A somewhat biased but interesting read24 Sep 2025 07:58
In this mornings DT an article on gold potential and most interestingly a comment that Ray Dalio , esteemed hedge fund founder , investor and authority on macroeconomic cycles , promotes investing 15 % of portfolio in gold miners currently :
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Warren Buffett hates it, but gold is a good bet for a balanced portfolio
David Stevenson
Picture of David Stevenson
You’ve probably heard by now that the gold price has been on a tear, but I suspect many of you won’t realise just how well it’s done over the past few years. Like many investors, including the Sage of Omaha himself, Warren Buffett, I’ve been at least cautious and sometimes downright cynical at worst about the barbarous relic that is gold.
Yet, so far this decade, gold has outperformed the AI-fuelled gains of the S&P 500, and that outperformance is even more pronounced when measured against the equity performance of the rest of the world. Over 10 years, gold has risen 228pc (in dollar terms) in value while the FTSE All-Share has provided a total return of just 47pc. Over more recent time scales, the gold price has risen by around 30pc since the US election, with a noticeable jump following the rollout of tariffs on April 2.
Adding fuel to the fire, gold prices have broken out of trading ranges in the past two weeks, even as the dollar has stabilised in value against other currencies. The dollar has been weak since Trump’s re-election, and gold tends to increase in value when the dollar falls.
The inverse relationship between the dollar and gold highlights a key truth about the metal. Yes, it’s a store of value, but fundamentally, it’s a collection of narratives. We tell ourselves, for example, that gold performs well during heightened geopolitical risk. Usually, it does, but not always; gold prices initially rallied in 2022 after the Russian assault on Ukraine and then spent the next nine months going straight down. We also claim that gold consistently performs strongly during inflationary surges.
However, gold’s performance after the initial outbreak of Covid was underwhelming, as it fell from August 2020 through to spring of the following year, just as inflation ramped up.
Currently, the consensus is that gold benefits from concerns about fiscal unsustainability and expanding government deficits. Many investors I speak to now believe that $4,000 a troy ounce is inevitable: investment bank JP Morgan has indeed predicted this, and they are not alone. As you can see, I’m cautious about all these beliefs regarding relationships, suspecting that some of them may be true some of the time but certainly not all the time.
More importantly, it’s essential to understand supply and demand. For gold, two sets of figures are worth watching closely: central bank buying and purchases from Asia, particularly China. One analyst, Rohit Paul, of Acuity Knowledge Partners, suggests that for the third consecutive year, central bank gold purchases have exce
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