more important than ever. And with the rise of exchange-traded funds, gold has never been easier to invest in.
“To touch gold is as close as you will ever come to touching eternity,” comedian and British financial commentator Dominic Frisby aptly put it in The Secret History of Gold. It does not corrode or tarnish. It never loses its shine. It’s malleable, divisible and ductile. It is almost impossible to destroy.
Investors have been growing nervous about public debt levels and the potential for fiscal crises across Western economies. US debt-to-GDP is running above 120%. In the UK, France, Italy and Canada, it’s at or more than 100%. These levels of extreme debt are historically unknown outside of global war and collapsing states. What if the US decides to inflate its debt away by printing money, devaluing the dollar and making the burden less onerous in inflation-adjusted terms?
Holding gold is now part of the long-term “debasement trade,” the way to protect your portfolio from the worry that governments just might try something radical. Gold will not always function as an inflation hedge, but it does provide some peace of mind that, come blackouts, civil war or other calamities, it will still be, well, good as gold.
There’s also a new buyer in town. Central banks have been hoovering up large volumes of the shiny metal over the last few years in an effort to diversify away from fiat currencies, the dollar in particular. In 2025, the world’s central banks bought a record 1,200 metric tons of gold and played their part in pushing the price above $5,000 an ounce. In the first quarter of 2026, they bought another 250 metric tons.
That said, central bank buying has eased a bit and some retail investors are selling, perhaps to move into cash as rates rise. While the price of gold is now at $3,983 an ounce, there is the thought that if inflation takes off gold will repeat its run of the 1970s, when it was the best performing asset of the decade. That’s not a given, of course. Gold entered the 1970s dirt cheap, but it would be hard to argue that’s the case now. Nothing is risk-free.
Regardless of the short-term picture, gold’s long-term record is inescapable. Right now a growing number of financial advisers see it as a must-have. They will tell you to hold around 5% of your portfolio in gold, though the more excitable among them will suggest 10% or more. Billionaire hedge fund manager Ray Dalio says go as high as 15%.
What’s the right number? There are two things to take into account, says Sebastian Lyon, chief investment officer of Troy Asset Management. You need enough so that, when bad things happen, your gold actually works as insurance. But you also don’t want to hold so much that it drags down your performance too much when times are good.
Remember, gold has no yield. So if you aren’t getting capital gains, you aren’t getting anything else, either. With all that in mind, anything short of 5% seems too little to me. And anything approaching 20% might be rather too much. Lyon has a base of 10% in the capital protection portfolios he co-manages for Troy, but he’s lowered it to 8% and raised it as high as 14%, depending on monetary and geopolitical risks.
So, how do you get your hands on some gold?
Buying Physical Gold
If you have an awful lot of gold at home or in a vault, there will be costs. The banks will charge you to keep your gold with them, and your insurers will charge you if you keep it at home.
Nevertheless, if you hold your gold to protect against hyperinflation, or catastrophes (political or natural), physical gold is the way to go. In the US, that might mean bullion shops in Manhattan’s Diamond District, for example. In the UK, dealers in London’s Hatton Garden will sell you pretty much any size of gold bar or coin. And if wandering around London with a large part of your net worth in your pocket doesn’t suit, you can order online.
What do you buy? In most countries there are a huge variety of coins and bars available, so buying is about personal preference. In the UK, if you are worried about taxes, make it gold sovereigns — but you will pay a premium since they are classified as legal tender rather than assets. If you are storing a large amount of wealth, a few kilogram bars (at around $130,000 apiece) will do you — bearing in mind that you may want to store them in a bank vault (and insure them, too).
But a lump of gold isn’t going to do you much good in a crisis. You should keep physical cash in your house for this sort of thing. But beyond that, what you need is a 10-pack of five-gram bars, yours for around £6,200 ($8,300), or perhaps a mini one-gram bar. Tiny, discreet and only about £130 ($175) each. They’ll be worth a lot more if disaster strikes.
In the US, you can buy these from Walmart and Costco (online, no less). In the UK, you can get them from most providers, sometimes clipped into the middle of branded gift cards with names like Barbie gold, Hot Wheels gold and Lucky Cat gold. Dubai International Airport is a good place to pick these up. Buy a few one-gram bars on your way through and use them when the time comes.
Gold ETFs
If you like the idea of physical gold, but don’t want the bother or expense of looking after it, buy an exchange-traded fund that’s backed by physical gold. There are plenty of these, tied to some $600 billion in real gold. The best of these ETFs will mirror the price of gold very closely, and do so at very low cost.
ETFs suggested by Fidelity that will do the job include the iShares Physical Gold ETC ($78), which is on their Select 50 list of funds, an independent rundown by expert investors. Morningstar notes that all gold ETFs give you the same thing: access to physical gold. But some do it more cheaply than others. With that in mind, the analysts there suggest the SPDR Gold MiniShares ETF ($79). In the UK, the most popular one tends to be WisdomTree Physical Gold ($373).
Gold Miners
Want more risk in your gold holdings? The next step is investing in shares of gold miners — the companies that actually explore for and dig up the gold you want exposure to. Given the cost of a mine is mostly fixed, mining companies tend to be heavily leveraged to the price of gold. When the price rises, their costs do not. So if they are well managed, they can deliver healthy returns.
Historically, many mining companies ruined things for themselves by wasting profits on dodgy projects and unnecessary capital spending. There is some hope they will show more restraint this time around. Bear in mind that holding shares in gold miners isn’t the same as holding gold itself. Sure, they mostly move with the gold prices. They’re also volatile and face typical corporate issues like management quality, location, costs and the like.
If you are going to invest in the mining sector, you should think of the companies individually. Or do so via an ETF or actively-managed fund that provides diversification. The Ninety One Global Gold Fund is one to look at — it also features on Fidelity’s Select 50 list. Other popular funds include BlackRock Gold and General Fund (which, full disclosure, I invest in), and the Jupiter Gold and Silver Fund, which also is able to invest in silver bullion. Mining ETFs include the VanEck Gold Miners UCITS ETF ($81) and the iShares MSCI Global Gold Miners ETF ($61). You can buy shares in individual mining companies directly via your platform just as you do shares in anything else. The same goes for the funds.
Digging for Gold
Finally, you could prospect. This may sound a little nuts, but the rise in price in recent years has made it an increasingly popular pastime, as various people on YouTube will attest. There you will find endless videos of influencers excitedly juggling nuggets, panning rivers and rappelling into abandoned mines. Go a little more old school and you can waste hours watching television shows such as Gold Rush and Alaska Gold Diggers (I am a little bit guilty here).
You can give prospecting a go in historically fruitful locales such as California, Alaska and Australia. But gold is potentially everywhere. In the UK, for example, you could try Cornwall, Wales and Scotland. A prospecting kit is available from Amazon for a mere £30 ($40).
Merryn Somerset Webb is Bloomberg UK Money’s editor-at-large.
To contact the author of this story:
Merryn Somerset Webb in London at [email protected]
