After the Gold Rush

You’ve probably seen the headlines. Gold and silver have had a remarkable run over the past two years, reaching record highs and generating strong returns. The financial media has given commodities significant attention.

It’s natural to wonder whether you should have had greater exposure. Are you missing out?

We understand that feeling. Watching an asset class perform strongly while you are not heavily invested can be uncomfortable. Commodities can feel tangible and reassuring in a way that shares in a global portfolio may not. Gold, in particular, has a long history as a store of value and was once central to the global monetary system. The narrative is simple and compelling: when uncertainty rises, own something physical.

However, before considering any changes, it is worth reflecting on what would have been required to capture those gains, and why chasing recent performance can be risky.

The Hindsight Trap

Our brains are not always reliable guides when looking backwards. Psychologists refer to hindsight bias, the tendency to believe past events were more predictable than they really were. In reality, uncertainty works in both directions. For every asset class that performs well, others underperform.

To benefit meaningfully from the recent rise in gold and silver, you would have needed to make a significant and concentrated allocation before the rally began. At the start of 2024, the case for doing so was far from clear. Gold had been moving sideways, interest rates were elevated, and silver had traded within a relatively narrow range for years.

There is also survivorship bias. We tend to hear about the investments that succeeded, but far less about those that did not. The unsuccessful concentrated bets rarely make headlines.

With hindsight, outcomes can appear obvious. At the time, they rarely are.

Why Diversification Still Matters

There is an important distinction between commodities and businesses.

Gold and silver have practical uses in areas such as jewellery and electronics. However, as financial assets, they do not produce income. They do not generate earnings or pay dividends, and they can incur costs to store and insure.

Equities, by contrast, represent ownership in companies that provide goods and services, employ people, and generate profits. While future returns are never guaranteed, businesses have historically adapted to changing conditions, innovated, and grown over time.

The long-term role of gold is less certain. Will it continue to act as a preferred hedge against inflation or market stress in decades to come? It may—but these narratives can evolve. For example, newer assets such as digital currencies have emerged and attracted similar attention at different points in time. Gold itself has experienced extended periods of weak performance in the past before returning to favour.

A diversified portfolio is designed to navigate this uncertainty by spreading exposure across a wide range of assets, rather than relying on a single theme or outcome.

It is also worth remembering that a well-diversified global portfolio may already include indirect exposure to commodities, for example through holdings in mining and natural resources companies. While this may not fully replicate commodity price movements, it does mean you are not entirely excluded from those areas.

Process Over Outcomes

A financial adviser’s role is to focus is on helping you achieve long-term financial security and maintain your independence over time.

This means building portfolios that are aligned with your goals, risk profile and time horizon, rather than attempting to predict which asset class will perform best in the short term. Concentrated or speculative positions, even when they have recently performed well, may not be appropriate within that framework.

Effective financial planning is not about reacting to headlines. It is about maintaining a disciplined, long-term approach that can withstand a range of possible outcomes.

The next popular asset class will emerge, just as others have before. Over time, leadership in markets changes.

Through it all, our approach remains consistent: stay diversified, stay disciplined, and focus on what can be controlled.

If you would like to review your portfolio or discuss your current strategy, we are always here to help.

Want help with your planning?

This article is for information purposes only and does not constitute financial advice. Advice should be based on your individual circumstances.

The value of investments can go down as well as up and you may not get back the amount invested.

Everwealth Ltd is an Appointed Representative of ValidPath Limited which is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 197107.