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Discover why gold remains a key strategic asset in 2025, offering returns, diversification, and liquidity.

Gold as a Strategic Asset in 2025

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Gold is a strategic asset, acting as a safe haven, offering portfolio diversification, providing long-term value retention, and its unique properties also make it a hedge against inflation and currency devaluation.

The Fundamentals of Gold as an Asset

As we navigate through the many troubles of 2025, many have asked: is gold considered an asset? This inquiry remains highly relevant for anyone looking to build a resilient and well-diversified portfolio. The answer, supported by centuries of economic history and contemporary market dynamics, is a resounding yes. Gold possesses several key characteristics that firmly establish its role as a strategic asset in the modern era.

One of the most fundamental aspects is its tangible nature. Unlike stocks or bonds, gold is a physical commodity. This physicality provides a sense of security and permanence that digital assets or paper money can't always match.

The value of gold isn't tied to the solvency of a single company or the policy decisions of a government, which makes it a truly independent store of value. This independence is a key reason why gold has consistently been sought after during times of global stress and uncertainty. It represents a universal form of wealth that transcends national borders and political systems.

Scarcity and Its Impact on Gold's Value

One of the primary reasons why gold is considered an asset lies in its inherent scarcity. Unlike fiat currencies, which governments can print, the supply of gold is finite. According to the World Gold Council, the total amount ever mined is estimated to be around 216,265 tonnes of gold, and experts believe there is little to no new, large-scale gold discovery expected in the future.

This limited availability contributes to its intrinsic value and acts as a natural hedge against inflation. When the purchasing power of traditional currencies erodes due to rising prices, the value of gold tends to hold steady or even increase. This historical inverse relationship with inflation makes gold a valuable tool for preserving wealth over time.

Think of it this way: when governments print more money to stimulate the economy, the total supply of that currency increases, and each unit becomes less valuable. This is the definition of inflation. Gold, however, cannot be created at will. Its existence is limited to what can be extracted from the Earth's crust. This fundamental limitation is a crucial factor in its enduring value.

The more money that circulates, the more expensive gold becomes in terms of that currency, but its real value remains relatively constant. For example, during the high-inflation period of the 1970s, gold's price soared from about $35 per ounce to a peak of around $850 per ounce by 1980. This makes gold an exceptional long-term store of value, particularly for those concerned about the erosion of their purchasing power.

Gold as a Safe Haven for Economic Uncertainty

Furthermore, gold has a long-standing reputation as a safe-haven asset. During times of economic uncertainty, geopolitical instability, or market turmoil, investors often flock to gold as a store of value. Its perceived safety stems from its lack of correlation with traditional assets like stocks and bonds.

When equity markets experience downturns, gold can provide a cushion against losses, thereby enhancing the overall stability of an investment portfolio. This characteristic is particularly important in the unpredictable global climate of 2025.

The concept of a safe haven is about seeking refuge from risk. When news of a potential economic recession, a military conflict, or a financial crisis breaks, investors who hold a significant portion of their wealth in stocks may see their portfolios plummet. In these same moments, the price of gold often rises. This is because investors are selling their risky assets (like stocks) and moving their money into assets they perceive as safe, and gold is at the top of that list.

This inverse relationship is one of the most powerful reasons for including gold in a diversified portfolio. For instance, during the 2008 financial crisis, while the S&P 500 index lost about 37% of its value, gold prices rose from around $730 in October 2008 to $1,300 by October 2010. It can help to balance out the volatility of other investments and smooth out the overall returns over time, providing peace of mind to the investor.

Updated Sep 13th, 2025

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Universal Acceptance and the Liquidity of Gold

Beyond its role as an inflation hedge and safe haven, gold also possesses a degree of universal acceptance. Throughout history and across cultures, gold has been recognized as a valuable medium of exchange and a symbol of wealth. This widespread recognition contributes to its liquidity.

While not as liquid as some financial instruments, gold can be readily bought and sold in global markets, providing investors with a degree of flexibility. From ancient civilizations to modern-day central banks, gold has held a unique place in the global financial system.

Central banks around the world hold vast reserves of gold, not just as a symbol of their nation's wealth, but as a strategic asset to be deployed in times of crisis. This institutional support further solidifies gold's position as a universally accepted and trusted asset. The ability to buy and sell gold in various forms—from physical bullion to paper-based assets—ensures that it can be converted into cash when needed, making it a reliable and accessible asset for investors across the globe.

The Role of Gold as a Hedge Against Currency Devaluation

In the current economic landscape, one of the most significant threats to wealth is currency devaluation. This occurs when the value of a currency decreases relative to other currencies, or relative to a basket of goods and services.

A primary cause of this is the excessive printing of money by governments, a practice that has been widespread in recent years. This can lead to a loss of purchasing power for citizens holding that currency. Gold, with its finite supply, offers a powerful counterpoint to this trend.

When a currency is devalued, it means you can buy fewer goods and services with the same amount of money. The price of everything in that currency goes up. Gold, priced in that devalued currency, will also go up in price, but its underlying value remains stable.

For instance, if the U.S. dollar were to lose half its value against other major currencies, it would take twice as many dollars to buy an ounce of gold. The real value of the gold would not have changed; it's the dollar's value that has shifted. This makes gold a crucial tool for protecting against the long-term effects of a depreciating currency.

Gold in the Modern Investment Landscape

While physical gold remains a tangible asset, investors now have various avenues to gain exposure to gold, including exchange-traded funds (ETFs) backed by physical gold, gold mining stocks, and even digital representations of gold. These options provide different levels of liquidity, risk, and convenience, allowing investors to tailor their gold holdings to their specific needs.

• Physical Gold: This includes gold bullion, such as coins and bars. It offers the highest degree of direct ownership and is the most traditional way to invest in gold. The main drawback is the need for secure storage, which can come with costs.

• Gold ETFs: These funds trade like stocks on a major exchange and are backed by physical gold. They are a convenient and liquid way to invest in gold without the hassle of storing it yourself. A popular choice for many investors seeking easy access to the gold market.

• Gold Mining Stocks: Investing in the stocks of companies that mine gold. This can offer leverage to the price of gold—when the price of gold goes up, the profits of a gold mining company can increase even more, leading to a potentially greater return. However, these investments are subject to company-specific risks, such as management issues or operational problems, and are not a pure play on the price of gold.

• Digital Gold: This is a more recent development, with some platforms offering a way to buy and sell gold digitally, often through blockchain technology. This can provide high liquidity and ease of use, though it is a newer market and may carry its own set of risks.

These diverse options make gold accessible to everyone, from the casual investor to the institutional fund manager. The choice depends on an individual's risk tolerance, investment horizon, and desire for physical ownership.

Gold's Historical Performance and Future Outlook

Gold is a fascinating asset, with a history of proving its worth through many cycles of economic change. Looking at historical data, gold has shown a remarkable ability to not only hold its value but to appreciate significantly during periods of high inflation or market turmoil. For example, during the high-inflation period of the 1970s, the price of gold skyrocketed. Similarly, after the 2008 financial crisis, gold's value rose as investors sought safety.

The outlook for gold in 2025 and beyond appears positive. With ongoing geopolitical tensions, persistent inflation concerns, and a global economy still finding its footing, the conditions are ripe for gold to continue performing well as a safe-haven asset. Central banks are also expected to continue accumulating gold reserves, further supporting its price.

For an investor, this means gold isn't just a historical artifact; it’s a living, breathing part of the modern financial landscape that is poised to continue playing a vital role. In fact, since 2000, the price of gold has increased over 700%, significantly outpacing U.S. inflation which has approximately doubled over the same period.

The Role of Gold in Portfolio Diversification

Diversification is a core principle of sound investing, and gold is an excellent tool for achieving it. The goal of diversification is to reduce overall risk by investing in a variety of assets that don't all move in the same direction at the same time. Since gold has a low correlation with stocks and bonds, adding it to a portfolio can help to smooth out returns and reduce volatility.

Imagine a portfolio consisting entirely of stocks. If the stock market crashes, the entire portfolio will suffer. Now, imagine a portfolio with a portion allocated to gold. If the stock market crashes, the gold portion of the portfolio is likely to rise or hold steady, offsetting some of the losses from the stocks.

This is the essence of diversification. Gold’s unique characteristics make it an invaluable component for creating a truly resilient portfolio, capable of withstanding various economic shocks.

Gold's Strategic Importance in 2025

In conclusion, the evidence strongly supports the assertion that gold is indeed an asset. Its scarcity, historical role as an inflation hedge and safe haven, universal acceptance, and adaptability to modern investment vehicles solidify its position as a strategic component of a well-rounded investment strategy in 2025.

It is a powerful tool for preserving wealth, protecting against economic uncertainty, and diversifying a portfolio. By understanding the fundamentals and considering the various ways to invest, individuals can harness the enduring power of gold to build a more secure financial future.

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By Jordan McCaleb, Precious Metals Investment Researcher