Investor Insights: Is it too late to invest in gold?

After a powerful run in recent years, many investors are wondering if they’ve missed the boat on gold. The metal has surged to repeated all-time highs in 2025, supported by persistent inflation worries, economic fragmentation, rising doubts about the fiscal position of developed world economies, geopolitical tensions and heavy central bank buying.

So is this the end of the story – or just another chapter in a long bull market? Let’s break it down into recent market dynamics, fundamentals and the outlook, before looking at three practical ways to get exposure: gold ETCs, gold mining ETFs and individual gold mining stocks such as Barrick, Fresnillo and Endeavour Mining.

Recent market dynamics: why gold has run so hard

Gold’s latest leg higher has been driven by a familiar cocktail of themes:

• Sticky inflation and rate uncertainty – Even after the big rate-hiking cycle, inflation in many economies has proved stubborn. While headline numbers have cooled, investors still worry that real (inflation-adjusted) rates may stay lower than advertised over time, which tends to support gold as a store of value.

• Central bank buying – Emerging-market central banks in particular have been diversifying away from the US dollar and Treasuries, adding to gold reserves at a brisk pace. This has created a powerful, price-insensitive source of demand.

• Geopolitical risk – Wars, trade tensions and a more fragmented global order have encouraged investors to seek “insurance assets”. Gold remains the classic hedge against extreme scenarios, even if it offers not income.

• Retail and ETF demand in waves – When prices break to new highs, flows into gold products often accelerate as momentum and media coverage draw in new buyers. That has likely contributed to the latest spike.

The result is a market that looks expensive on recent history, but not obviously in a blow-off bubble. The key question is whether the underlying drivers are temporary or structural.

Fundamentals: what really drives gold?

Unlike a stock or a bond, gold doesn’t produce cash flows. That makes it tricky to “value” in the conventional sense. But there are some reliable drivers over time:

1. Real interest rates
   When real yields (bond yields minus inflation) are high and rising, gold tends to struggle, because investors can earn a decent real return elsewhere. When real yields are low or falling, the opportunity cost of holding a non-yielding asset like gold drops, and the metal tends to do better. The recent rally has been noticeable for a marked decoupling in the usual correlation with real yields.

2. US dollar direction
   Gold is priced in dollars, so a strong dollar often weighs on the gold price for non-US buyers, while a weaker dollar usually helps. The longer-term debate about US fiscal sustainability – persistent deficits and rising debt service costs – is one reason some investors think the dollar could face periodic bouts of weakness, which would be supportive of gold.

3. Demand from official and private buyers
   Central banks, jewellery buyers (especially in Asia and the Middle East), and investment demand via ETFs and bars all matter. In recent years, official sector demand has been unusually robust, adding a structural pillar under the market.

4. Geopolitics: I would add a fourth to this list with geopolitics playing a noticeable part with a distinct premium since the Oct 7th attacks in Israel.

On the supply side, mine output tends to respond only slowly to higher prices because large projects take years to plan and develop. That means tight supply can persist for quite some time if demand remains strong.

Outlook: have you missed it, or is there more to come?

There are sensible arguments on both sides.

Why it might not be too late:

• Even after big price gains, the macro story is still broadly gold-friendly and it's hard to see changing: high debt, fiscal deficits, geopolitical risk and questions about how far rates can really rise in the long run.

• The Fed gets a new chair next year - possibly announced by Christmas - and with the central bank in sync with the administration we think it means the Fed 'runs it hot', easing policy and allowing inflation expectations to rise, which is gold-positive.

• If central banks continue to diversify reserves, they could remain persistent buyers on dips.

• If we do see renewed concerns about recession or financial stability, gold tends to benefit from “risk-off” moves.

Why caution is still warranted:

• Sentiment can get crowded after a strong run; short-term pullbacks of 10–20% are common even in powerful bull trends. The recent consolidation in price action shows it's not a simple one-way bet as it was.

• The current consolidation could persist - after touching $3,500/oz for the first time in April 2025 we saw price action move sideways for around 5 months before the rally that began in late August that took us to the all-time highs around $4,380.

• If inflation cools more decisively and central banks manage a soft landing, investors might rotate back toward risk assets, reducing demand for defensive exposures.

• A sustained rise in real yields – for example, if bond markets demand a higher premium to fund government deficits – could weigh on gold.

So, is it too late? Probably not, if you treat gold as part of a diversified portfolio and are prepared for volatility. What’s more dangerous is going all-in after a big rally, on the assumption that prices only go one way. A staged or disciplined approach (for example, averaging in over time) can help manage timing risk.

How to invest in gold

If you decide that gold deserves a place in your portfolio, there are three main routes many investors consider:

1. Gold ETCs: simple, direct exposure to the metal

A gold ETC (exchange-traded commodity) is usually backed by physical bullion held in secure vaults. You’re not buying coins yourself; you’re buying a security that aims to track the spot price of gold, minus fees.

Pros:

• Clean, transparent exposure to the gold price.

• Traded on an exchange like a share, with intraday liquidity.

• No need to worry about storage, insurance or authenticity of bars/coins.

Cons:

• You’re exposed solely to the metal price – no income, no operating leverage.

• There may be small tracking differences versus spot due to fees and structure.

• You rely on the ETC issuer and custodian – so counterparty and structure risk, while typically small for mainstream products, is not zero.

Gold ETCs can work well if your main goal is portfolio insurance or diversification, rather than trying to maximise return. You may need to take an appropriateness test to invest in gold ETCs.

2. Gold mining ETFs: leveraged play on the metal

A gold mining ETF holds a basket of listed gold producers. Think of it as buying the sector, rather than the commodity.

Pros:

• Leverage to the gold price – when gold rises, miners’ profits can rise faster, as revenue grows while many costs are relatively fixed.

• Diversification across multiple companies, reducing single-stock risk.

• Potential for dividends from profitable producers.

Cons:

• You’re taking on equity risk, including stock-market volatility, management execution, cost inflation and country risk.

• Miners can underperform the gold price for long stretches if they mismanage capital, face cost overruns, or if broader equity markets sell off.

• ETFs still have ongoing fees.

Gold mining ETFs can suit investors who are comfortable with higher volatility and want more upside sensitivity to a bull market in gold.

3. Single-stock gold miners: high risk, high reward

Finally, you can buy individual gold miners such as Barrick Gold, or Fresnillo. This is the most targeted way to play specific themes – for example, backing a management team, a particular asset base, or a turnaround story.

Pros:

• Potential for outsized gains if the company executes well and gold cooperates.

• Company-specific catalysts: new discoveries, cost improvements, mergers & acquisitions, or debt reduction.

• Dividends and buybacks can enhance total return when times are good.

Cons:

• Stock-specific risk is significant: operational issues, political risk in key jurisdictions, environmental liabilities, or poor capital allocation can all hammer returns.

• Even if gold is rising, a badly run miner can destroy value.

• You need to do more homework: balance sheets, all-in sustaining costs, reserve life, jurisdiction risk, and management track record all matter.

Individual miners are best for investors who are comfortable analysing companies and accepting that outcomes can diverge widely from the gold price itself. I recently looked at a batch of junior gold miners, which are generally seen as a higher beta proxy.

Too late?

It’s unlikely that the “window” for gold has slammed shut, but the easy gains may be behind us in the short term. For most investors, the question is less “Have I missed it?” and more “What role should gold play in my portfolio, and how much volatility am I prepared to tolerate?”

A balanced answer might be: modest core exposure via a gold ETC for diversification, possibly complemented by gold mining ETFs or a carefully chosen name like Barrick for those who want more upside – and are honest with themselves about the extra risk that comes with it.

If you want to learn more about incorporating gold into your portfolio, I had a look at the Ray Dalio All-Weather Portfolio, and had a look at a simple DIY diversified approach that incorporates gold.