So what does it mean for investors when all that glitters really is gold?
The yellow metal is up 25 percent since the start of the year and has steadily risen 40 percent over the past 12 months. Meanwhile, gold miners, as represented by the VanEck Gold Miners ETF (Ticker: GDX) have also shined, levitating 47 percent year-to-date and 55 percent in the last year.
On the other hand, the S&P 500 has proven to have anything but the Midas Touch dropping 11 percent since the beginning of 2025, while rising a modest 5 percent in the past year. Even more shocking perhaps has been the performance of the market’s golden child Nvidia (Ticker: NVDA) with the AI chipmaker dropping 25 percent year-to-date.
Jason Britton, president of Reflection Asset Management, for one, believes gold’s sharp inverse move relative to the S&P 500 reflects the fact that investors are “spooked” and whipsawed by the market. And not just the selloff in stocks in his opinion. It’s also the wild and negative price action in the US dollar, oil, the 10-year Treasury - almost everything but gold – that’s scaring market-participants.
As to whether he would rather buy more gold or nibble at the S&P 500 at this juncture, Britton said he is a buyer of “specific parts” of the benchmark index here, most notably the AI trade which he calls “alive and well” despite recent pressure.
“I believe that investors with a longer-term horizon who can stomach the near term volatility who don’t have current liquidity needs can be buying into a generational opportunity we haven’t seen since the Covid crisis,” Britton said.
Despite all this spooking going on, Britton does not view gold’s pop versus the S&P 500’s drop as a reflection of the true state of the economy given some of the recently released economic data and corporate earnings. But he does see it as “symptomatic of the beginning erosion of consumer confidence” which he feels will have significant negative effects on the economy moving forward.
Along similar lines, Jeremy Zuke, financial planner at Abundo Wealth, agrees that the short-term price action of gold says relatively little about the long-term economic outlook.
“For someone with a long investment horizon, being an owner of profitable business, aka a stock investor, has been much more likely historically to be the better path to building wealth. We always tell clients a small amount of gold is fine, but not at all necessary or even recommended,” Zuke said.
Added Zuke: “It might feel good at that moment to have something up when the market is down, but over long periods of time gold provides bond-like returns with stock-like volatility. That is the big cost of those temporary good feelings.”
Elsewhere, Ron Piccinini, director of investment research at Amplify, views gold’s price action on the “high side of expected behaviors” when markets are going through a bout of uncertainty. According to Piccinini, gold is one of the last true portfolio diversifiers left, in the sense that one can add it to a classical portfolio, and achieve higher risk-adjusted returns.
“Seeing gold appreciate in this environment is not really a surprise,” Piccinini said.”
That said, what may be a surprise for investors is what gold may be saying – or at least whispering - about the economy, according to Piccinini.
“There is a small but frightening probability that the US government can’t reign in its finances back to sustainable levels. With high interest rates, the debt service is high and could spiral in a way that the debt service is repaid with printed money. This could be spelling doom for US Bonds and the US dollar,” Piccinini said.
Gold is a good hedge against that scenario in Piccinini’s opinion, with the bonus that without an expiration date, an investor can be somewhat imprecise on the timing, compared to using derivatives.
He added that investors that do not have enough gold in their portfolio should not be deterred by the current high price.
“We have held healthy amounts of gold, between 10 percent to 25 percent, depending on the risk tolerance target, since 2023 in our portfolio allocations. We do not foresee a need to reduce these position sizes for the time being,” Piccinini said.
Finally, Tom Graff, chief investment officer at Facet, recommends market-watchers start looking to the dollar for clues about gold - and the overall market as well.
“I know a lot of investors are focused on the tariff shock, but it is likely this is already priced into the dollar. From here on, I expect more core fundamentals to be driving currencies, such as relative interest rates. We already have the ECB cutting while the U.S. Fed is likely to remain on hold for several months. So, I think there are a lot more risks to gold than people realize,” Graff said.
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