When it comes to gold, the focus should be on strategic asset allocation rather than trying to time the market. For gold, as with many investments, “time in the market” is more important than timing it. Gold has long been considered a form of money, offering stability and protection against economic uncertainty. Similarly, bitcoin, a more recent addition to the financial ecosystem, is also viewed by some as “honest money” — a currency that operates outside traditional government control, akin to a government without a Department of Government Efficiency (DOGE).
Gold has been considered a store of value for thousands of years, while bitcoin has only existed as a form of digital currency since 2009, gaining serious recognition around 2017. Back in 2017, one ounce of gold and one bitcoin were almost equivalent in value. Fast forward to 2027, and the price of gold might be in the range of USD 2,800, compared to the explosive growth of bitcoin, which could be valued at around USD 100,000 per coin. Given this divergence, the question for many investors in 2025 and beyond is whether to trust the U.S. dollar or allocate resources toward gold — particularly as gold continues to reach record highs.
The Current State of Gold
The U.S. dollar carries the phrase “In God We Trust,” but for an increasing number of investors, the phrase might soon evolve to “In Gold We Trust.” The growing trend of de-dollarization and economic policy uncertainty — coupled with geopolitical tensions — is driving increased demand for gold as a safe-haven asset. Investors are recognizing the value of gold not just as a hedge against inflation but as a strategic tool for wealth preservation.
In terms of global reserves, the U.S. is the largest holder of gold, with approximately 8,133.5 metric tons stored primarily by the U.S. Department of the Treasury in facilities like Fort Knox, the West Point Mint, and the Denver Mint. Other significant holders include Russia, with around 2,330 metric tons, and China, which holds about 2,068 metric tons, although estimates suggest that their reserves may be higher due to unreported reserves and the movement of gold between countries, particularly from London.
The Bull Market for Gold
As of now, gold spot prices are trading around USD 2,884 per ounce, with many analysts predicting that the price will surpass USD 3,000 in the near future. As global economic uncertainties persist, investor psychology continues to shift toward assets that offer stability and protection. Financial markets are often driven by investor sentiment — fear and greed — and herd mentality. However, as UBS recently noted, the enduring appeal of gold as a store of value and hedge against uncertainty has once again proven itself. The UBS 12-month gold forecast has been revised to USD 3,000 per ounce, as gold has surpassed the previous long-standing target of USD 2,850 per ounce.
Given this backdrop, many analysts believe that the gold bull market will continue under President Trump’s second term. Trade wars, tariffs, and other global economic policies are reinforcing the trend of reserve diversification and de-dollarization, particularly among emerging market (EM) countries. This trend is driving up official sector demand for gold, which is becoming increasingly valuable as a reserve asset.
Tactical vs. Strategic Asset Allocation
As gold continues to hit new highs, the debate over how best to incorporate it into a portfolio intensifies. The question investors must consider is whether gold, at its current price point, should be categorized as part of strategic asset allocation or as a tactical allocation. Given its volatility and ongoing price appreciation, gold is seen by many as both a growth asset and a risk management tool.
Building a Balanced Portfolio
A balanced investment portfolio typically mixes growth assets with stability. Here’s a general guideline for asset allocation:
Stocks (Equities): 50-60%
Provides long-term growth potential and can include a mix of domestic, international, and sector-specific stocks.
Bonds (Fixed Income): 30-40%
Adds stability and income through government or corporate bonds.
Cash or Cash Equivalents: 5-10%
Maintains liquidity for emergencies or short-term goals.
Alternative Investments (Optional): 5-10%
For diversification, alternative assets could include gold, bitcoin, real estate, commodities, and hedge funds.
In some portfolios, gold is classified as part of the alternative investments bucket. For example, the Development Bank of Singapore (DBS) recommends a meaningful allocation of up to 40% in gold within the alternatives section of a diversified portfolio. In certain regions or countries where there is less trust in local currencies or government stability, gold can even be viewed as a cash equivalent.
The Case for Gold in 2025 and Beyond
As investors face an increasingly uncertain global environment — with ongoing trade tensions, shifting policies, and geopolitical risks — gold’s role in a portfolio may grow in importance. The challenge is whether to embrace gold as a tactical allocation or to view it as a long-term strategic asset, especially with prices at all-time highs.
Gold, like bitcoin, is sharia-compliant, meaning it does not carry counterparty risk, a critical feature for certain investors. This makes it attractive to a global audience, especially in regions where trust in government-issued currencies may be lower.
As President Trump contemplates policies for his second term, the outlook for gold remains bullish. The dynamics of trade wars, tariffs, and the ongoing de-dollarization trend are expected to continue fuelling demand for gold as a hedge against uncertainty. UBS's revised forecast, along with other market signals, reinforces this view — gold is likely to play a larger role in portfolio construction moving forward.
Conclusion: Trusting Gold in Uncertain Times
Gold has historically been more than just a hedge against inflation. It serves as a wealth-preservation tool and provides protection against market volatility and uncertainty. Given the current economic landscape, including the rise of bitcoin and growing de-dollarization, gold's status as a core asset in diversified portfolios seems set to continue.
Investors should take care to evaluate how much gold to incorporate into their portfolios, whether as a long-term strategic asset or as part of a more tactical allocation. Waiting for a significant price drop may be a gamble, as gold’s performance in recent years demonstrates that its value as a safe-haven asset is likely to remain strong.
Ultimately, a well-diversified portfolio — which includes gold — is crucial for managing risk, especially as we look toward 2025 and beyond.
Legal Disclaimer:
The information provided herein is for informational purposes only and should not be construed as financial, investment, or legal advice. Gold, whether in physical form, ETFs, or other investment vehicles, may serve as a component of a diversified portfolio. However, past performance is not indicative of future results, and investments in gold carry certain risks, including but not limited to market volatility, liquidity constraints, and potential loss of purchasing power value.
Rainer Michael Preiss, Partner & Portfolio Strategist at Das Family Office in Singapore
