Historically, gold has been regarded as a safe store of value against the potential for fiat currency to depreciate in value – in other words, as a hedge against inflation.

But for much of 2026 so far, higher inflation has coincided with lower gold prices.

“Gold was still up 6% over the year to the end of May,” said Joseph Greif, investment director at wealth manager Evelyn Partners, “but its recent behaviour has been uncomfortable for investors who expected it to protect portfolios immediately.”

Inflation has run hotter since the Iran war broke out, especially in the US. The US is a critical market for gold; the metal is priced in dollars, so its usefulness as an inflation hedge is implicitly measured against US inflation.

But while the Iran conflict pushed inflation higher, the price of gold fell. Between 27 February – the day before the war broke out – and 10 June, the price of gold fell 23%. Annualised US CPI inflation rose from 2.7% in February to 4.2% in May.

Why the gold price fell during the Iran conflict

Inflation is not the only dynamic that gold prices interact with. One of the key ones is interest rates, particularly in the US.

Gold pays no interest. That matters less to investors when interest rates are low, because alternative assets like bonds aren’t offering much interest themselves.

But once interest rates increase – or when markets expect them to – then gold loses appeal relative to interest-paying investments.

This is the main reason gold prices fell, both before and during the conflict in Iran. The price of gold peaked on 29 January at $5,595, around a month before the war broke out. The catalyst for prices to start falling from then was Donald Trump’s nomination of Kevin Warsh as the new chairman of the Federal Reserve (Fed).

Until then, markets had assumed Trump would nominate a ‘dovish’ chair for the central bank and that this would result in relatively loose US monetary policy (i.e. lower interest rates) – a positive for gold.

By the time the Iran war broke out, markets had already spent weeks pricing in higher interest rate expectations. And the inflationary shock that the Strait of Hormuz’s closure prompted only amplified those expectations.

“The prolonged conflict sparked severe inflationary risks, pushing US inflation to 4.2% in May,” Benoît Harger, portfolio manager at private bank J. Safra Sarasin, told MoneyWeek. “This data forced markets to price in potential interest rate hikes instead of cuts. It boosted the appeal of yielding assets and triggered a 30% gold correction from its January high.”

This isn’t necessarily out of character with how gold has behaved in the past.

“What lots of people don’t realise about gold is it sells off in a crisis, often because of liquidity,” Cosmo Sturge, director of market strategy at metals fund manager Baker Steel, told MoneyWeek. “You had a lot of investors who had made a lot of money in the run-up to the [Iran] war, and suddenly that change in the outlook for inflation and the knock-on effect for interest rates [prompted them to] sell gold.”

Could gold still help hedge against inflation?

Despite the selloff, most experts agree that gold still has a role to play in portfolios, particularly as a hedge against inflation.

Central bankers are currently more constrained in how high they can push interest rates than they have been in the past.

The Fed hiked interest rates to as high as 19% in the early 1980s to combat rising inflation. This coincided with a steep decline in the gold price, from around $650 in January 1980 to around $320 in June 1982. But these high interest rates damaged the global economy and would be unworkable today.

“Rates clearly can rise, but could they rise to those levels again? Could the Fed really have the firepower to be able to fight true inflationary crises through monetary policy?” asks Sturge. “I'm not sure. Debt to GDP is four times higher than in 1980. You've had a huge increase in the money supply in the US, which has obviously been fueling inflation.”

If it reached a point where the Fed couldn’t control inflation through monetary policy, then financial repression – government policies that keep rates artificially low, at the expense of savers and private businesses – would result.

“That is a very positive environment for gold,” says Sturge.

Similarly, Harger believes that gold remains an effective inflation hedge because it protects against long-term structural fragility. He argues that interest rates will eventually have to fall: “The global economy cannot sustain permanently high financing costs without triggering a recession. Furthermore, under-pressure growth and massive public deficits… limit long-term rate hikes.”

Gold, he says, will likely be a beneficiary of this eventual reduction in interest rates. “A strategic allocation may provide protection against sovereign risk and currency devaluation as rising debts force loose monetary policies.”

“Over the long term, gold being an inflation protection, I think, has held very well, but it tends to be more in terms of protecting your purchasing power rather than necessarily shooting sky high every time there's inflationary scare,” said Sturge. “It's driven by persistent debt growth: the fiscal deficits of the world, long-term currency debasement – these are the reasons why people hold gold.”

Where are the safe-haven assets in a crisis? The answer has rarely been murkier. Gold is the usual place to wait out market shocks, but it has struggled for direction since US-Israeli strikes began on Iran on 28 February.

Gold's problem is that it had already risen 20% this year, leaving it “overextended” heading into the conflict, says James Mackintosh in The Wall Street Journal. That made it “an obvious asset to sell” for traders looking to raise quick cash.

“It's hard to overstate just how unusual” trading has been during this war. When stocks fall, gold and bonds usually rise. This time all three assets have fallen, a historical rarity. Where else to hide? “Defensive” stocks (think utilities and consumer staples) usually outperform at times of market stress, says Niket Nishant for Reuters.

Not this time. European consumer staples fell 4.5% last week, worse than the 3% drop on the wider Stoxx 600 index. Traditional safe-haven currencies haven't fared any better. The Swiss franc and the Japanese yen both sold off as bombs dropped on Tehran.

So far, the only traditional safe-haven asset to have done its job is the US dollar, up nearly 2% against a basket of other currencies over the past month. That reflects the fact that as an energy-exporter the US is less exposed to oil shocks, but even this comes with an asterisk. Investors are loading up on “short-term dollar cash” but want nothing to do with long-term dollar assets such as US Treasury bonds, which also slid.

Gilts – traditional safe-haven assets – have been clobbered

UK gilts “suffered their worst week” since the 2022 pension fund debacle, says the Financial Times. Two-year German bonds had their worst week since 2023. That reflects two risks. Firstly, that higher energy costs will raise inflation and delay interest-rate cuts. Pricing shows that traders now put only a 50-50 chance on one Bank of England quarter-point rate cut before the end of the year, compared with the two cuts expected a few weeks ago.

Secondly, concern that a serious energy shock could pressure the Treasury to spend “billions of pounds in new support measures”. While all bonds have sold off, gilts have recently been underperforming French, German and US government paper, partly because the UK is especially dependent on imported energy. When investors took fright in March 2020, they thronged into US Treasuries (and other sovereign bonds) to wait out Covid, says Matt Zeigler in Panoptica Money.

But since then, the hierarchy of “safety assets” has been “fundamentally reordered”. The decisive event was the removal of key Russian banks from the SWIFT banking system in 2022. Holders of “surplus capital” in Asia and the Gulf realised that what “happened to Russia could happen to them”. They are now choosing to forego dollar-denominated assets such as Treasuries when choosing where to stash their wealth.

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I have been bullish on bitcoin and gold for many years and continue to be. I created the Bold index, which combines the two on a risk-weighted basis.

Bitcoin is on the floor, and the bulls are few, whereas gold is riding high and bulls are plentiful. What does the contrarian investor do?

I pair them because they are the world’s two most liquid alternative assets. Both have limited supply and share the notion that the world is eternally printing money, and it stands to reason that scarce assets will perform over time.

They are both neutral assets – they are accepted around the world.

They are also both rebel assets.

Bitcoin came from the grass roots of the computing world, and the authorities cannot control it.

Gold is also a rebel asset, because it holds governments to account.

If the gold price is going up too fast in a currency, it means capital is leaving the system.

I say that despite the central banks investing in gold. Let us be clear that it is not the G7 buying gold. It is the non-OECD states that are trying to diversify their reserves away from G7 bonds.

In the physical sense, bitcoin and gold have little in common, because bitcoin is not physical, it is virtual. At least, that is the “boomer” view.

Young people are much more comfortable with the idea of digital property, and the future is whatever they will make it to be.

Indeed, it comes with many advantages, such as the ability to transact instantaneously, securely and seamlessly across borders. It’s not just bitcoin, they say, this is the future of the financial system.

After bitcoin comes Ethereum, which underpins the $310 billion stablecoin market – much of which uses its network.

Stablecoins allow you to transact digital cash without using a bank.

A future without banks collecting fees from the payment system? Absolutely. Ethereum also enables transactions in pretty much anything and could be the basis of future stock and bond markets. Its operating system has been upgraded yet again, and it can deliver scale at low cost.

Bitcoin and gold: what’s the sentiment?

It’s all very exciting, but then again, so is technology. Bitcoin is, in some ways a tech stock and has always been correlated with the tech sector. Prices have been tumbling in tech, and it should come as no surprise that bitcoin has followed.

Fear drives more fear, and a falling price is always glee for the permabears. The bears point to the four-year cycle, which is currently in the dip phase. But tech is also in the dip phase, and does that have a four-year cycle? If there is a cycle, this one started early.

There is also the threat of quantum computing, which will have enough computing power to break the early bitcoins “mined” (released electronically into circulation) in 2009 and 2010.

It is possible that this could happen in the coming decade, but such powerful computers will surely be in the hands of tech companies before bad actors, and in any case, they will have other priorities should that come about.

In the meantime, all bitcoin needs to do is lengthen the private keys (passwords) with a network upgrade, and that will keep even these powerful computers at bay. The threat of quantum is overstated, but if people are worried about it, the price will feel it.

The miners operate at a speed 1 ZH/s (zetta hash per second). That is 1 followed by 21 zeros. That is a vast amount of computing power that needs to be broken. Still worried about quantum?

While the bear stories are well known for bitcoin, what are they for gold? There aren’t any, which is why contrarians should be wondering when the top is coming. The bulls say gold can do no wrong, as it is driven by infinite buying from central banks, who are prompted by geopolitical and macroeconomic fear, which is only rising. I agree, the world is unstable in parts, but nothing goes on forever.

I created Bold because these assets have similar long-term goals, exhibit low correlation, and are a natural pairing. That means they are both monetary assets, and when one is going up, the other is often going down. That is perfect for diversification.

Consider that you could have two assets, and they moved together. Alternatively, you could hold two assets that acted independently. The latter choice means you will have a less stressful life, and if you took the time to rebalance them when the prices had moved apart, you’d make even higher returns.

That is what Bold does with bitcoin and gold. Each month, we calculate their risk weights, which are driven by the past year’s volatility. The less volatile asset, gold, gets a higher weight. Then, at the end of each month, they are rebalanced, returning the weaker asset to its prescribed weight. By repeatedly buying low and selling high, good things happen.

Bitcoin is a globally recognised, highly liquid alternative asset with a unique position in the world of digital assets.

Following the Financial Conduct Authority’s policy shift last year, Bold is available to UK investors in the form of an exchange-traded product (ETP): my 21Shares Bitcoin Gold ETP (LSE: BOLD).

Today, bitcoin is more oversold relative to gold than at any point in its history. For those looking to bank some gold gains and diversify, Bold offers an intelligent solution.

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Investing in mining stocks is one of many approaches to boost your portfolio’s exposure to gold and other precious and industrial metals.

Shares in miners – companies that dig commodities like gold, silver or rare earth materials out of the ground – are becoming increasingly popular investments. FTSE 100 mining giants Glencore (LON:GLEN) and Fresnillo (LON:FRES) were the second and third most popular stocks among Interactive Investor’s users during January, coinciding with an eye-catching month for the price of gold and silver.

There are three ways of tapping into changes in commodity prices.

You can buy the physical commodity (such as a gold bar) or a physically-backed product like an exchange-traded commodity (ETC, which is similar to an exchange-traded fund or ETF). This approach gives you direct exposure to changes in commodity prices.

Or you can invest in futures contracts. These rise in value when markets expect commodity prices to rise in future. But they are time-limited, and rolling over these contracts beyond their term (usually 3-12 months) incurs additional costs.

The third approach is to buy shares in mining companies. While these come with their own risks, they often lead to greater returns than you’d get simply by investing in the physical commodity.

“A gold bar will perform like the price of gold,” says Evy Hambro, portfolio manager at BlackRock World Mining Trust (LON:BRWM). “Whereas with gold [mining] companies, you’ve got a bit more volatility, but you’ve got the chance of fantastic returns through dividends, M&A, exploration success and production growth.”

How does investing in mining stocks work?

Mining stocks are shares in the businesses that take commodities out of the ground.

Very simply, the profit a mining company makes is the value of the commodity they sell minus the cost of producing it. Owning their shares entitles you to some of those profits.

Mining stocks come with risks both positive and negative compared to physical commodities, says Hambro. “On the negative side, you could have an operational issue. The mine could flood, or there could be strikes,” he says. There is also the risk that their operating costs could increase because of price rises in their inputs, such as a spike in the oil price. And while physical gold just sits there getting more or less valuable as the price changes, a mining company’s performance is subject to the decision-making skill of its management team, which can vary.

But mining stocks could benefit from all sorts of tailwinds; a mine’s life could be extended by new discoveries, or an acquisition by a competitor could suddenly boost the share price. And unlike physical gold (or silver, copper, or any other commodity), mining stocks can and do pay income in the form of dividends.

How do commodity prices affect mining stocks?

Rising commodity prices can dramatically increase the profits that mining companies can make, assuming their underlying costs stay relatively constant.

On 5 February, Barrick Mining (NYSE:B), one of the world’s largest gold mining companies, announced a 79% increase in adjusted earnings per share to $1.04 in Q4 2025. Management increased its quarterly dividend by more than 140% over the previous quarter.

In the 12 months to 11 February, Barrick’s share price increased by 210%. Shares in Fresnillo increased 390% over the same period; but the spot price of physical gold gained a relatively modest 75% (silver, which Fresnillo also mines lots of, gained 162%).

This is a roundabout way of saying that mining stocks are more volatile (and as such, riskier) investments than physical commodities, but the additional risk can be compensated by far greater rewards when things go well.

Can commodity prices keep rising?

Mining stocks have benefitted from a dramatic rise in precious and industrial metals prices over the last year. As ever within investing, this prompts concerns over whether prices can continue to rise.

Hambro believes that the volatility seen in precious metals prices through late January and early February 2026 reflects a pattern of metals prices stabilising at a higher level following a period of rapid gains.

“[Metals prices] have gone up a lot, and some people think they might come down… there is caution about such a big rise,” he said. “People might want to take some profits.

“But as time goes on, and the prices don’t retreat, people become more comfortable with that price range. They will start to reflect that price range in their assumptions.” That eventually leads to further buying of metals and related assets, as buyers start to move back into the market.

What are mining royalties?

One interesting aspect of mining stocks compared to other equities is their potential to return capital through royalties, rather than dividends.

Dividends are paid out of equity, which is accumulated through profits – that is, at the bottom of the balance sheet. But royalties are payments made as a percentage of a mining company’s top line.

Accessing mining royalties usually requires a substantial investment into a mining company at the start of its project. For that reason, they are fairly inaccessible for most retail investors, but they entitle the investor to a percentage of sales from the mine for the duration of its operations.

This offers two main advantages: firstly, you’re paid out of sales, not profits. If the miner’s costs go up, you still get paid the same percentage of sales – as opposed to equity and dividends, which only come about after all operating expenses and taxes have been paid.

Secondly, if the life of the mine is extended, the length of time that you will receive royalty payments is increased, without any extra cost.

While it isn’t straightforward for most individual investors to access royalties, some investment trusts, like BlackRock World Mining Trust, own royalties contracts.

How to invest in mining stocks

The most basic way to invest in mining stocks is to buy the shares directly, which you’ll be able to do through most brokers. But because of the specific risks involved in mining stocks compared to physical commodities, it can make sense to diversify your exposure rather than putting your entire commodities allocation into a particular miner.

There are some funds that are focused on mining stocks, such as SVS Baker Steel Gold and Precious Metals Fund or Jupiter Gold and Silver Fund.

There are countless ETFs focused on mining stocks, including the WisdomTree Strategic Metals and Rare Earths Miners UCITS ETF (LON:WREE), which holds companies involved in producing the rare earths and other key materials used in the energy transition; the HANetf ICAV Sprott Copper Miners ESG Screened UCITS ETF (LON:COPP), which primarily holds copper mining stocks; or L&G Gold Mining UCITS ETF (LON:AUCP) which focuses on gold miners.

Or, besides BlackRock World Mining, there are investment trusts such as Golden Prospect Precious Metals (LON:GPM) and CQS Natural Resources (LON:CYN); both have the same management, but Golden Prospect focuses primarily on precious metals miners while CQS Natural Resources is more diversified across both precious and industrial metals (and includes some exposure to non-mined commodities like oil and gas).

Do you plan to use gold to help to fund your golden years? If not, you may want to reconsider.

With the gold price gaining 65% in 2025 and 7.6% in 2026 through to 2 February (despite a recent pullback) it is clear that gold has a role to play in investors’ portfolios. And one expert thinks that also applies to pensions.

“Gold’s unique characteristics, including its scarcity, liquidity and long-standing role as a store of value, all make a strong case for its inclusion in pension portfolios as markets become more volatile and traditional protections weaken,” said Maike Currie, vice president of personal finance at PensionBee.

So if you like to manage your pension actively, perhaps through a self-invested personal pension (Sipp), what are the main benefits that gold could add to your pension pot? And how much of your pension should you allocate to gold?

Gold could protect your pension through diversification

The key advantage to holding gold in your pension is that it offers a degree of protection through diversification.

It is crucial that your pension is as resilient as possible. You don’t want your golden years to be ruined by a stock market crash wiping out the value of your pot.

As such, most pension funds are diversified between stocks and traditionally safer investments like bonds.

However, that logic is starting to unwind. In recent years, bonds and equities have been more positively correlated with each other, thanks largely to persistent inflation (which erodes the real value of bonds over time).

“Investors are increasingly questioning the reliability and diversification benefits of traditional safe havens such as government bonds,” said Currie.

Gold is, in many people’s view, a better diversifier. Its low correlation with both bonds and equities means it can help to cushion pension savings during periods of market stress.

How much gold should you put in your pension?

The caveat is that, as gold price movements in late January and early February showed, it can be volatile. It also pays no interest, so is something of a dead weight in your portfolio outside of periods when its price is rising. Historically, gold prices have often traded flat for long periods of time (such as from the 1980s to the early 2000s).

For these reasons, you shouldn’t put too much gold in your pension.

“Understanding how much gold fits into your pension has never been more important, particularly for time-poor savers nearing retirement and looking to access their pension,” said Currie.

Currie recommends that gold should comprise around 5% of a well-diversified pension portfolio.

How you hold this gold is also important. While you could invest in gold mining stocks, these are often more volatile than the metal itself. You’ll get a more direct correlation with the gold price by buying a gold exchange-traded commodity ETC, such as the iShares Physical Gold ETC (LON:SGLN).

As of 2006, you can hold physical gold in a Sipp – but only in the form of gold bars, not gold coins.

We explain how to invest in gold in a separate article.

Silver trades above $110 per ounce. It famously touched $50 in 1980, and then not again until 2011. Then last October, it finally broke through after a 45-year wait. Little wonder the silver bulls are so excited.

Silver is a friend of gold. It is a precious metal, but less precious than gold. While gold is prominent in jewellery, its primary role is as an investment. Silver, on the other hand, has industrial uses in electronics, solar panels, the car industry and catalysts, as well as being used for decorative purposes. In that sense, silver has a dual role, part industrial and part precious metal.

According to the Silver Institute, 1,030 million ounces of silver were supplied last year (around six times the quantity of gold), less than was consumed. The silver market has been in deficit for five years in a row, and as inventories have been wound down, silver is feeling the pinch.

The total supply of gold above ground, sitting in vaults and jewellery boxes, is estimated to be worth around $35trillion. There is much more silver held above ground, with an estimated worth of around $6trillion, a figure that has quadrupled over the past year due to the price surge. These metals have been part of the global monetary system since it began. Today, one ounce of gold buys 45 ounces of silver, half the amount of a year ago: silver is on a tear.

Why is silver rallying?

The gold-to-silver ratio is how most metal watchers think about the relationship between them. The price of both metals generally moves in sync, and so the ratio expresses relative value. In March 2020, during the market crash, silver was dirt cheap, as an ounce of gold bought 110 ounces of silver. Contrast that with April 2011, when that same gold ounce only bought 35 ounces of silver.

These swings can see silver beat gold by three times in bull markets and then give back the gains much faster in the bears. Little wonder silver was once described by a trader as “gold on crack”.

To understand why silver is rallying we should first understand gold, where the main source of demand has come from the non-OECD central banks who are diversifying their reserves. These economies have come a long way since the Asian crisis of the late 1990s, as they have grown along with their reserves. According to the International Monetary Fund, central banks’ reserves stand at $12.9trillion.

Historically, these reserves had been invested in government bonds, mainly US Treasuries, but ever since the war in Ukraine saw Russia’s assets confiscated, central banks have been seeking to diversify, and gold fits the bill. It is a timeless constant and a highly liquid asset that comes to the fore at times of financial stress. There are other reasons for this gold bull market, including the debasement of the US dollar.

When a savvy investor spots a gold bull market, they dash in front and buy the miners and silver, in the knowledge that they are likely to outperform. The miners win because they have additional gearing to higher prices, and silver because it is a smaller market. A surge in demand causes a squeeze.

This silver bull market has been underpinned by gold, but since the central banks are buying gold and not silver, who is? You would normally expect to see a stampede of retail investors. However, the quantity of silver held by exchange-traded funds (ETFs) is still below where it was five years ago, when silver traded below $30. Moreover, the hedge funds have been lightly positioned, according to data from the futures market.

The real bulls are in China, where the price trades at a 14% premium to the price in London, at $129. What do the Chinese see that we don’t? China manufactures the world’s solar panels and needs much of the annual new supply to do so. China also refines two-thirds of global silver and has raised export controls.

They have reclassified silver as a strategic metal, putting it in the same category as rare earths. An unintended consequence of Donald Trump’s tariffs has been the hoarding of commodities, especially metals. Out goes the free market, in come strategic reserves.

In the meantime, some investors have demanded physical delivery from the Commodity Exchange (COMEX) warehouses, where inventories have dropped by 22% since October. Then we hear that Goldman Sachs’s head of precious-metals trading, Benjamin Binet-Laisne, is leaving the bank, with no explanation. Market rumours suggest that someone out there has a very large short position in silver. Why else would the price surge so sharply?

While Western investors are only just starting to catch silver fever, the Chinese are going at full pace. They are worried about economic uncertainty, just as we are. But unlike us, and owing to capital controls, they have fewer investment choices. Now that property in China is out of favour, their primary choices are between cash, local stocks, gold, and silver.

This silver rally is one for the history books. Knowing how badly the silver booms have ended in the past, scepticism has become the consensus. But the world needs silver, the market remains in deficit, nation-states are hoarding, free trade has been suppressed, and mined supply hasn’t grown in a decade. It feels late to buy silver today, and for those who already own it, it is an easy decision to lighten up. But you never know, maybe it really is different this time.

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This year’s best-performing emerging market (EM) shouldn’t really be classified as an emerging market at all. South Korea’s high-tech industrial base is a match for any of the world’s leading developed economies. Yet restrictive trading rules on the local bourse see it consigned to the same global investing basket as Egypt and Peru.

Nonetheless, the local Kospi index has rocketed 66% this year. That reflects two massive tailwinds: AI, and a closing Korea discount. For the first theme, memory-chip champions Samsung and SK Hynix are cashing in on Big Tech’s splurge on semiconductors. For the second, Seoul has begun to implement pro-shareholder reforms, a copy of similar changes in Japan that unleashed a multi-year stockmarket rally.

Emerging market winners

Korea’s gains have helped push the MSCI EM benchmark to a 26% gain for the year to date. After years of lagging the developed-markets index, that rise comfortably outstrips the 18% gain for MSCI’s equivalent index for developed markets.

Those gains partly reflect more benign financial conditions for the developing world. US interest-rate cuts and a weaker dollar tend to push capital out of Wall Street and into more exotic locales. Yet the upswing has not been universal. This year’s big winners have tended to offer exposure to one of 2025’s two winning trends – AI-focused tech and the global metals rally. Like Korea, Taiwan’s Taiex (+20.5%) is rallying on soaring demand for AI equipment, largely driven by the enormous success of local chipmaker TSMC.

The mainland Chinese CSI 300 is up a healthy 17.5%; Hong Kong’s tech-biased Hang Seng has done even better, with a 28.5% gain. The east Asian economies now jointly account for 60% of the MSCI EM index, making the index a more concentrated bet than many EM investors would ideally like.

India, the index’s third-largest component, provides some diversification. The country’s thrilling growth story resembles that of China in the early 2000s. Yet share prices have become stretched, and the BSE Sensex’s 8% gain for the year is lacklustre. While India is a global leader in IT outsourcing, local markets offer little exposure to AI.

Southeast Asia is a mixed bag. Vietnam’s VN index has rocketed a third in the same year that it won an upgrade to emerging-market status by index provider FTSE Russell. Indonesia’ IDX Composite has gained 21%.

Malaysia’s KLCI is flat, while the Philippines’ PSEi index has slipped 7% amid signs of a domestic slowdown. Thailand’s SET index has retreated 10% as investors flee political turmoil and signs of a decline in the country’s crucial tourism sector.

Metals rally helps emerging markets shine

Gold’s 60% rally this year has helped South Africa to shine. The JSE Top40 index has had a banner year, with local miners and an improved political outlook propelling it to a 40% gain. Copper champion Chile has done even better, with the IPSA index enjoying a massive 50% rally.

But not all commodities are created equal. The oil-heavy Saudi Tadawul all-share is off 13% amid weak energy prices. The US has picked fights with both the Mexican and Brazilian governments this year, but you couldn’t tell by looking at their stock exchanges, up 28% and 32% respectively.

The White House’s 50% tariffs on Brazilian imports have “backfired”, because “Brazil exports more than twice as much to China as to the US”, says Craig Mellow in Barron’s. Brazil’s strength in agriculture makes it a highly complementary trading partner. Investors also hope that next year’s presidential election could bring a pro-market candidate to power, echoing Javier Milei’s success in Argentina.

It has been another good year for emerging Europe. Poland, the region’s biggest market, is catching up fast with western Europe. A boom in defence spending has helped push the WIG20 to a 39% gain. Finally, difficult post-crisis reforms continue to pay dividends in Athens. The ASE index has rallied 41% this year and 119% over the past three years. The protracted Greek tragedy is finally over.

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Technological improvements have unrecognisably changed much of the global economy in the last 30 years. But one area that remained steadfastly stuck in the past is one of the most fundamental parts of any economy – money. In recent years, however, a financial revolution began. Cryptocurrencies have been with us now for 16 years, but they bring with them a whole host of complexities that only the faithful are willing to overlook. In most cryptocurrencies acolytes lies the spirit of the rebel – somebody who wishes to sit outside the system with their wealth independent of oversight and away from traditional assets. Inevitably, this has roused suspicion that the main benefit of cryptocurrencies is as a cover for nefarious activities.

A different type of cryptocurrency has recently come to light – stablecoins. Where Bitcoin and similar digital currencies aim at tearing down the financial order, stablecoins’ purpose is to improve it. These digital assets, backed by real-world currency, are beginning to act as an important bridge between the traditional financial system and the burgeoning world of decentralised finance. At the forefront of this movement is Circle (NYSE: CRCL), a US-listed financial technology (fintech) business that is positioning itself to be a central player in this new global landscape.

What are cryptocurrencies?

Cryptocurrencies are essentially strings of data that represent value. The key characteristic is that they are fungible, meaning that any one unit is interchangeable with any other, just as a pound coin is equal in value and function to any other pound coin. The magic that makes these digital assets secure lies in the blockchain, a development that became possible with the internet.

A blockchain is a decentralised digital ledger, a record of all transactions, that is maintained across a vast network of computers rather than being held by a single central authority, such as a bank. To understand its power, consider the traditional system of double-entry book-keeping. When you send money to someone, both you and the recipient keep a record of the transaction. A bank acts as a trusted, private third party to ensure that both records match.

The blockchain introduces a different third party outside of the private banking system. The radical idea was that the confirming party in transactions was to be a public record, open to be seen and verified by anyone. Every transaction is recorded in a “block” of data and, once that block is verified by the network, it is added to a permanent, immutable chain of previous blocks – thus creating a blockchain. This open, unchangeable record is what makes the assets on a blockchain truly unique and resistant to fraud, as it removes the need for a single, central authority. Imagine a contract between two parties. Then imagine that this contract only becomes valid once the whole world can see it and it thus only becomes legal if everyone agrees. That is the essence of the blockchain.

The difference is that a contract is a unique, non-fungible asset. Because cryptocurrencies are fungible, they can be used to facilitate secure, peer-to-peer transactions without a middleman such as a bank. That is the fundamental idea behind the original cryptocurrencies such as Bitcoin.

The rise of stablecoins

The older digital currencies grabbed headlines due to their volatile price swings and the vast wealth they created for the mavericks who saw the potential early. Stablecoins may prove a more practical innovation. As the name suggests, they are digital assets specifically designed to maintain a stable value, and their value is typically pegged to a fiat currency such as the US dollar or the euro. There are different types of stablecoins, each with a different mechanism for maintaining their peg.

The most common and trusted type is the fiat-backed stablecoin, such as Circle’s USDC. The mechanism is simple: for every digital token created, an equivalent amount of a real-world asset is held in a reserve account. This backing provides trust and stability, ensuring the stablecoin can always be redeemed for its real-world dollar equivalent. Crypto-collateralised stablecoins, such as MakerDAO’s DAI, are backed by volatile cryptocurrencies and use extra collateral to manage risk. Algorithmic stablecoins, such as the failed TerraUSD, rely on complex programs to maintain their value, but can collapse. The recent public failures of algorithmic coins have highlighted the importance of transparent, asset-backed models such as Circle’s.

Circle, formerly Circle Internet Financial, is a prominent US-listed fintech business that has made this model its core mission. Its flagship product is the USD Coin (USDC), but it has since expanded to include the EUR Coin (EURC). The company was founded in 2013 and initially focused on Bitcoin payments before making a strategic pivot to stablecoins. Circle’s history is defined by its commitment to working within the existing financial and regulatory system. From its early days, it actively pursued regulatory approval around the world. It secured key licences in New York, the UK and Singapore.

This dedication to compliance has set it apart. By actively seeking regulatory clarity from the outset, Circle has positioned itself as a trusted partner for financial institutions and businesses. Unlike many of its competitors, rather than trying to replace the financial world order, it is trying to fix it. This is in stark contrast to its main rival, Tether and its USDT coin. Historically, Tether has operated with less transparency and a more decentralised approach, often drawing intense regulatory scrutiny. Tether remains the larger stablecoin by value of currency in circulation, but Circle’s strong focus on trust and following the rules has helped it grow quickly. Because of this, many large investors and businesses see it as a safe and reliable way to enter the world of digital assets.

Circle's new financial infrastructure

Beyond simply providing a digital dollar or euro, Circle is building a new financial infrastructure. This is where the concepts of the off- and on-ramp become critical. The on-ramp is the process of converting traditional currency into a digital one, such as moving dollars from your bank account to a crypto exchange to buy USDC. The off-ramp is the reverse. Currently, these two steps can be a barrier, often involving fees and delays. But the true power of a stablecoin system could lie in a frictionless future where on-ramping and off-ramping are less frequent. Once an individual or business holds their currency in a stablecoin such as USDC, they can transfer it to anyone else in the system instantly, at nearly no cost, and at any time of day. This “always-on” payment rail will bypass the traditional banking system and its associated fees.

This is already happening – in international remittances, for example, where a USDC transfer can take seconds and cost fractions of a penny. This stands in contrast to the traditional system, which can cost upwards of £20 and take several days. In a world of mass adoption, one could even receive a salary in stablecoins, then use them to pay for groceries or bills, all within the same digital system, unlocking a cheap, frictionless, financial life. Circle has actively pursued partnerships with major financial players such as Visa and Fiserv to turn this vision into a reality. These collaborations will allow traditional finance firms to integrate Circle’s technology, helping to bridge the gap and accelerate the adoption of USDC.

Most of Circle’s income comes from the interest it earns on the money that backs its stablecoins. Each USDC and EURC is supported by cash and short-term government bonds, which together provide a steady source of earnings. How much Circle makes depends mainly on two things: current interest rates and how many of its stablecoins are in use. It’s an attractive model, but not without its risks. In a high-interest-rate environment, the firm’s profitability soars. In a rate-cutting world, however, Circle’s revenue from this source would be directly affected.

Acknowledging this dependency, Circle is diversifying its income by offering a suite of software services and customisable interfaces that help businesses integrate stablecoins into their own operations. This includes its Circle Payments Network (CPN), which provides a transaction-based revenue stream that is less sensitive to interest-rate fluctuations. At present, these are small parts of Circle’s business, but they have the potential to become more important as the firm grows.

What the future holds with Circle

Circle’s strategy of working with regulators positions it to be centrally important to an emerging global financial framework. This is no longer a theoretical possibility, especially given the recent passage of the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS, Act. This new US law is the first to set clear national rules for stablecoins. It says that only approved companies can issue them and that they must follow strict rules to protect users and remain transparent. Every stablecoin must be backed one-for-one with safe assets such as cash or short-term US government bonds. Circle has followed this approach from the start and proves it through public reports. The GENIUS Act is a big deal for a company like Circle. Many other stablecoin makers will find it hard to follow these strict new rules, but Circle’s business model was already set up to meet them. This new law provides the clear rules that banks, tech companies and large businesses need. They can now use stablecoins with confidence because the law removes the legal doubts that stopped widespread use before. Additionally, the Act bans stablecoins that don’t follow the rules and sets clear guidelines for foreign companies. This will probably make Circle’s USDC even stronger as a trusted, regulated choice in the market. It punishes companies that don’t meet this new “gold standard”.

By building a trusted, compliant infrastructure, Circle is not simply creating a new cryptocurrency. It is also helping to lay the groundwork for a stablecoin-powered financial system that could one day become the backbone of global commerce. In the process, it has the potential to make the company enormously profitable. The traditional banking world is on notice: the future of finance is here, and it is built on a foundation of stable, digital money.

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Our annual conference, which this year coincided with the magazine’s 25th birthday, was a roaring success. For those who weren’t there, here is an overview of what you missed. Andrew opened proceedings by noting that the magazine’s quarter-century was bookended by two huge technology booms, while the years in between had seen extraordinary events ranging from a financial crisis to a pandemic.

The only thing it hadn’t seen was a normal business cycle, thanks to constant interference in economic cycles and economies by central banks. Calderwood Capital’s Dylan Grice underlined how state meddling was a recurrent theme – well-intentioned efforts to regulate the market only deepened the crises leading to the American and French revolutions. Throw in today’s geopolitical, technological and financial uncertainty, and extreme caution is called for.

Diversify as follows, he says: construct an equally weighted portfolio comprising equities, commodities, precious metals, real bonds, nominal bonds and securities offering exposure to insurance and reinsurance, such as CAT bonds.

The panel following Dylan’s speech, hosted by MoneyWeek’s columnist Rupert Hargreaves of City A.M. and consisting of Jasmine Yeo of Ruffer, Troy Asset Management’s Charlotte Yonge, RIT Capital Partners’ Frank Ducomble and Charlie Morris of ByteTree, highlighted the scope for gold, bitcoin and index-linked bonds to shield investors’ holdings. Charlie said he was convinced that AI is a massive bubble that peaked in late October.

MoneyWeek Wealth Summit highlights

The emphasis then switched to long-term growth opportunities. Enter Vietnam, which has been one of our favourite stock markets since 2005. Dominic Scriven of Dragon Capital says the economy is growing at 7%-8% a year. Exports have moved up the value chain from raw materials to electronics, and consumption is rising. The pro-business Communist government is sacking one million civil servants to make the public sector more efficient.

Japan, meanwhile, is making its private sector more efficient. Nicola Takada Wood of AVI reviewed the progress of the campaign to shake up corporate governance and unlock value. AVI has been a key activist investor in the under-researched small-cap segment of the market. There is still room for improvement – a large majority of the firms trading below book value in the market are small caps.

Ben James of Baillie Gifford focused on AI. It is the latest technological revolution in a series that began with the industrial revolution, the last one being information technology. We are in the early phase of the machine era, and a key theme will be robotics, with robots doing manual tasks everywhere. In this context, Aurora, an unmanned truck group, and Tesla’s robots have caught Baillie Gifford’s eye.

Next we heard from India Capital Growth Fund’s Gaurav Narain. India continues to exhibit robust growth of about 6% a year, powered by a young population’s household spending – the median age is 28. The stock market remains buoyant, too, accounting for a third of flotations worldwide.

A lunchtime discussion about gold was led by Cris Heaton, who quizzed James Proudlock of OptionsDesk and Erik Norland of CME Group. A snap poll of the audience afterwards was bullish.

After lunch, our founding editor, Merryn Somerset Webb, now at Bloomberg, reviewed the lessons of MoneyWeek’s 25 years. Two of them were that diversification and mean reversion always matter. And hold gold.

Then Laura Foll of Janus Henderson explored the perennial problem of the British stockmarket withering away, with former MoneyWeek editor John Stepek, also now at Bloomberg. The market’s overall valuation is in line with its long-term average, while small and mid caps still look cheap. Foll highlighted commercial property as an area unlikely to become obsolete as technological advances gather pace.

Diana Choyleva of Enodo Economics has become more positive on China in the past few years. There is scope for a bull market now that the government is trying to encourage people to hold stocks rather than property. Pantheon International’s Charlotte Morris reminded the audience that privately held companies outnumber listed companies threefold, so it is important to have exposure to private equity. The same goes for healthcare, according to James Douglas of Polar Capital. The pace of innovation remains impressive and demand robust – concern over the Trump administration’s capricious health policies has eased and valuations are appealing.

The afternoon panel, focusing on diversifying beyond the US and its AI-driven tech stocks, along with the relative merits of small and large caps, was hosted by MoneyWeek’s columnist David C. Stevenson. David was joined by Martin Connaghan of the Murray International Trust, Simon Barnard of the Smithson Investment Trust and Swathi Seshadri of MCP Emerging Markets. Value lies beyond the US, while Simon Barnard noted that the AI boom may be like the railroad one – more useful to future users than the original investors.

Following Dr Pippa Malmgren’s riveting explanation of how stablecoins could remodel the global financial order, MoneyWeek’s funds columnist, Max King, finished the conference by reminding readers to stay optimistic and recall that sometimes value stocks were cheap for a reason. The FTSE 100 should soon reach 10,000, he said. This week, it is tantalisingly close.

Thank you to our headline partner Aberdeen, event partners India Capital Growth Fund, OptionsDesk, Polar Capital, QuotedData, RIT Capital Partners, Smithson Investment Trust and Vietnam Enterprise Investments; and association partner The Association of Investment Companies for their support.

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Isaac Newton, who must be one of the cleverest individuals ever to have lived, made groundbreaking contributions to physics, mathematics, mechanics, philosophy and astronomy. The laws of motion, the theory of gravitation and the reflecting telescope were among his many contributions. He was also a brilliant alchemist, obsessed with theology and biblical prophecy. As if that isn’t enough, he is credited with the design of the gold standard, the primary monetary system of the world for over two hundred years.

Counterfeit coins

In 1695, counterfeit coins accounted for more than a tenth of all English money in circulation. The English used the counterfeit coins in particular to pay their taxes. The Exchequer that year reported no more than ten good shillings for every hundred pounds of revenue. Coin clipping was also a major problem, especially of old coins, and silver coins were disappearing from circulation altogether.

Silver was worth more on the continent as bullion than it was in the UK as tender, so arbitrageurs shipped coins abroad, melted them down, and sold them for gold. Everyone from the Jews to the French was blamed, but by 1695, it was almost impossible to find legal silver in circulation. It had all been melted down and sold.

This all led to a shortage of currency, which inhibited trade. King William III begged the House of Commons to respond to the crisis and, seeking help, secretary of the Treasury William Lowndes wrote letters to England’s wisest men, asking their advice. Among them were philosopher John Locke, banker Josiah Child, and scientist Isaac Newton.

Newton was in his mid-40s and probably not far off the peak of his powers. He had published his most famous work, the Philosophiæ Naturalis Principia Mathematica, just eight years earlier in 1687, and it had established him as the cleverest man in the country. He would now apply his great mind to money.

With the formation of the Bank of England in 1694, Newton had become aware of the possibilities of paper money. “If interest be not yet low enough for the advantage of trade and the design of setting the poor on trade,” he wrote, “the only proper way to lower it is more paper credit till by trading and business we can get more money”.

He could see that token value and intrinsic value were not necessarily one and the same. It was also obvious to Newton that the currency criminals were rational actors. They would continue to clip, counterfeit and sell abroad while there was profit in it. Bullion smuggling carried the death sentence, yet still it went on. Coercion alone would not be enough to stop it from happening. The market itself needed to be changed.

Newton came up with two measures. Firstly, to deal with the clipping, all coins minted prior to 1662 should be called in, melted down, and, using machines, re-made into coins that had a single consistent edge. With no more hand-hammered coins in circulation, clipping coins would become that much more difficult. Re-minting the entire country’s coin, however, at a time of such primitive machinery, was no small undertaking. Secondly, to deal with the silver issue, the amount of silver in coins should be lowered so that the silver content and the face value of the coin were the same. The thought of such a devaluation went against the psyche. The idea that token value and intrinsic value might be different was alien and Newton’s second proposal was not widely welcomed. There were 20 shillings to a pound, so a shilling should contain a concomitant amount of silver.

Newton may have thought that the token was more important than the silver content, but landowners and the government, which was largely made up of them, would lose 20% of their wealth by Newton’s proposal. In 1696 Parliament approved the recoinage, but stipulated the new coins maintain the old weights. Newton warned that the silver outflow would continue.

Isaac Newton's new career

The following year, nudged by John Locke, Charles Montagu, the chancellor of the Exchequer, sent Newton a letter notifying him that the King intended to make him warden of the Mint. So began his new career. Perhaps the role was only intended as a sinecure, but Newton took it very seriously.

Putting his chemical and mathematical knowledge to good use, Newton got the Mint’s machines working and the coins minted at a speed that defied the predictions of even the boldest optimist. Newton would also have to learn the skills of a policeman – both investigator and interrogator – and he proved masterful. This ruthless enforcer of the law oversaw numerous investigations, exposing frauds and then prosecuting perpetrators. Poor counterfeiters had no idea what they were up against, and many were sent to the gallows for their crimes.

So good at the job of warden was Newton that, in 1699, he was promoted and made master of the Royal Mint. After the political union between England and Scotland in 1707, Newton directed a Scottish recoinage that would lead to a new currency for the new Kingdom of Great Britain. He had solved the clipping problem, the counterfeiting issue was vastly improved, but silver was still making its way across the Channel, just as Newton had said it would. As long as the silver content exceeded the face value of the coins, the trade would continue. By 1715, almost all of the coins that Newton had struck between 1696 and 1699 had left the country.

Newton’s studies had moved on from tides, planetary motions and pendulums to the gold markets. He drew up an extensive table of assays of foreign coins and in doing so realised that gold was cheaper in the new markets opening up in Asia than in Europe, and thus that silver was not just being sucked out of England, but out of Europe itself to India and China where it was traded for gold.

The 18th-century gold rush

Portuguese deserters had found alluvial gold two hundred miles inland from Rio de Janeiro in Minas Gerais in Brazil. Soon everyone was flocking there. By 1724, within just three decades of the discovery, world output had doubled. By 1750, 65% of global production was emanating from Brazil. The gold made its way to Lisbon, along with sugar, tobacco and other Brazilian products, and with it the Portuguese minted their moidores coins. The Portuguese used their gold to buy English cereal crops, beef and fish, woollen goods, manufactured articles, and luxuries. Portugal imported five times as much from England as it exported to it, and it used its gold to settle the difference.

The moidores, which weighed slightly more than an English guinea, worth 28 shillings, actually became currency. In London, the Bank of England began buying vast amounts of gold “to be coined as it comes in” and the Mint began minting guineas from the moidores. By 1715, the Bank had 800 kilogrammes, or 25,700 troy ounces (t.oz), a nascent central bank reserve, and this figure would rise to 15.5 tonnes, 500,000 t.oz, by 1730. So much gold coin had never been minted before, and London soon overtook Amsterdam as the foremost precious-metals market. Gold was coming and staying. Silver was leaving for Asia. In 1717, Newton was called on to investigate.

He came up with a new system in 1717. Less than three months later there was a Royal proclamation that forbade the exchange of gold guineas for more than 21 silver shillings – even if they were clipped or underweight. Thus was a guinea just over a pound, which was 20 shillings, or 113 grains of gold. The ratio of gold to silver was effectively set at roughly 1:15.5.

But silver-coin clipping continued, and full-weight silver coins continued to be exported to the continent, where 21 shillings of silver could still get you more than a guinea’s worth of gold (just over 7.6 grams/1/4 t.oz). Exports also headed to Asia, especially India and China, often via the East India Company, where silver was even more valuable. The result was that silver was used for imports, and thus left the country, while exports were traded for gold, which thus came into the country. All in all, some two-thirds of that Brazilian gold is thought to have ended up in England.

Britain had always been on a silver standard. A pound was a pound of sterling silver. Although the Royal proclamation suggested a bimetallic standard, in practice, with so much silver going abroad, it moved Britain from silver to its first gold standard.

Gold was more dependable than clipped silver. The future would look back on Newton as the father of the gold standard. His system proved the bedrock of Britain’s domestic and international trade throughout the 18th century, helping it to become such a formidable commercial power. But it was an accidental gold standard. Nobody – not the institutions nor the persons involved – had had the slightest intention of creating a new monetary system based on gold. Most people wanted to sustain silver as the prime coinage of the land. Newton had tried to create a functioning bimetallic standard.

But market forces had other ideas

The second half of the 19th century proved the age of the gold rush. Aside from taxation, it is difficult to think of anything more overlooked that has had a more profound influence on the course of human history than the gold rush. Nations, indeed civilisations, have been formed on the back of them. The 24th of January 1848 stands as a watershed moment, the dawn of a new golden age.

On that day a carpenter from New Jersey by the name of James Marshall saw something shiny at the bottom of a ditch while carrying out a routine inspection of a lumber mill he was helping build on the western slopes of the Sierra Nevada in California. Within a few years, the scale of the gold business changed out of all proportion.

Until that point there had been roughly one-third of an ounce of gold for every person on the planet. Fifty years later, even with a higher population, there was two-thirds of an ounce. The gold price should surely fall with all the new supply, feared bankers and economists. “The price must fall,” said The Economist, wrong about everything even then. But the gold price did not fall. It remained constant. What everyone had failed to appreciate was that most of the gold would be used as money, and that trade, exchange and economic expansion would be the result.

Surprisingly perhaps, the biggest casualty of the gold rush was silver. Silver had been used as money for thousands of years. Not for much longer. Its price halved. In 1850, only Britain, Portugal, Brazil, and a handful of other nations were on the gold standard. Everyone else was on bimetallic standards. By the end of the century, every major nation bar China was on a gold standard, the classical gold standard Newton is credited with having designed, but which, really, was accidental.

Dominic Frisby’s latest book is The Secret History of Gold: Myth, Money, Politics & Power, published by Penguin Business and available from all good bookshops. He writes investment newsletter The Flying Frisby.

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“The lesson of history,” it is said, “is that the lessons of history are never learned.” Does the same apply to investment? Investors, amateur and professional alike, spend a huge amount of time poring over charts, historical precedents, analogies and past behaviour to find clues to the future.

Regulators warn us that past performance is not indicative of future results but, as Baroness Helena Morrissey reminds us, “we are instinctively drawn to think that the past is a model for the future”. The problem is that history never repeats itself and, even if it did, the outcome would vary as people, perhaps drawing on past precedents, react differently.

Investors are better served by remembering Mark Twain’s observation that “history doesn’t repeat itself, but it often rhymes”, and by accumulating pearls of wisdom from their own experience, as I hope I have in the last 47 years, 42 of them in investment.

Being good at sums, I started out qualifying as a chartered accountant at what is now KPMG, though I impetuously left after qualifying to spend two years in corporate advisory under Victor (aka “Lord”) Blank. Fortunately, I realised before he did that the varied skills and personal characteristics necessary in that career were conspicuously lacking in me and that I was more suited to the world of investment.

Good investment goes beyond the numbers

Still, those early years taught me priceless lessons, especially that, as any good accountant knows, the secret of good investment does not lie solely in the numbers. Many investment companies have a screening system to identify companies that combine good margins, high returns on capital, a solid balance sheet, revenue growth, cash generation and so on as part of their “process”. The problem is that these processes are all more or less the same, so the stocks identified are fully valued. The best opportunities are often in the stocks that the screens reject.

An early quote of Warren Buffett’s that I learned was that “when a management with a reputation for excellence encounters a business with a reputation for bad economics, it is the reputation of the business that survives”. It sounds great but management success is not necessarily transferable from one business to another. Simon Wolfson, CEO of Next, points out that 28 of his top 30 employees were promoted internally and have a combined 500 years of experience at Next.

“Bad economics” is not a given in any business. Companies fail because they prove incapable of adapting to change or just give up, rarely because their business has become obsolete. Woolworths continues to thrive in Australia and South Africa, where Wimpy, not McDonald’s, is the market-leading burger chain. 3i’s hugely successful European retail chain Action mimics Woolworths, as does the UK’s B&M. Tim Waterstone built up his chain of bookshops to market dominance when his competitors despaired of competing with Amazon and downloads.

Professional investors will often tell you that they never invest in a business they don’t understand. I doubt it is possible for any manager to really understand any business they invest in; an investor covering dozens or hundreds of companies cannot compete with a dedicated management team. The advantage investors have is objectivity, the ability to see the broader picture and the ability to walk away.

Investment-management companies boast of the number of analysts they employ globally, the number of company meetings they hold and the depth of their research. This often leads to overanalysis, whereby huge amounts of research improves the investor’s confidence but doesn’t result in a better decision. Many of my best investments were made almost on the spur of the moment from a single insight.

Hope is not an investment strategy

Nathan Rothschild said that the secret of his success was that “I never buy at the low and I always sell too soon”. Yet many investors try to finesse their investment decisions, holding back from an investment decision in the hope that a share price would revisit a high or low. I found it helpful to assume that any share I bought would promptly fall 10% and any I sold rise 10%. I would be pleasantly surprised if it turned out differently.

“Run your profits, cut your losses” has always been a popular dictum but is contradicted by “nobody ever went broke taking a profit”. True; they went broke selling a winner and reinvesting in a loser. It is incredibly hard to know when to sell. Most people sell too soon but selling a share in freefall is mortifying. “Up like a rocket, down like a stick,” the wags say. I sometimes top-slice holdings but am a reluctant seller. However, the market regularly reminds us that great companies and funds don’t outperform forever.

“The stock market can stay irrational for longer than you can stay solvent” is another popular favourite. Any professional investor will tell you that it can be a long, long wait before an investment comes good, so you have to be very patient.

They say this after it has come good, not after three or five years of dud performance when they are wondering if they have made a mistake. Also, remember that markets are irrational much less often than many professionals believe – investment sages are not known for their humility or lack of self-confidence.

“Cheap is not cheerful” is a strapline I picked up along the way. Investors are drawn to lowly valued shares or markets (like the UK) but they are usually cheap for a reason. Cheapness is the easiest excuse for a bad investment. That is not to belittle “value” investing but the best hunting ground for value is recovery – which is contrarian and risky – or undiscovered potential.

Go for growth

The opportunity in “growth” investment is the reluctance of investors to believe that high growth is sustainable. No analyst likes to predict sustainable growth above 15% per annum but, as the leading firms in the technology sector have shown, it does happen. Still, there are many blind alleys: companies whose technology is superseded by others, who fail to monetise the potential, whose big idea turns out to be less revolutionary than expected or just a fad.

An early lesson every investor needs to learn is that they will make mistakes and lose money. The two don’t always go together. A mistake can be profitable and a rational decision can lose money: you played the odds wrongly but got lucky, or the other way round. Learn the lessons of the mistakes and move on.

An early boss, hedge fund manager John Angelo, used to tell me, “opinions are like a**holes; everybody’s got one”. Much later, I learned that it was, broadly, an aphorism of Winston Churchill’s.

John’s point was that he was only interested in what was going to happen and what it meant for markets, not in subjective opinions. Good investors shy away from opinions on politics, economics and current affairs but listen to all the arguments, distrusting the consensus. You learn much more that way.

Bumps in the road

The greatest lesson of all is that markets go up in the long term. Time turns most bear markets and crashes, which seemed so serious at the time, into mere blips in the long upward path. Yet the narrative of the investment gurus, faithfully reported by the media, is always to talk down the outlook for markets, to warn of “bubbles” and predict disaster just around the corner.

It is a standing joke of investment professionals that headlines of “billions wiped off stockmarkets” and lurid magazine covers depicting an absence of hope are a signal to buy rather than sell. But retail investors in the UK are more easily influenced, which helps to explain why the British investment market struggles. Bad news sells and Britons are not known for their optimism.

“The more you know, the more you realise how little you know,” said Bertrand Russell, though the sentiment goes back to Aristotle and Socrates: “Wisdom is knowing how little you know.” Experience makes you come to terms with this more than it teaches you how to invest.

You will not be right all the time. Even Roger Federer won only 54% of the points he played in his tennis career and many of the points he lost were unforced errors, probably regularly repeated. As Baillie Gifford points out, a good investment can multiply your money but a bad one will only lose it once. A missed opportunity may be more painful than a loss.

One of my best investment decisions was back in 1992 when I correctly predicted Britain’s departure from the exchange rate mechanism (ERM) and, against the overwhelming consensus, the economic and market consequences of our exit. This laid the foundations of five years of great performance. All I did was recognise the close parallels with Britain’s departure from the gold standard in 1931, a lesson in economic history I had absorbed at university.

One of my worst decisions was to sell my holding in a gold mining fund two years ago, having held it for about ten years. I despaired of the failure of shares in gold miners to respond to a rising gold price and switched into an energy fund.

The fund I sold performed strongly last year and has doubled in 2025, while the energy fund has remained marooned. I daren’t switch out for fear of being whipsawed. You never learn all the lessons from experience that you should have.

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What MoneyWeek got right

The commodities supercycle (Oct 2001)

Buy gold (Sep 2002)

The US housing bubble (March 2005)

The credit crunch (July 2007)

Sell the banks (Feb 2008)

Trump, Corbyn and populism (Sep 2015)

Post-Covid inflation (May 2020)

What MoneyWeek got wrong

We are all instinctively value-orientated (it tends to beat growth in the long term), and this meant we were often too sceptical of technology stocks. We said Google was overvalued at its flotation in 2004, when the share price was $85. Now it would be $2,330 if the stock hadn’t split in 2022. Being structurally bearish in view of the endless money printing, and central-bank interference in the business cycle, sometimes meant being insufficiently cyclically bullish over the years – that liquidity has to go somewhere, after all.

Columnist Max King has been a useful bullish corrective to our scepticism over the past decade or so. He is also sceptical when he needs to be, however: he rightly urged readers to get out of Neil Woodford’s Patient Capital Trust in early 2018.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

“History is just one f**king thing after another,” declares a vulgar schoolboy in Alan Bennett’s play The History Boys. Surveying the past 25 years can feel the same way. From Iraq to the euro crisis and from Brexit to bitcoin, a great deal has happened over the quarter-century that MoneyWeek has graced newsstands. But not all news stories are created equal.

Hazarding a slightly more elegant periodisation than Bennett’s character, I would argue that the great turning point of the past quarter-century was the financial crisis that began in 2007. For the UK in particular, recent history can be neatly sliced into two periods: the years before and after the great crash.

London loses its crown

In the early 2000s, London could credibly claim to be the centre of global finance. It topped Z/Yen’s inaugural Global Financial Centres index (GFCI) in 2007.

America might be the superpower, the argument went, but London was the world’s capital. Britain’s economy was like the tennis at Wimbledon, a venue for global heavyweights to clash, helped by the English language and an excellent time zone.

The past is indeed a foreign country. Where once the “Sir Humphreys” in Whitehall talked of surpassing New York, today they tremble at unflattering comparisons to Greece. The London stock exchange fears irrelevance. Nvidia alone, valued at $5 trillion, dwarfs the combined value of all London’s blue chips. Deal volume has never regained its 2006 peak of $51 billion (it was just $248 million in the first nine months of this year).

While the technology megabucks fly on Wall Street, one of London’s most notable listings this year has been Princes Group, a purveyor of tinned tuna. It is a perfectly respectable business, but there is a certain desperation in efforts by officials to tout this solid, dull flotation as heralding some great renaissance.

Most tellingly, UK living standards have flatlined since 2007. “[Had the] pre-2007 productivity trend continued, British workers would be 16% more productive today,” says Aadya Bahl on an LSE blog. The significance of 2008 is much more evident in Britain than in America, where growth eventually recovered. The S&P 500 index of US stocks has rocketed nearly 900% since its 2009 low (compared with 153% for the FTSE 100). The UK had placed all of its chips on the wealth generated by the City.

When that bet imploded, the country struggled to carve out a new role for itself. Ever-Tiggerish, Americans bounced back from the banking disaster, reinventing themselves as shale-oil prospectors and smooth-talking tech venture capitalists; Britain has more resembled a middle-aged man bouncing between odd jobs after an involuntary redundancy.

Far too easy money

Gordon Brown’s hubristic claim to have abolished “boom and bust” was widely panned as the Great Recession got underway. But in this, the chancellor-turned-PM was only mirroring the wider economic establishment, where the notion of a “Great Moderation” (built on the supposed inflation-fighting genius of central bankers) was all the rage.

Central banks treated us to further financial wizardry after the subprime meltdown by unleashing ultra-low interest rates and the money-printing of quantitative easing (QE). More tranches were added whenever markets started to feel queasy. By the peak in 2021, the Bank of England’s QE portfolio had swollen to £895 billion, or 40% of UK GDP. Contrary to the worst fears, inflation did not immediately rocket. What happened was more insidious.

With credit all but free, risky behaviour went unchecked for years. On Wall Street, the era of ultra-low rates led to some truly daft companies and unworkable business models. The most notorious was WeWork, a poorly run office landlord that somehow convinced venture capitalists it was a ground-breaking tech innovator. Investors threw tens of billions at the idea before it filed for bankruptcy in 2023.

The impact on governments’ behaviour was even worse. Easy money anaesthetised bond markets, removing pressure on states to get spending in order. Although not openly admitted, this was by design. The hope was that cheap borrowing costs would prompt governments to borrow and spend more, thus ending the world economy’s post-crisis slump.

Governments binge on debt

It took a pandemic for the balance of global savings and borrowing to shift decisively. Anyone wondering why interest rates and inflation have spiked so violently of late need look no further than the world’s finance ministries. With furlough schemes, governments got out the credit card, treating tens of millions of workers to a year off. Then came the energy shock after Russia’s invasion of Ukraine in 2022, combined with a pressing need to find more money for defence and an ageing population.

The result has been an explosion in public borrowing. In 2000, UK public debt stood at 37.7%. Today it is 103%, with the Office for Budget Responsibility warning that on the current trajectory it will hit 270% of GDP by 2070. It’s a similar story in most of the developed world.

The mirror image of worsening government credit has been surging gold prices. The yellow metal started the year 2000 at $289 an ounce (oz). Today it trades at $4,035/oz. That 1,294% gain arguably makes it the trade of the century so far, far outstripping the S&P 500’s 365% return over the same period. MoneyWeek is a great fan of the yellow metal, but even we must admit that at current levels, vertigo is setting in.

Bitcoin fanatics will argue that theirs is the trade of the millennium. MoneyWeek has been cautious about embracing the highly volatile cryptocurrency. Claims that bitcoin is “digital gold” are suspect. Bitcoin tends to behave more like a risky asset, rising and falling together with frothy tech stocks, than it does a hedge.

Yet our scepticism is proving hard to maintain. Since its first boom in 2017, the digital currency has gone on to return over 500%. Modish “meme” coins can do even better. Investing is about growing and preserving pre-existing wealth, rather than making a fortune from nothing. Yet pick the right meme coin and you can become wealthy overnight. Still, a lottery ticket can also do that for you.

So much for peak oil

Gordon Brown’s talk of ending boom and bust is far from the only dubious prediction over the past 25 years. During the 2000s, looming “peak oil” was a persistent worry due to the depletion of existing reserves. Credible estimates predicted that production would peak sometime around the late 2000s, before plummeting. Oil prices did in fact rocket at the end of the decade, rising from $30 a barrel in April 2004 (when MoneyWeek suggested readers buy) to more than $140 a barrel in 2008 (shortly before it told readers to sell).

Yet peak oil was not to be. All of that talk of coming shortages only prompted capitalists to go out and find more. In the 2010s, Texan cowboys flooded world markets with shale. Today, peak production is thought to be likely to occur in the early 2030s.

Peak oil was overdone, but the warning that energy was set to become more scarce has proved accurate. As cheaper production sources were exhausted, more marginal reserves such as shale require a higher price point to be economical. At $64 a barrel, Brent crude prices trade at a level regarded as cheap by current standards. But that is still much higher than its $29 a barrel of November 2000.

Emerging markets diverge

MoneyWeek was launched just as emerging markets (EMs) were gathering steam. The first decade of the 2000s was a golden era for developing economies, as China entered the World Trade Organisation, and Asia and Russia recovered from financial crises. From January 2001 to the end of 2009, EM equities gained 200%, compared with a measly 4% in developed markets. The rise of EMs has remained a vital theme, but one that proved messier than expected.

For one thing, growth has had a frustrating tendency to fail to translate into equity gains. The EM index has returned a paltry 28% since the start of 2010. Leadership of the complex has narrowed as Brazil, Russia and South Africa variously stagnated.

Yet defying repeated predictions of an imminent “China crisis”, China has kept on growing, although the recent property bust is proving the most serious test yet. Many developing economies become trapped at the “middle-income” level, defined as GDP per capita of between $1,000 and $13,800. With GDP per head of $13,300 as of last year, China finds itself on the cusp of joining the world’s high-income economies.

Since Covid, the world’s second-largest economy has emerged as a global leader in electric cars and AI. This has not made for very exciting investment returns (the CSI 300 index is still 13% off the level it reached at the height of an investing mania in 2015). But as geopolitical facts go, none is more fundamental to the future than the Middle Kingdom’s growing power.

Don’t buy at the top

Other popular narratives today may also ultimately prove wide of the mark. Tech leaders in Silicon Valley are currently warning that automation could lead to a jobless future, while simultaneously worrying that low birth rates will starve the economy of working-age people. The future, they incoherently claim, is one of both mass unemployment and a chronic labour shortage. Both problems can’t be true at once.

What about Britain? Trying to be optimistic, one might argue that pessimism has reached such an extreme level that it won’t be very hard for growth to surprise on the upside. The FTSE 100 has returned a decent 75% over the last five years.

Yet its performance this century has been dire. Up 52% since MoneyWeek launched, the blue-chip index has given investors a measly annualised return of 1.75% over 25 years (generous dividends on top do soften the pain of sluggish capital growth, though). Measure from the 2003 low, and the index has returned 165%.

No country knows more about investing misery than Japan, one of MoneyWeek’s long-standing favourites. Last year, the Nikkei index regained its 1989 peak; it took 34 gruelling years. The Topix share index has returned 275% since 2013, when Shinzo Abe launched economic reforms, but getting there has involved a long and painful wait.

The investment industry is fond of reminding us that over the long-term stocks tend to deliver an attractive rate of return. Yet that is an average. As grinding returns in the UK and Japan have shown, if you buy near the top, your portfolio’s recovery time risks being counted in decades. Those currently going all-in on the US tech frenzy have been warned.

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After World War II, America and its allies put in place a set of alliances, institutions and power structures to rebuild war-ravaged countries, create geopolitical stability and generate global economic growth. This post-war order has endured – with one important change – for much of the following eight decades.

The fall of the Berlin Wall and the dissolution of the Soviet Union seemingly marked the end of any alternative to Western capitalism and liberal democracy as the main global economic system. However, in recent years, it has become increasingly obvious that the ties holding this US-dominated system together are fraying and are likely to break.

We are heading into a new world that is likely to be more unstable. In a symbol of this change, on 5 September this year, US president Donald Trump signed an executive order renaming the Department of Defence as the Department of War. This restores the name that it carried from 1789 until 1947 and points to the rising risks of conflict in the years ahead.

So how should investors position themselves for what comes next? What areas that are currently under-represented in most portfolios should they consider for diversification and protection?

Rivalry and conflict between the US and China

The main question is how the shift from a single superpower to two contending nations – the US and China – will affect global supply, demand and the efficiencies of comparative advantage. Free trade has generated huge gains since the end of the Second World War, and even more so since the end of the Cold War. This is now clearly under threat.

With the end of the post-war order comes the new “Great Game”. This name was originally given to the struggle between Britain and Russia for influence in Central Asia (Afghanistan and Persia). This time, the strategic rivalry and political conflict is between the US and China. Paradoxically, it is America that is now pursuing a more inward-looking strategy under Trump’s Make America Great Again (MAGA) banner, while China aims to build economic and political alliances through its Belt and Road (BRI) and Global Development Initiative (GDI) projects.

While America strives to bring its manufacturing base back onshore, Europe is now having to divert budgets from social welfare to rearmament. Both are now in stiff competition with China to electrify the planet and build digital infrastructures. This will inevitably lead to global competition for resources across energy, metals and critical minerals.

This is leading the two superpowers to weaponise their core strategic advantages. For America, this is the US dollar, still the world’s global reserve currency. For China, it is a stranglehold on rare earth elements and critical minerals.

China needs an alternative to the dollar

Freezing and confiscation of assets and denial of access to global payments systems is forcing non-US aligned countries to look for an alternative store of wealth and means of exchange. Herein lies the potential significance of the Brics+, the informal name for the original group of five key emerging-market powers – Brazil, Russia, India, China, South Africa – plus other countries that have begun joining them for summits and policy coordination. Some see this group as a counterpart to the G7 group of developed economies. Initiatives by the Brics+ members so far include work on a development bank, central-bank cooperation and an international payment messaging system.

Any alternative to the dollar looks increasingly likely to be a form of tokenised, asset-backed digital currency. This explains why many central banks closely aligned with the Brics+ nations have been large buyers of gold and other precious metals.

If the creation of a new currency system seems far-fetched, it is worth a quick review of the genesis of the post-war order: the Bretton Woods Agreement of 1944. China is a great student of history, and this agreement provides an template for how new world orders are created. While World War II was still raging, more than 700 delegates from 44 countries met at Bretton Woods in New Hampshire in the US to work on a new global monetary system. The goal was to create a globally efficient foreign exchange market, prevent competitive currency devaluations and promote global economic growth.

John Maynard Keynes, one of the principal economists at the meeting, proposed creating a new international reserve currency called the “bancor” and setting up a global central bank called the “Clearing Union”. However, these proposals were eventually watered down by the US Treasury in favour of a more prominent role for the US dollar, whereby the dollar would be pegged to the price of gold, and other participating currencies would be pegged to the dollar. The agreement was fully implemented in 1958, pegging the US dollar to gold at $35 per ounce.

This system functioned until the early 1970s when it became evident that US gold reserves were not adequate to sustain the peg. This caused a run on gold, forcing first a temporary suspension of the dollar’s convertibility into gold followed by complete collapse of the agreement in 1973. US president Richard Nixon also imposed a 10% tariff on all dutiable imports to force its major trading partners to adjust their currencies upwards and trade barriers downwards. Does this sound familiar?

China has already taken the strategic initiative to convene the Brics+ group of nations. It has established the Shanghai Gold Exchange – and associated physical storage – and now holds a significant percentage of its reserves in gold. It has shown little desire to replace the dollar with its own currency – internalisation of the renminbi would erode the ability to operate capital controls – but it and its allies need an alternative to the dollar.

Given China’s embrace of technology and advanced domestic digital-currency adoption, it does not feel far-fetched to envisage it launching a Bretton Woods-style gold-backed digital currency for those unable or unwilling to access the US dollar system. Crypto tokenisation is the vehicle, not the asset.

China's control of strategic resources

China’s strongest bargaining chip lies in its control of rare-earth elements (which are used in magnets, electrification, lasers and optical devices, catalysts and emission controls and radar/guidance systems), as well as critical minerals, that have broader energy, industrial and defence applications.

China has this control because, while the West focused on the comparative advantage of outsourcing its production to countries with lowest costs, China focused on building an end-to-end supply chain comprised of exploration, mining, refining and industrial manufacturing. With its looser environmental controls, it has come to dominate the global supply of these critical minerals.

In the tit-for-tat game of tariffs and sanctions, China is able to leverage its position in the one area where the US is completely vulnerable. So just as China and its allies have no alternative but to develop a competitor to the US dollar as a store of wealth and means of exchange, the US and Europe now see they have no choice but to develop alternative sources for mining and processing capacity to break this reliance. Exacerbating the situation, America’s prioritisation of its own MAGA agenda over historical alliances has left Europe and other previously US-aligned countries to build their own rather than collective resources.

If investors believe the post-war order is irretrievably compromised, they should consider investments that give exposure to these themes. Gold and precious metals for hard assets. Tokenisation and chips to enable digitalisation. Energy and power generation, rare earth elements and critical minerals, which will be in demand as both sides try to secure supply chains. And US and European defence stocks as the West joins in the new arms race.

Investors have many ways to access these ideas, including individual stocks, thematic exchange-traded funds (ETFs) or exchange-traded commodities (ETCs) that hold physical metals. Listed commodity futures and options are also becoming increasingly accessible, as major exchanges such as the Chicago Mercantile Exchange (CME) roll out mini and even micro contracts, which are 1/10 or 1/100 of the size of standard contracts and require less up-front capital. Such instruments are only suitable for experienced investors, but they offer a way to quickly add hedges or speculative positions to a portfolio – something that will become more valuable in a fast-changing world.

James Proudlock is managing director of OptionsDesk.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

History may merely rhyme, rather than repeat itself, but it certainly often offers a neat sense of symmetry. When this magazine launched on 4 November 2000, air was hissing loudly out of the dotcom bubble. Today, with MoneyWeek’s 25th birthday imminent, stock markets are once again indulging in a bout of exuberance, possibly irrational, over a new technology. Meanwhile, globalisation and the liberal internationalist world order are being eclipsed by mercantilism and military conflict, while growth has stagnated in much of the developed world.

This is the context in which we are holding Turmoil, tariffs and Trump 2.0, this year’s annual wealth summit on 7 November. After an introduction from MoneyWeek editor Andrew Van Sickle and summit host Dominic Frisby, keynote speaker Dylan Grice of Calderwood Capital will focus on the challenges of this “high signal” environment, before we look at how to get to grips with the risks.

First, MoneyWeek columnist Rupert Hargreaves will lead a discussion among four top multi-asset investors: Charlotte Yonge of Troy Asset Management; Charlie Morris of ByteTree; Frank Ducomble of J. Rothschild Capital Management; and Jasmine Yeo of Ruffer. They will explore the role of stocks, bonds, gold, crypto and more in protecting and growing your portfolio.

Then the agenda become more optimistic, reflecting the fact that for all the world’s intractable problems, there is always money to be made somewhere. Enter Dominic Scriven of Dragon Capital, who will make the case for Vietnam, which has been one of our favourite markets since 2005. Another of our favourites is Japan, and Nikola Takada Wood of Asset Value Investors will outline the corporate governance revolution there.

Baillie Gifford has a knack for finding outstanding growth, so who better than Ben James from the US Growth Trust to tell us how AI could reshape the world. There is also ample scope for long-term gains in India, the world’s fourth-largest economy, as Gaurav Narain of India Capital Growth Fund will explain.

MoneyWeek has liked gold since 2001 – but after the recent surge, are we near the end of the bull market? Gold experts Erik Norland of CME Group and James Proudlock of OptionsDesk will be the guests of contributing editor Cris Sholto Heaton for our lunchtime discussion. Meanwhile, some of our speakers will share their personal investing experiences with Kalpana Fitzpatrick, our digital editor, during the coffee breaks.

MoneyWeek Wealth Summit: afternoon sessions

After lunch, former editor John Stepek will discuss how to tackle the ongoing malaise in the UK stock market with Laura Foll of Janus Henderson and Law Debenture, before Charlotte Morris of Pantheon International explores opportunities in listed private equity. Gareth Powell of Polar Capital will then look at structural tailwinds for healthcare.

Our columnist David C. Stevenson will hear from Carlos von Hardenberg of MCP Emerging Markets, Martin Connaghan of Murray International Trust and Simon Barnard of Smithson Investment Trust about the global outlook. Are small caps and emerging markets set to rally after years in the shadow of US mega caps?

Many of our guests run investment trusts. These are our favourite type of fund – they tend to outperform open-ended funds and offer a better structure for holding illiquid and volatile assets. We expect volatility in the years ahead, and the ability to tolerate it will matter.

The afternoon will also see Merryn Somerset Webb, MoneyWeek’s founding editor, reflect on lessons from the past 25 years. China expert Diana Choyleva will explain how Beijing aims to reshape the world as it competes with the US. Economist, entrepreneur and award-winning author Dr Pippa Malmgren will argue that stablecoins could revolutionise the financial system in our afternoon keynote. MoneyWeek columnist Max King will wrap up with thoughts on why gloomy British investors should be more like optimistic Americans.

We hope to see you there – see moneyweekwealthsummit.co.uk for more details and to register. Thank you to our headline partner, Aberdeen; event partners India Capital Growth Fund, OptionsDesk, Polar Capital, QuotedData, RIT Capital Partners, Smithson Investment Trust and Vietnam Enterprise Investments; and association partner The Association of Investment Companies for their support.

The upcoming second wave of collectable British coins to wash over Heritage Auctions in Texas shows how important coins from this country are to collectors around the world and not just in Britain.

An Edward VIII bronze proof 1/2 penny from 1937 was the top lot from Part I of The Cara Collection of Highly Provenanced British Rarities sale in May, selling for $180,000, including the buyer’s premium. In Part II on 6-7 November, it will be the turn of Edward VIII’s great-grandmother, Queen Victoria, to test the depths of collectors’ pockets. A Victoria gold proof “Una and the Lion” £5 cameo from 1839 features one of engraver William Wyon’s most famous designs. A “proof” is a high-quality sample coin created ahead of a coin issue and one that is often intended for collectors and not for general circulation. A “cameo” is a coin that displays a deep contrast between the relief (the design) and the field (background).) Its “near-Choice” grade designation marks it out as an example that is in particularly good (if not mint) condition and the highest bid for it as of the start of the week was $234,000.

Meanwhile, a gold “Ship” ryal coin, worth 15 shillings in or around 1585, when it was made, is another highlight of the sale. On the obverse (“heads”) side, the coin features a stylistic and rather splendid portrait of Elizabeth I, sporting a large ruff and clutching her orb and sceptre aboard a ship, symbolising England’s rise as a naval power. It was also in 1585, during Elizabeth’s reign, that the first colony was established in America – at Roanoke in the modern US state of North Carolina – and that helps to lend the coin a certain appeal in American eyes. But it is also “one of the most… intensely hunted pieces in British numismatics” (coin-collecting), as Heritage puts it, because it is one of the last coins to be struck in the medieval design style, replete with heraldic flourishes – just as the Tudor era was shortly to come to an end.

The "Ship" ryal is a curious gold coin

The ryal was always a rather curious coin and one of the many gold denominations in circulation in England at the time. It started life during the reign of Edward IV in the 15th century as an attempt to create a half-sovereign, worth 10 shillings. By the time of Elizabeth’s reign decades later, that figure had increased to 15 shillings. But in any case, the competing noble of six shillings and eight pence had become the standard gold coin and the ryal soon made way for the 10-shilling angel. It is for that reason that only a handful of “Ship” ryals, featuring Elizabeth as Britannia, were struck at the Tower of London, and they remain some of the rarest gold coins from her reign. The present example is expected to fetch up to $150,000.

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I repeatedly come back to this subject because I think it is one of the most important yet overlooked issues in global finance. The geopolitical ramifications are enormous. Something that the Trump administration appears to understand in a way that previous administrations didn’t is this: it doesn’t matter if you issue the global reserve currency; if you don’t make anything, when the tide goes out, you are going to be caught swimming naked.

During Covid, the dangers of excessive dependence on China and its supply chains for critical or strategic products became apparent. It became clear again during the Ukraine war. Russia managed to manufacture munitions much faster than Nato.

Reshoring US industry is not something that can be done overnight. It is going to take years, if not decades – almost as long as it took to unwind in the first place. But the Trump administration is at least trying to kick-start the process with tariffs, a weaker dollar and, more subtly, the managed decline of the US dollar as global reserve currency.

As a result, neutral gold’s role as a global reserve asset is returning to prominence. History’s “golden” rule will soon apply again: he who has the gold makes the rules.

My argument is that China has considerably more than the 2,300 tonnes it says it does. That figure constitutes the world’s fifth-largest reserve of the yellow metal. The central banks of the US, Germany, Italy and France are the top four holders of gold reserves, with respective 8,133, 3,350, 2,451 and 2,437 tonnes.

How much gold does China have?

The People’s Bank of China (PBOC) is China’s main custodian, but other state entities, such as the China Investment Corporation (the sovereign wealth fund), the State Administration of Foreign Exchange and the Army, also own gold. In fact, having other state bodies hold gold is one of the means by which China is able to understate its reserves.

I’m going to use a slightly more conservative methodology, which means I will arrive at a lower estimate. Even so, the numbers will shock you. Remember that China is the world’s largest importer of gold, the largest consumer and the largest producer (in 2008 its output eclipsed South Africa’s). I am going to use round numbers, as they are more digestible, and when there is a spread (between 500 and 1,000 tonnes, say), I will take the middle number: 750.

It is impossible to know just how much gold China has imported, because so many transactions are private ones, particularly those that go through London, Switzerland or Dubai. Gold transactions in Hong Kong are more transparent.

However, most, although not all, of the gold that goes to China goes through the Shanghai Gold Exchange (SGE), which opened in 2007. Withdrawals from the SGE between 2007 and mid-2025 total 29,500-30,000 tonnes, based on aggregated data from the Shanghai Gold Exchange (SGE) and World Gold Council (WGC) reports. I’m going to overlook gold that made its way to China prior to 2007, although it’s quite easy to make the argument that this amounts to several thousand tonnes.

The SGE is just a flow metric, it should be noted. It does not represent total consumption. Some of the gold passing through will have been double-counted, either as a result of reselling and recycling, or because of China’s booming money-laundering business and the circular trade with Hong Kong. Estimates for double-counting range from 10%-30%. Let’s take the middle 20% figure (6,000 tonnes), and that leaves us with 23,250 tonnes of SGE gold.

As for the undisclosed gold, consider that the PBOC likes 400-ounce bars, as traded in London. These do not trade on the SGE, which uses smaller kilogram bars and 3kg and 12.5kg ingots. (400oz is about 11.3kg.)

So London imports will not go through the SGE, unless re-smelted, and are therefore counted in addition to the numbers above. Analysts mostly concur that while reported imports via London, Switzerland and Dubai total between 3,500 and 4,500 tonnes, another 3,000 tonnes (mostly post-2009, accelerating since 2022) have gone unreported. Add the 3,000 tonnes to the 23,250 of SGE gold and our total is now 26,250 tonnes.

Gold mining in China

Around 55% of Chinese gold production is state-owned, and we know from geological records that this century, China has mined roughly 7,500 tonnes.

Between 70% and 80% of Chinese production is sold through the Shanghai Gold Exchange, so we have already counted that. The other 20%-30% goes to the state. Using estimates from the mid-range, 25% of those 7,500 tonnes (1,875 tonnes) has gone to the state. The rest has been sold through the SGE. Add 1,875 tonnes to the total, and we reach a figure of 28,125 tonnes.

By the way, I have not included overseas Chinese gold production, of which there is a lot. Some of this gold is sold on international markets and never actually reaches China. But what does reach China is sold through the SGE and has therefore already been counted. Finally, we have to add in gold held in China, whether as bullion or jewellery, prior to 2000. The WGC estimates a figure of 2,500 tonnes in privately held jewellery. Added to domestic mining and official reserves, you get a figure of around 4,000 tonnes. This brings our grand total to 32,125 tonnes.

Demand for gold

Previously, I have argued that 50% of that gold would go to the state. That would mean roughly 16,000 tonnes – almost twice as much as the US’s reported 8,100 tonnes! Let me propose another methodology.

It stems from my conversation with Konstantin Kisin in the Triggernometry podcast a fortnight ago. Last year, investors and central banks comprised a respective 25% and 23% of overall demand for gold; the figures for jewellery and industry are 47% and 6%.

These figures of course change from year to year, with demand from investors and central banks being the big variables. But if we assume demand from China roughly matches global demand, that would mean that of the 32,125 tonnes, roughly 15,100 tonnes is jewellery; 8,030 is now bullion held by investors; 1,930 tonnes went into manufacturing; and the Chinese government has 7,400 tonnes.

This assumes Chinese gold has been allocated over the last 25 years according to the global habits of last year, which is almost certainly a bogus assumption. China is such a big manufacturer that demand from the Chinese industry may well be higher than 6%.

It’s also easy to argue that because the Chinese people like gold so much, and the state has been encouraging them to invest since 2007, that both Chinese jewellery and investment demand is higher than 47% and 25% respectively.

Similarly, because of dedollarisation, demand from the PBOC could be higher than 23%. In any case, I have been transparent about my methodology.

You can make up your own minds. The upshot is that China’s stated reserves of 2,300 tonnes are a gross underestimate.

In a way, it’s actually better for investors if China has less gold, because it means they have more buying to do, and that should help drive prices higher. Meanwhile, the Middle Kingdom’s stated 2,300 tonnes only account for 7% of its $3.4 trillion of overall reserves. To get above 70% and match the allocation ratios of the US, Germany, France and Italy, at $4,200/oz gold, it would need something like 18,000 tonnes. That’s a lot of buying yet to come, in other words.

If you take my assumption from previous years (that 50% of the gold that has gone to China via imports or production went to the state), then China has 16,000 tonnes of gold. That is twice America’s reported holdings of 8,133 tonnes.

This comes just as gold, at current prices, accounts for 30% of global foreign-exchange holdings, according to Deutsche Bank. The US dollar, meanwhile, makes up 40%. The euro’s proportion lies below 20%. This is quite the move: gold’s share was just 20% at the beginning of the year.

At $5,800 – a 33% rise from today’s price of $4,340 – gold overtakes the US dollar to become central banks’ largest holding. That assumes banks don’t buy any more, of course, when they will. A recent survey by the WGC found that 43% of central banks plan to increase their holdings over the next year, while 95% of reserve managers expected global central-bank holdings to rise over the next 12 months.

I was looking for parity between the dollar and gold in terms of reserve holdings at some stage in the next decade. We could see it within the next six months on current trajectories.

Why is China keeping its gold a secret?

And gold isn’t money, according to former Federal Reserve chairman Ben Bernanke. So why does China understate its reserves? China is still in accumulation mode. While it is buying, it wants the price low.

It certainly doesn’t want to cause it to spike.

If China were suddenly to say that it actually has 7,400 or 16,000 tonnes, rather than 2,300, it would send the gold price rocketing. More significantly, it risks sending the dollar into a plunge. China has $3.4 trillion-worth of dollars. It wants to preserve their value, presumably.

In short, coming clean on gold holdings would create enormous financial upheaval. It has that card, ready to play, should it ever need to, should it ever get into conflict with the US, for example. Money is the first thing that gets weaponised in war.

But for now it doesn’t need to. China is surely happy growing as it is, making things and selling them to the rest of the world, thus ensuring that the rest of the world becomes dependent on it. Why rock the boat? It’s on to a good thing after all.

“We must not shine too brightly,” as Deng Xiaoping is once supposed to have said. I understand that what he actually said amounted to “keep a low profile”, or “don’t draw attention to yourself”. Same difference. China doesn’t want to rock the boat, particularly while it’s still accumulating gold.

This is quite a shift that is taking place, and it is happening quickly. The upshot? You really want to own gold, overbought or not.

Dominic Frisby writes the investment newsletter The Flying Frisby (theflyingfrisby.com). His latest book is The Secret History of Gold: Myth, Money, Politics & Power, published by Penguin Business and available from all good bookshops.

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Gold has risen more than 60% this year to over $4,300 per ounce. In doing so, it has transformed the outlook for the gold-mining industry after years plagued by post-pandemic supply chain snarl-ups, a lack of labour and the 2022 energy crisis.

Last quarter, gold producers generated roughly 50% more free cash flow than consensus estimates, notes Jim Luke, who runs Schroders ISF Global Gold among other funds. Importantly for investors, most companies are not rushing to spend this windfall.

Miners are still running their businesses using “conservative gold price assumptions” of around $2,500 to $2,800 per ounce, and letting cash build up on their balance sheets. In the first quarter of 2025, the sector moved from a net debt to a net cash position for the first time in more than 20 years.

Gold miners are deeply undervalued

As a result, gold miners now look deeply undervalued. Across the mining sector, the price/earnings (p/e) ratio has halved over the past decade, while the gold price has more than doubled, note Keith Watson and Robert Crayfourd, managers of the Golden Prospect Precious Metals (LSE: GPM) and CQS Natural Resources Growth and Income (LSE: CYN) investment trusts. “While there has been some recent performance, it’s not fully reflective of the current spot price, and that creates the opportunity.”

The big miners have now become cash cows, and analysts are struggling to catch up. Last week, Canaccord Genuity published a note on London-listed Fresnillo (LSE: FRES) for the second time in five weeks, revising its earnings targets higher by more than 70% for 2026.

“Our profitability profile for Fresnillo has moved faster than at any other time under our coverage,” they say. Two years ago, the firm’s capital spending commitments were consuming all of its operating cash flow. Today, cash flow exceeds spending by three times.

The cash influx is likely to lead to a rush in mergers and acquisitions (M&A) over the coming months and years. “It’s still cheaper to buy assets than to build them, and buying avoids the execution risk associated with development,” say Watson and Crayfourd. “We expect to see larger companies begin to focus on growth, which will create a bid for developers and smaller producers to be acquired.”

How to invest in gold miners

Funds that own a spread of larger miners, smaller producers and explorers could be the best way to capitalise on the sector. Golden Prospect is a pure play on precious metals, with roughly 85% in gold stocks. CQS Natural Resources has about 50% invested in precious metals miners, as this is where Watson and Crayfourd see the greatest value in the commodity space.

The BlackRock World Mining Trust (LSE: BRWM) and the open-ended BlackRock Gold and General Fund are both managed by the well-resourced Thematics and Sectors team at BlackRock, headed by mining-sector veteran Evy Hambro. As such, the investment trust team at Winterflood thinks these are some of the best ways to build exposure to the sector as a “one-stop shop” for investors looking for commodities exposure. Gold and General is a pure play, with almost 90% in gold and most of the balance in silver, while World Mining has 36% in gold.

There are also several other active funds that invest in gold and precious metals, as well as a growing number of passive exchange-traded funds (ETFs) that track various gold-mining benchmarks. The latter include Van Eck Gold Miners (LSE: GDGB) and L&G Gold Mining (LSE: AUCP). Both of these have done very well over the past year, but as the difference in returns – 83% versus 103% – shows, different funds and indices can have very different outcomes.

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Sometimes an idea is so catchy that it doesn’t matter whether it’s true. The “debasement trade” – the claim that investors are starting to price in a severe surge in inflation that will erode the value of money – is a good example. We see it everywhere in headlines at the moment. Yet it’s impossible to see much evidence in markets. To begin with, we have to agree on what is being debased. The US dollar is the favoured target. However, if you look at the dollar versus other major currencies, there is no sign of this happening. Yes, it is down since the start of the year, and still seems more likely to fall than rise against over the next few years if foreign sentiment towards US assets continues to cool. But it has been stable since June. We’re not even seeing weakness now, let alone debasement.

Maybe the debasement is in all fiat currencies, so they won’t fall against each other because they are all equally bad. Instead, they will weaken against real assets. The surge in gold and other precious metals seems to support this. Yet stocks are also doing well, even though they typically struggle in high inflation (they often rise during hyperinflation, but that is a different scenario). More likely, traders are latching onto gold because it’s been going up: record flows into gold exchange-traded funds (ETFs) support this idea. A few months ago, I noted that we were not seeing these flows – now it has changed.

Bond yields and the debasement trade

If markets were genuinely becoming much more worried about inflation, we’d expect to see it in bond yields. While many yields have risen this year – especially longer-term government bonds – this always felt more like markets were pricing long-term uncertainty about government policy and finances, not specifically forecasting inflation. It continues to look that way.

Yields have mostly come down in the last few weeks. Even more significantly, inflation breakevens – the difference between the yields on a conventional bond and an inflation-linked one of the same maturity – are not rising (see above). Breakevens are not a good forecast of inflation, but if markets are functioning normally, they will express fear of inflation through nominal yields that rise faster than inflation-linked ones and thus through widening breakevens.

Of course, we may well see high inflation if governments run large deficits while forcing central banks to cut rates and control yields. But it’s wrong to claim the market’s watchdogs are sounding the alarm. They are clearly not – yet.

What to do if inflation surges will be on the agenda at Turmoil, Tariffs and Trump 2.0, the MoneyWeek Wealth Summit, on Friday, 7 November in London. Our morning keynote speaker, Dylan Grice, will discuss the difficulties of investing in this “high-signal” environment, while our multi-asset panel of Charlie Morris (ByteTree), Charlotte Yonge (Troy), Frank Ducomble (RIT) and Jasmine Yeo (Ruffer) will share ideas on how to hedge the risks. See moneyweekwealthsummit.co.uk for details.

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Gold prices are surging once again, and this time, they are being spurred on by a constitutional gridlock that has caused the US government to shut down.

Republicans in the Senate had been pushing to pass a bill that would have extended government funding, but failed to attract the Democrat support needed to reach the 60 votes required.

Democrats were holding out for health care policy reforms in order to lend their support to the bill. Without either side having budged, both are now blaming each other for the shutdown, which will see certain parts of the US government temporarily cease to function.

This is the first time the US government has closed down since 2018, during Donald Trump’s first term in the White House.

Assuming the shutdown isn’t too lengthy, economists don’t expect it to have a major impact on the US economy. Ryan Sweet, chief US economist at Oxford Economics, for example, has stated that the shutdown won’t change the company’s outlook for US GDP, unemployment or inflation in the near term.

But Sweet did say it could impact the timing of any future Federal Reserve (Fed) rate cuts.

“The Federal Reserve emphasized the September move as an insurance cut,” said Sweet. “A shutdown would likely leave the central bank in a fog about the labor market, fueling support for an October cut rather than risk falling behind and having to cut more later.”

Falling US interest rates are typically a bullish signal for gold investors. But this isn’t the only reason why the US government shutdown is boosting gold prices.

How the US government shutdown is boosting gold prices

The gold price rally has been ongoing since 2024. The US government shutdown is just the latest development that is fuelling its run.

It has helped make September a standout month for gold, though. Gold prices have increased 12% from $3,476 on 1 September to their latest all-time high of $3,895 a month later.

Gold is typically seen as a safe-haven asset. Political instability of any kind tends to see investors turning to the precious metal in order to protect their wealth.

That applies double when it comes to the US, given the country’s dominant position in the global economy and the dollar’s status as the world’s reserve currency.

"The US government shutdown has increased investor uncertainty, delaying Friday’s key jobs data," said Russell Shor, senior market analyst at Tradu.com. "This has strengthened demand for gold as a safe-haven asset, while expectations of further Fed rate cuts have pushed prices higher."

The shutdown is also fuelling pessimism over the US dollar, in which gold prices are typically quoted.

“The dollar slipped again overnight,” said Emma Wall, chief investment strategist at Hargreaves Lansdown on 1 October, the first day of the government shutdown. “The outlook is not positive if previous lockdowns are any indicator.”

This latest fall in the dollar further extends one of the other longer-term drivers of the gold price rally: ‘dedollarisation’.

“Emerging markets have turned away from the US dollar as a store of reserves in order to reduce their dependence on the US, instead favouring gold,” said Wall.

While a weakening dollar inherently pushes up gold prices (as it takes more dollars to buy the same amount of gold), the recent rally has transcended this impact.

“Gold prices recently hit an all-time high in real terms, exceeding the safe-haven asset’s previous inflation-adjusted peak from 1980,” said Shannon Saccocia, chief investment officer, private wealth at Neuberger.

What the US government shutdown means for gold and other investments

While gold prices rose in the days leading up to the shutdown, the reaction of the stock market was more reserved.

The S&P 500 rose for three consecutive sessions up to 30 September, the eve of the government shutdown. At time of writing, S&P 500 futures are down 0.5% on the morning of 1 October, suggesting that these gains are about to reverse.

“Historically shutdowns have been bad for the US dollar, bad for US equities, and bad for bonds too,” said Wall.

If the shutdown becomes drawn out, it could have a negative impact on the US economy.

“The economic costs increase the longer the shutdown drags on,” said Sweet. “Our estimate is that a partial government shutdown reduces GDP growth by 0.1-0.2 percentage points per week.

“For context, a shutdown that lasts the entire quarter, which has never occurred, would reduce Q4 real GDP growth by 1.2-2.4 percentage points.”

On 8 October, UK retail investors will once again be able to invest in Bitcoin exchange-traded notes (ETNs), which will be listed on the London Stock Exchange.

The UK financial regulator, the Financial Conduct Authority, banned them in 2020, saying that crypto assets cannot be reliably valued by retail consumers because “these assets have no reliable basis for valuation”.

It was also concerned about “the prevalence of financial crime, extreme volatility, inadequate understanding by retail consumers, and the lack of legitimate investment need.

These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products”.

This accurately described many crypto assets at the time, but I believe it was heavy-handed to include Bitcoin, along with the other major projects such as Ethereum.

Other countries have recognised this, and it is right that Britain should do the same.

In 2020, Bitcoin was emerging as an institutional asset, as it already had an active futures contract in the US.

Bitcoin exchange-traded funds, or ETFs, were launching in Switzerland, Germany, Brazil, Hong Kong, and Canada, and a US version was being discussed. (In Europe the ETFs are often called ETNs or ETPs, exchange-traded products.) The US ETFs were approved in January 2024.

They were a huge success, and the iShares Bitcoin Trust has grown into an $88 billion product, marking the most successful fund launch in BlackRock’s history. Two months later, the UK regulator revised its 2020 statement, saying that crypto ETNs could list in a new segment on the London Stock Exchange dedicated to professional investors only. It reiterated that crypto assets were “high risk and largely unregulated. Those who invest should be prepared to lose all their money”.

Then, as Bitcoin has enjoyed three years of relative calm, in June this year the Financial Conduct Authority (FCA) announced it would lift the ban on crypto ETNs for UK retail investors. “This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry. We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them, given they could lose all their money.”

Catching up with the world on Bitcoin

The FCA recognised that Bitcoin was thriving and that the UK had become an overly cautious outlier. London is a major financial centre, and banning innovative financial products, risky or otherwise, would ensure London’s long-term irrelevance.

A little regulation is a good thing, but too much will certainly kill you. Some of its concerns were legitimate, because many crypto assets are intrinsically worthless. But Bitcoin, along with some other important crypto projects, stand out from the crowd.

For example, crypto assets are volatile, but even in 2020, Bitcoin was much less so than the rest. Its 360-day volatility was in line with Marks & Spencer or Legal & General at the time, and today it is even lower.

Bitcoin has also inspired many innovations, such as the stablecoin, enabling cash transactions in real time over the internet, and non-fungible tokens, which pave the way for the tokenisation of real-world assets. There have also been bright ideas in decentralised finance (DEFI), new trading technologies, and perpetual futures contracts. Many of these ideas are finding their way into mainstream markets. I think the next generation will not differentiate between equities and crypto as they will essentially merge.

Yet still to this day, many ask what Bitcoin's purpose is, and what value does it represent? I think the answer is simple, and the clue lies in its high correlation with the technology sector. While many describe it as electronic gold, its price doesn’t behave like it. It correlates with technology stocks because it is a technology. It has become the de facto reserve asset of the internet.

When you consider how fast AI is growing, and that it operates 24/7, can traditional banking keep up? Bitcoin trades instantly and settles within minutes. It is a very liquid asset trading around $40 billion each day, which is not as much as gold’s $150 billion, but is more than the most liquid stocks in the world, and growing.

The history of crypto regulation in this country mirrors the development of the asset.

As Bitcoin has matured, the regulator has shifted its stance.

At the time of the ban on 6 October 2020, the price of Bitcoin was £8,189. Today it is £84,497. There must have been concerns that Bitcoin was extremely risky, because I cannot recall a case where investors have been prevented from buying a publicly traded asset before.

In UK regulatory circles, we should presume that Bitcoin was seen to be highly toxic. As the FCA is at pains to point out, Bitcoin might still lose you all of your money, but it is also recognised that it could do the opposite.

For those who are intrigued but wary, I have the solution. By holding the 21Shares Bitcoin and Gold ETP (Zurich: BOLD), you get the best of both worlds. It tracks the BOLD index, which I created five years ago. By regularly rebalancing, it adds value by taking profits from the stronger asset, and adding to the weaker, which also keeps a lid on risk. And by owning gold alongside Bitcoin, losing all of your money becomes impossible.

Charlie Morris is the CEO and founder of ByteTree. It offers investment research for private clients through the Multi-Asset Investor (bytetree.com/the-multiasset-investor), in addition to other research services.

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Investors are nervous. There are few other ways to read the latest gains in gold – above $3,650 per ounce for the first time this week – or the big moves in long-dated government bonds. Yet some markets look remarkably unperturbed.

Take credit spreads – the gap between the yield on government bonds and corporate debt – which tend to blow out at times of stress.

Spreads for US investment-grade bonds are instead at their tightest since 1998, barely 0.8 percentage points (pp) above the yield on comparable Treasuries. Eurozone investment grade bonds are similar; they have been tighter at times (eg, 2007 and 2018), but remain very low. Spreads for non-investment grade bonds (known as high-yield) are around 2.9pp, a bit higher than they were earlier this year in both the US and European markets. But they are still right at the bottom of their long-term range, and below the 4%-plus area they hit in April – which was not itself exceptionally high.

The growth of private credit

One theory holds that spreads are tight because government bonds are getting riskier and no longer offer a real “risk-free rate” to benchmark corporate bonds against. Some argue that top-grade corporate credit could trade on lower yields than governments (the spread on US AAA-rated bonds is around 0.3pp).

This feels like a stretch. The most likely escape route for governments is to have central banks buy bonds at low yields – a precedent set under quantitative easing. That is probably inflationary and inflation will hurt low-yield corporate bonds. If you expect this, you should demand higher yields, not settle for less.

Another argument with high yield, in particular, is that the corporate bond universe is of higher quality now. The growth of private credit – the hottest area in alternative assets over the past few years – means that lower-quality borrowers have migrated there to get more favourable terms. That has left the better borrowers in bonds. There is probably some truth in this, but spreads still look so tight that they don’t provide much compensation for risk.

Of course, tight spreads also explain why higher yields in private credit have proved so attractive. The challenge with private credit is that it is by definition less public, so it’s harder to have a clear picture of the market and how much risk investors are taking to earn, say, 200pp more yield from something much less liquid.

On the face of it, default rates remain low – around 1% according to a recent paper by ratings agency S&P Global. But this relies on a narrow definition of default and ignores selective defaults, such as converting cash interest into more debt, repayment holidays or extending debt maturities. Include those and defaults have been much higher, says S&P, despite the benign environment. Data from other analysts paints a similar picture. One has to figure there will be a reckoning here when the cycle turns, making low credit spreads in bonds a dangerous reason to reach further for higher yields in private credit.

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Since World War II, the two landmark events in the evolution of money were Bretton Woods in 1944, when the dollar became the de facto global reserve currency, and then the Nixon Shock of 1971, when the US abandoned the last vestiges of its gold standard. There is a shift currently taking place in the global financial landscape, the ramifications of which might, I suggest, prove equally significant.

You might feel it is unimportant. You might feel it is hugely significant. Either way, before making your mind up, you need to understand what is taking place, so that you can position yourself and your family, if you deem it appropriate. You may even be able to profit handsomely from the transition. Here I explain US dollar policy: what is going on and, more importantly, where it is all heading.

Donald Trump solves Triffin’s Dilemma

The US government, as we know, wants to bring manufacturing back on shore. President Donald Trump has said it repeatedly, his vice-president, J.D. Vance, has said it, and so has his Treasury secretary, Scott Bessent, who keeps reminding us that it is now time to prioritise Main Street over Wall Street.

Part of the reshoring of US manufacturing involves tariffs, as we now know all too well. Part of it involves weakening the US dollar to make US exports more competitive. Again Trump, Vance and Bessent have all said this. However, there is a problem, and that problem has a name: Triffin’s Dilemma, named after Robert Triffin, the Belgian-American economist who first identified the paradox in the 1960s.

You might think it’s an advantage to issue the global reserve currency. You can issue dollars. Everyone else has to work for them. The French called it “America’s exorbitant privilege”. But this was a status the US engineered for itself during the Bretton Woods Agreement that determined the monetary order at the end of World War II. What has happened, however, is that it has made the US fat and lazy, especially since 1971 when the US abandoned the ties of the dollar to gold.

To supply the world with dollars, the US must run trade deficits. That is to say it must buy more than it sells in order that US dollars can make their way out into the world. Persistent trade deficits have, over time, eroded its industrial base. Factories and jobs have gone offshore. Foreign nations have used their profits to invest in US capital markets and its debt. At the same time, financial markets – aka Wall Street – have grown and grown. Part of this process was the financialisation of America.

The Trump administration gets this in a way its predecessors did not. Vance has actually called the dollar’s reserve status a “tax” on American producers. What’s more, as this process has continued, more and more the credibility of the dollar itself is being cast into doubt. This tension forces the US to choose between its own domestic economic needs and the stability of the international monetary system. This is Triffin’s Dilemma. Trump wants to revitalise America’s “rust belt”. But there is more to it than that.

The Covid pandemic pulled back the curtains and revealed the extent to which the US has been operating with its trousers down: an excessive dependence on China and its supply chains for too many strategically essential products, especially those related to health, technology and the military. Then, during the Ukraine conflict, Nato found itself unable to match Russian munitions production. The US, in short, is struggling to produce critical goods. It’s why Trump keeps harping on about rare-earth metals. It is vulnerable.

Moving away from dollar towards gold and bitcoin

The answer is to engineer a “managed decline” of the dollar and reduce its role as a global reserve asset. This was already happening organically. China, for example, has been reducing its holdings of US Treasuries for 10 years now – quite gradually – although its US dollar holdings remain above $3 trillion. Meanwhile, China – and many other countries along the Silk Road besides – have been increasing their gold holdings, and quite dramatically. (In my view China has at least four times as much gold as it says it does. You can read more on this in my book, The Secret History of Gold: Myth, Money, Politics & Power.) The process is known as dedollarisation. Just a few months ago, gold overtook the euro to become the second most-held asset by central banks; the dollar itself fell beneath 50% for the first time this century. In fact, gold has just overtaken US Treasuries as a percentage of central-bank holdings worldwide.

We are not seeing a move towards any other national currency as global reserve. There is not one that could take up the role, despite what the bureaucrats in Brussels might try to tell you about the euro. The move is towards the neutral but universal asset that is gold. That suits all the main players. Gold is neutral and both the US (assuming it has all the 261 million ounces of gold that it says it does) and China have lots of it. (US gold has not been audited in over 60 years, hence the doubts.) Indeed, a gold revaluation would be a “win-win” for both China and the US. A higher gold price would strengthen US fiscal flexibility while boosting Chinese consumers’ wealth, encouraging domestic consumption and reducing trade imbalances. (China has been encouraging its citizens to buy gold since 2007.)

There is the potential to leverage the US’s 261 million ounces (8,133 tonnes) of gold reserves, currently marked to market at just $42/oz. There are two ways this might be done. Economist Judy Shelton has proposed issuing Treasuries that are in part backed by gold to offset the inflation/debasement risk to make them more attractive to buyers. The other possibility (which has gone from, as Bessent put it, “we are not doing this” to “we are not doing this yet”) is to revalue the gold from $42 to the current price of $3,400/oz, which would create more than $850 billion of reserves without having to incur any extra debt. That would help with the US’s current fiscal challenges: true interest expenses (including entitlements and veterans’ affairs) currently exceed 100% of Treasury receipts. In short, the US administration is leaning into a weaker dollar and the neutral reserve asset that is gold to rebalance trade and rebuild domestic industry, even at the cost of short-term economic pain.

A showdown between gold and bitcoin

Bitcoin, as the world’s best neutral digital currency, is going to have a role to play in all of this as well. The US is quite happy with that, too, as evidenced by its pro-Bitcoin rhetoric. At the national, corporate and individual levels the US has a lot of Bitcoin. The US itself has 198,000 coins, the most of any nation; Strategy (NYSE: MSTR) has 630,000 and many other companies besides also hold the asset; and 15%-20% of US citizens are thought to own some Bitcoin. Of the eventual 21 million supply, probably 15% has been lost and another 1.3 million are locked up by Satoshi Nakamoto and will likely never appear (he is almost certainly dead) – a hefty chunk one way or the other.

Which brings us to the recent Genius Act. This effectively nixed central bank digital currencies (CBDCs): the Federal Reserve Bank is now not allowed to issue them just as, irony of ironies, the EU’s Christine Lagarde was planning to phase them in. However, the act supported stablecoins (that is, coins backed by dollars) as a private-sector alternative. The more bitcoin grows, the more the stablecoin market will grow. Today, roughly half the entire US dollar stablecoin market, estimated at $250 billion, is invested in US Treasuries (maybe 2% of the overall Treasuries market). Tether is the world’s seventh-largest buyer. As the stablecoin market grows, so will its demand for Treasuries.

The market is small, but growing rapidly. Projections of its growth range from $500 billion in 2035 (JPMorgan’s guess) to $2 trillion (Standard Chartered) and $4 trillion (Bernstein). “If the stablecoin market meets these growth projections,” says the Kansas City Fed, “it could lead to a substantial redistribution of funds within the financial system.” In other words the stablecoin market is going to help the US fund its debt, just as other nations move away from Treasuries to gold and bitcoin. Gold might suit the US as a neutral currency, but bitcoin suits it better, especially if there are complications surrounding the Fort Knox gold, which it seems there are. Why no audit yet?

It’s likely a few years from now, there is going to be some sort of showdown between gold and bitcoin in the battle for primary reserve asset status. It’s unlikely to be both. Governments will favour gold, as they have lots of it. Tradition is on their side. Eternal gold has a track record that is unrivalled. But it is an analogue asset in a digital world. Bitcoin is much more practical. Which will win out? Practical digital or impractical analogue? This is a contest that is still a way off. For now all roads lead to gold and bitcoin as the world dedollarises. Own both is what I say.

Britain left behind on both gold and bitcoin

Needless to say the UK is absolutely clueless in all of this. The government sold two-thirds of its gold in 1999 and the Financial Conduct Authority regulator has made it near impossible for UK citizens to buy bitcoin. Word is that the chancellor is now planning to sell the country’s bitcoin holdings – though as these are confiscated this is legally problematic. The UK has recently overtaken China to become the largest holder of US Treasuries in the world after Japan, just as everybody else is dumping them. It is making no attempt to buy any gold either. We really have clueless clowns running the show.

Meanwhile, with the threat of AI and automation to America’s jobs – especially in jobs that involve driving, where millions work – there is the risk of mass unemployment coming quite quickly, and with it plentiful defaults on mortgages and loans. This could force the US to print money, driving inflation and providing yet another reason to own gold and bitcoin, which cannot be debased.

In short, the dollar will weaken significantly over the next three years. The pound is a basket case. National currencies are not stores of wealth. Gold and bitcoin are. Own both as the Trump administration addresses Triffin’s Dilemma through a managed dollar decline. They will use gold and potentially bitcoin to restore US industrial and military strength. This is the shift that is taking place.

Dominic Frisby writes the investment newsletter The Flying Frisby.

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There have been two big developments in gold recently. The first is that the metal itself is reaching new highs: this week, it passed $3,500 per ounce for the first time. The other is that gold mining stocks are outperforming gold, which is something we have not really seen in this cycle.

Gold miners are a geared play on gold. When gold goes up, they rise higher; when it goes down, they fall further. This is because they have operational leverage: relatively high fixed costs mean that they make weak profits when gold prices are depressed, but higher prices can translate into a strong increase in margins.

Of course, this depends on input costs not going up too much, but recent trends have been positive. Gold miners have been seeing huge improvements in free cash flow for a while, yet the shares only began to move this year.

Investors are sceptical about the gold mining boom

You can view this in a few different ways. One is that buyers of gold have different motivations to buyers of stocks. Gold is going up because some investors are nervous and see it as a useful hedge against the kind of risks that could cause a stock market slump. Gold stocks are still stocks, and if they are worried about the market as a whole, they would logically rather have gold than any kind of stocks. Conversely, buyers of stocks are excited about the bull market in areas such as artificial intelligence. They are not interested in the bull market in gold – and hence not interested in gold stocks – because they see racier opportunities elsewhere.

Another possibility is that investors are doubtful about the quality of gold miners in particular, based on memories of the last cycle.

Yes, they are making plenty of money now, but will they be disciplined enough to hand that back to shareholders? Or will they squander it on higher-cost or riskier projects to expand production, or indulge in empire-building mergers and acquisitions?

Certainly, the sector has a remarkably poor long-term record. The MSCI ACWI Select Gold Miners index has a gross total return – ie, with dividends – of 3.3% per year in US dollar terms since 2003. That’s a compound return of just over 100%. One nuance here is that after gold had been in a long bear market during the 1980s, many gold miners took to hedging their output in the 1990s and early 2000s, which worked against them once prices began rising. Still, the record of the NYSE Arca Gold Bugs index, which tracks stocks that did little hedging, is not that impressive either.

However, hedging is now minimal so producers are fully exposed to rising prices. Gold miners will be very profitable with gold anywhere close to here. They also tend to have low correlation to the wider market, which may be useful if the AI boom turns to bust. A tracker such as iShares Gold Producers (LSE: SPGP) or the even more operationally leveraged Van Eck Junior Gold Miners (LSE: GJGB) is a simple way to follow the trend. Just don’t treat it as a long-term core holding. History suggests that it isn’t.

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The world has always been an unpredictable place for investors, and it has become more so over the past five years. Digitisation is partly to blame. News can travel from one side of the planet to another in seconds. The news can then be manipulated and redistributed in a heartbeat, sometimes with devastating consequences. Digital technology has also accelerated the pace of change across the economy. Start-ups powered by AI are reaching revenue milestones once thought impossible.

Y Combinator (the start-up accelerator known for backing Airbnb and Dropbox) recently said its latest batch of tech start-ups was growing at 10% per week, an unprecedented rate in a start-up venture. Most of these companies would have had to hire large teams of expensive human coders a few years ago. But today, 95% of the code has been written by AI.

These digital changes are coming at a time when populist political parties have upended the global political order. Donald Trump’s global trade war has disrupted trading networks established over decades and threatened the dollar’s status as a safe haven. Furthermore, the world’s largest countries are drowning in debt, severely hampering their ability to respond to future crises.

Multi-asset trusts offer added protection

Against this backdrop, it is worth considering the place of multi-asset trusts within a portfolio. Maggie Fanari, CEO at J. Rothschild Capital Management, the manager of RIT Capital Partners (LSE: RIT), notes that multi-asset trusts such as RIT “offer investors access to differentiated global strategies, hard-to-reach assets, and long-term structural themes, making them highly complementary to most portfolios… A multi-asset approach gives us the ability to respond decisively to shifting macroeconomic conditions across a market cycle.”

Multi-asset trusts also provide investors with an added layer of protection through diversification. “Diversification is famously the only ‘free lunch’ in finance,” says Alastair Laing, CEO at CG Asset Management and co-manager of Capital Gearing Trust (LSE: CGT).

The closed-ended structure of an investment trust is perfectly suited to diversification and multi-asset holdings, some of which are likely to be illiquid. “Our permanent capital base gives us a structural advantage, enabling us to maintain conviction in high-quality investments… ride out short-term volatility, and allocate meaningfully to less liquid opportunities,” says Fanari.

Of course, investors could build their own multi-asset portfolio – encompassing assets such as bonds, equities, gold and even exposure to illiquid assets, such as private equity and renewable energy – via investment trusts. However, this comes with another set of risks. “This requires significant effort and could be tax-inefficient if capital gains tax is crystallised each time rebalancing occurs,” explains Laing.

Investors pay a fee for a trust’s portfolio management, but they’re paying for the managers’ skill. There are also tax benefits, as the assets remain within the trust. A trust such as RIT also provides exposure to somewhat exclusive private-market themes. “We also benefit from access to specialist managers,” says Fanari. “These specialist partners value our long-term, patient capital.” All of the big multi-asset trusts, Capital Gearing, Personal Assets (LSE: PNL), RIT and Caledonia Investments (LSE: CLDN) offer something slightly different, with the latter more focused on private equity. Capital Gearing and Personal Assets have also favoured a more defensive approach, focusing on bonds (mostly inflation-linked), gold and equities.

Personal Assets’s co-managers, Sebastian Lyon and Charlotte Yonge, say the investment team’s views in recent years have been “shaped by an expectation of regime change”. Inflation, government debt, shifting political sands, economic uncertainty and technological change have created a “world of greater uncertainty, higher inflation and a bond bear market, which began in the summer of 2020. Thus far, the 2020s are looking very different from the 2010s”.

The managers have shifted the portfolio away from risk assets to “ complementary asset classes that may offset falls in equity markets”. They’ve also reduced exposure to the US dollar “as investors increasingly question the dollar’s position as the world’s reserve currency”. Instead, Personal Assets has been adding to its yen holdings. Index-linked bonds play a key part of the wealth-protection strategy for Capital Gearing and Personal Assets. “We consider that the role inflation-linked bonds play in a fiat monetary system is the same as the role gold played under the gold standard – that is to say, the closest asset class to risk-free,” says Laing.

Charlie Morris, the founder and chairman of ByteTree, argues that investors should go one step further. “Hold bitcoin for return as it catches up with gold as a reserve asset, and gold as a hedge. I believe the risk-weighted combination of the two assets is the optimal approach for asset allocators. In my opinion, gold is the reserve asset for the real world, and bitcoin is the reserve asset for the internet.”

Having a small amount of bitcoin in a portfolio has been a sensible decision for the past few years. It illustrates why it’s reasonable to consider a range of assets across a portfolio. Multi-asset trusts can take some of the effort out of this decision-making process. Not all investors will be comfortable with this approach, but it’s worth considering. The goal of a multi-asset portfolio is to reduce risk and volatility via diversification and enhance long-term returns.

“The pain of losses [outweighs] the joy of profits, which can lead to poor investment decisions,” says Laing. “By investing to avoid significant drawdowns, investors can protect their portfolio against their poor, emotion-driven decisions.”

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The last 50 years have been kind to investors in real terms. Everything made money: equities, bonds, property and gold. All investors had to remember was not to buy high and sell low. But that hasn’t always been the case. According to Barclays, UK equity prices were flat in inflation-adjusted terms in the 50 years to 1976. They doubled in the US, but that meant an annual gain of just 1.4%. Investors needed to reinvest their highly taxed dividends to grow their capital in real terms, but even so, the total return from UK equities for the 15 years to 1976 was zero.

Gilts fared even worse. An investor starting in 1926 had lost over 90% of their capital in real terms by 1976. Even with gross income reinvested, they had lost 75% of their money – and, of course, the reinvestment of gross income was not available to individuals. Holders of US Treasuries did better in the 50 years to 1976; they lost a mere 75% of their capital.

Anyone who squirrelled away gold started off well. The dollar value rose 70% in 1933 when Roosevelt devalued the dollar, having required all private holders of gold in the US to surrender it at the old price. The price was then fixed at $35 an ounce until 1971.

Property was a better investment. The price of the average house in the UK multiplied nearly 20-fold between 1926 and 1976 to about £12,000. But strict rent controls dating from the First World War ruled out buy-to-let for all but the most unscrupulous landlords. For British residents, investing outside the UK was academic. Strict exchange controls, introduced in 1947, made it legally impossible to buy overseas equities, bonds or property, or to own gold without paying a huge but volatile “dollar premium”.

The last 50 years have been much kinder to investors, but there have been plenty of traps for the unwary. The abolition of exchange controls in 1979, globalisation and the opening up of new markets, and novel strategies have increased the opportunity for UK investors to make fools of themselves. Information is much more readily available, but it doesn’t necessarily lead to better decisions. It’s as easy to be carried along by the herd as ever. Consider the following examples.

Investment #1: gold

The price rose from $35 an ounce to a peak of $850 in 1980, driven ever higher by the prognostications of the Aden sisters, who had relocated to Costa Rica so that their Delphic prophecies would not be interrupted by contact with the real world. The price then fell to $300 in 1999 as high real interest rates and falling inflation rendered “the barbarous relic” unattractive.

At this stage, Gordon Brown, Britain’s chancellor, decided to sell half of Britain’s gold reserves. The 395 tonnes raised $3.5bn against a current value of $46bn. Even at the time, this sale was recognised as a contrarian “buy” signal. Since then, the price has risen at a compound yearly rate of 10%.

Investment #2: Japan

The Nikkei index reached nearly 40,000 in 1989, when it represented more than half of the MSCI World Index. In a parallel property boom, land prices increased 50-fold between 1956 and 1986, reaching $139,000 per square foot in Tokyo. It was calculated that the Imperial Palace in Tokyo was worth as much as the whole of California.

The booming stock market was driven not by earnings but, it was said, by Japanese housewives and gullible foreigners. Japanese companies had very little in the way of earnings and rarely paid dividends, financing investment through the sale of warrants and convertible bonds with derisory yields. Western pundits sought to rationalise this on the basis that Japan’s economic miracle would go on forever.

The market then halved in barely two years but only reached a low in 2009, 80% below the peak. Many investors invested prematurely for a turnaround, but recoveries soon petered out. A sustained recovery started in 2012, and the Nikkei index only passed its old peak in 2024.

Investment #3: the dotcom bubble

Stock markets soared in the late 1990s on the back of the technology sector, but the media, telecoms and biotechnology industries were also caught up in the excitement. Share prices ran way ahead of earnings. As Ed Yardeni of Yardeni Research points out, the technology and communications sector came to comprise 41% of the S&P 500 in early 2000 but only 24% of earnings. Moreover, these earnings proved largely unsustainable, so by 2003 the figures had fallen to 18% and 13% respectively.

Within three years of their 2000 peaks, the S&P 500 and the FTSE 100 indices had nearly halved. The FTSE 100 didn’t reach a new peak until 2017, but the S&P 500 achieved it 10 years earlier in 2007, thanks to the rebound of the technology sector. Technology and communications now account for 43% of the S&P 500 but 38% of prospective earnings, while in the UK, the technology, media and telecommunications (TMT) sectors have never recovered.

In 2003, shares such as Amazon and Microsoft could have been bought at bargain prices, giving rise to a revisionist view that the TMT bubble was the dawn of a new age rather than a blind alley. But many of the shares that drove the market higher then have either disappeared or are a shadow of their former selves.

The list of forgotten firms from that era that were once in the FTSE 100 is long, including Freeserve, Thus, Colt Telecom, Baltimore Technologies, CMG, Psion, Kingston Communications and Bookham. ARM has since re-emerged stronger than ever, while Autonomy was controversially bought by Hewlett Packard. FTSE 100 veterans Cable & Wireless and GEC were destroyed by poor acquisitions.

Lastminute.com was founded in 1998 as an online bucket shop for unsold package holidays and hotel rooms. When it was floated in London in March 2000 by Brent Hoberman and Martha Lane Fox it was valued at £570 million, and the valuation soon peaked at £770 million. It was sold in 2014 for £76 million and lingers on.

Investment #4: Woodford Patient Capital Trust

Neil Woodford built a reputation at Invesco managing unit and investment trusts offering generous income. Investing for income became popular after the collapse of the TMT bubble. Income can either be reinvested for good long-term returns or taken out, but not both. This is not always clear in the marketing.

Chafing at the constraints put on him by Invesco, Woodford left in 2014 to found his own business. He started an equity income fund which, at its peak, managed over £10 billion and, in 2015, launched an investment trust, Patient Capital. Initially, £200 million was targeted but this was soon increased to £800 million. The so-called independent directors were associates of Woodford, and the trust was to invest not just in income-generating larger companies but also in high-risk smaller and unquoted companies, mostly technology or biotechnology related.

This was an area of the market in which he had, in the past, dabbled without success. His investment process was akin to throwing mud at the wall in the hope that some of it would stick. Such investments also made their way into the equity income fund but poor performance led to mass withdrawals and a crisis in the remaining rump of illiquid investments.

Investment #5: Global Absolute Return Strategies

The idea behind GARS, launched in the wake of the 2008 financial crisis, was to offer investors hedge fund-like performance at much lower fees and with better liquidity. The fund, managed by Standard Life, offered the prospect of returns of 5% above cash over rolling three-year periods through a multi-asset portfolio of investment and trading ideas from the supposedly clever people at Standard Life.

Good initial performance led to a flood of inflows from pension funds and other investors seeking a quiet life but with great returns. GARS peaked at £53 billion under management in 2014 but copycat funds at Aviva, Invesco and Investec (now rebranded as Ninety One) made the overall pool much larger.

With too much money chasing too few opportunities, performance soon flagged, then turned negative and investors exited. Even so-called “macro” hedge funds hit hard times. With assets down to just £1.3 billion, GARS was shut down in 2023. The idea that second-rate fund managers could make great risk-adjusted returns on huge pots of money from staring at Bloomberg screens was always idiotic.

Investment #6: bonds

The bull market in government bonds started in the inflation-ravaged late 1970s and early 1980s and lasted more than 40 years. At its peak in 2020, 10-year gilts were yielding just 0.25% and 10-year US Treasuries 0.68%, well below the inflation target rate of 2%. Merrill Lynch had calculated in 2016 that interest rates were at their lowest for 5,000 years, but Covid drove them even lower.

Bond yields followed, with the UK repaying its undated 3½% War Loan in 2015 before yields plunged further. In 2021, the Financial Times calculated that “bonds worth $15 trillion, more than a fifth of all debt issued by governments and companies around the world” were trading at negative yields. This was surely the biggest bubble of all time.

Many of the UK’s defined-benefit pension fund managers, chasing the illusion of “liability-driven investment”, were not only heavily invested in government bonds but had bought on margin (ie, borrowed to buy more) to increase their exposure. When rising inflation started to push bond yields higher, they became forced sellers, forcing yields higher still. The FT, using data from the Pension Regulator, estimated that pension funds lost £425 billion in 2022 while other estimates exceed £500 billion. No wonder they have insufficient money to invest in British businesses or infrastructure.

Normally, the managers responsible would have been fired, never allowed to work in financial services again and possibly jailed. Fortunately for them, blame for the fiasco was deflected by the political and media establishment onto the government of Liz Truss – as if gilts would still be yielding 0.25% without her ill-timed budget.

Investment #7: bitcoin

The cryptocurrency market is estimated at $3 trillion, and many believe this constitutes a massive bubble ready to implode. However, law-abiding people in law-abiding countries without exchange controls will never appreciate the attraction of cryptocurrencies. Legitimate investors are just the tip of the iceberg, accounting for less than 10% of the market.

They have done well by defying responsible advice but should beware any sign of an end to the war in Ukraine, as Russia pays its troops in bitcoin. This can be accessed anywhere in the world by survivors or next of kin, so rising prices keep them fighting. This makes bitcoin the world’s most unethical investment.

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Investors in 2025 are either anxious or happy. The anxious believe investing is all about costs. Buy some cheap trackers, and in the long run, you’ll do fine with minimal effort. The happy are active investors who have avoided the largest stocks. It is an anomaly for the largest stocks to lead the market (1929, 1972, 1999 excepted), and following the crowd into richly valued areas doesn’t end well.

As an active manager, I have found 2025 rewarding mainly because my portfolios pursued value outside the US. A weak dollar has meant US equities have lagged the world. US equities have delivered zero returns in sterling this year, and the MSCI World index, with 70.3% exposure to the US, is up just 2.4% including dividends. Contrast that with the FTSE 100, up 12%, or the pan-European EuroSTOXX, up 20% this year. US exceptionalism has once again been exaggerated.

Passive investing makes sense for people who do not want to take an interest in their finances, which presumably counts out MoneyWeek readers. It delivers a market return, before fees, and prevents a worse outcome from incompetent active managers or bad actors. Being cheap and simple, it deserves to be the default option for the majority, and rightly so. After all, beating the markets is a minority sport.

Therein lies the opportunity. Passive management is now so vast that, according to US investment platform Market Structure Edge, trading in index products accounts for 56% of market volume; in 1995, it was in its infancy. If passive management today is so vast, it means active management should provide fertile grounds for rich pickings.

This is reaffirmed by a recent market trend that shows active fund-management companies on the up this year, while the passive managers are waning. For example, shares in institutional active manager Schroders are up 25%, while BlackRock, owner of iShares, is down for the year. Is this a one-off? I don’t think so, because the valuation gap is enormous. Schroders trades on twice sales, with a free cash-flow yield of 16%. Contrast that with BlackRock on a hefty eight times sales with a free cash-flow yield below 3%.

Youthful investors forget, or have never witnessed, that active managers were among the most highly rated stocks in the 1990s. Today, they are dirt cheap. My recent picks include Man Group, Jupiter, and the Dutch company Allfunds, which provides trading infrastructure for the funds sector.

The investors' Money Map

Other investment themes that stand out include gold, precious metals and copper – all beneficiaries of a weak dollar, money printing, and burgeoning deficits. There’s bitcoin and crypto, which are increasingly looking like core allocations. There are also the banks, which benefit from high interest rates, and China, which has impressive technology companies trading on attractive valuations.

On the other hand, 2025 has been another year to avoid gilts. The long bond yield has settled at 5.5%, a level not seen since 1998. It is supposed to mimic annual nominal GDP growth, which comprises economic growth (1.3%) and inflation (4.4%), so the yield is about right. For it to come down, we would need to see a recession to break inflation, tough love in dealing with the budget deficit, or “growth” policies that don’t involve raising taxes. A recession will come about sooner or later, as they always do, but a balanced budget? Unlikely.

The economy may be in better or worse shape next year, but does it matter? In 30 years since I took an interest in financial markets, I am certain that value is more important than the economy. Therein lies the importance of my Money Map (pictured), which I last wrote about for MoneyWeek in 2017: What to take with you in the investment jungle. It outlines the investment strategy most suited to different macroeconomic environments. When times are good, stay on the right, and when bad, stay on the left. When inflation rises, stay high, when it is low and stable, duck.

I have long built portfolios around this idea, filled with undervalued stocks, bonds, commodities, or funds. The Money Map helps to identify the key areas on which to focus, and more importantly, the areas to avoid. Above all, this is how to diversify a portfolio: by having exposure to each quadrant, whatever the weather, because macroeconomic environments can change quickly.

That said, I have more exposure to the favoured quadrant, and to the adjacent quadrants, with less in the least-favoured one. In recent times, this has meant having more value, and less quality and bonds in the portfolios, while staying broadly neutral in growth and gold. At some stage, this will change, probably when there are clear signs that inflation is under control and interest rates fall.

I am looking forward to that because you will have noticed that quality stocks such as Unilever, Diageo, and Reckitt Benckiser have struggled in recent years and now offer good value. In the US, quality stocks such as Nike, Procter & Gamble, McDonald’s and PepsiCo are also waning, and maybe they’ll be cheap by 2026, or 2027. In any event, the world’s best companies have had their bubble pricked and are headed lower, which is something to look forward to.

Charlie Morris is the CEO and founder of ByteTree. It offers investment research for private clients through the Multi-Asset Investor, in addition to other research services. ByteTree also has a Bitcoin and Gold ETF (BOLD) managed by 21Shares in Zurich.

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UK inflation hit 3.6% in June 2025, prompting savers and investors to wonder how they can protect the value of their money from the corrosive impact of inflation.

Investing in gold could be one solution. The yellow metal has long been viewed as a hedge against inflation. It is finite: there is only so much gold in the world, besides as-yet unscalable instances of scientists achieving alchemy by turning lead into gold.

“Because the commodity has a limited supply, the value of gold often rises during longer periods of high inflation,” said Rick Kanda, managing director at The Gold Bullion Company. During these periods, “investors sometimes turn away from stocks and invest in previous metals instead”, he added.

Inflation means investors need to get clever with their investments. Cash won’t do: over time, inflation tends to outpace the returns from cash, so if you’ve not already considered getting started in investing, now is a good time to do so.

Inflation has been rampant over recent years, and as it has climbed, so has the gold price. But how strong is the link between gold prices and consumer prices – and can investors use gold to hedge against inflation?

How are the gold price and inflation linked?

The relationship between gold prices and inflation isn’t too clear over the long term.

The chart below plots the gold price in pound terms against the UK’s headline consumer price inflation, month-by-month, over the five years to June 2025.

While there are some periods when gold prices have climbed alongside inflation, the correlation isn’t seamless. Inflation rates have been falling since 2023, but gold prices have continued to rise. Since the start of 2024, gold prices in pounds have moved in opposite directions from the headline inflation rate.

There’s lots of reasons why the two don’t move in lock-step. For one thing, gold is traded in dollars rather than pounds, so its price has a less direct relationship to the UK economy.

There are also broader influences on the gold price than currency devaluation. The gold rally that started in 2024 was catalysed by increased gold purchases by central banks. That, clearly, has little to do with the direction of travel of gold prices.

But on a larger scale, gold tends to be a commodity that performs during periods of global inflation and instability.

“When it comes to the price of gold, inflation is extremely influential,” said Kanda. “Gold typically performs well in economic uncertainty caused by global conflicts and tariffs, and inflation is one variable where this is the same.”

How can investors use gold to hedge against inflation?

In Kanda’s view, the best ways to use gold to hedge against inflation are to buy gold coins, or gold bullion.

Coins, he says, offer a good halfway house between price and divisibility. They are also relatively liquid and can be exchanged easily at a gold dealership.

Gold coins are also exempt from capital gains tax.

But beginner gold investors should also consider gold bars, largely because manufacturing costs tend to be lower compared to coins, “resulting in lower purchase prices per gram for gold bars.

“This could help maximise your profits if you go on to sell at a later date,” adds Kanda.

Alternatively, if investors don’t want to hold physical gold, they could invest in a gold fund.

How else can investors hedge against inflation?

Gold is one way to give your investments some defence against inflation, but it is not the only one.

The stock market tends to beat inflation over the long term, though of course inflation can be bad for certain sectors and persistent inflation can dent market sentiment.

Real estate is one potential inflation hedge, given the fact that rising consumer prices tend to be captured by rising house prices.

Read more at our explainer on how to hedge against inflation.

A five-year investment return of 25% looks miserable compared with the 71% return of the MSCI All Country World index, so why does Personal Assets Trust (LSE: PNL) have £1.6 billion of assets and trade at a negligible discount to net asset value (NAV)? The answer is that PNL – like Capital Gearing (LSE: CGT) and Ruffer Investment Company (LSE: RICA) – isn’t targeted at those who want to get rich through investment, but at those who want to stay rich.

“Our policy is to protect and increase (in that order) the value of shareholders’ funds per share over the long term” is the trust’s strapline. Risk-averse investors could certainly have done much worse over the past five years: the average return from investing in supposedly safe gilts has been -22%.

Holding government bonds alongside equities has been the standard way to smooth the performance of a portfolio. The classic ratio has been 60% equities to 40% bonds. This works well when stock and bond markets are inversely correlated – meaning that bonds generally perform strongly when equities are doing badly and vice-versa.

Yet this is no longer working well. The inverse correlation that lasted for over 30 years flipped in 2022. A classic passive 60/40 portfolio would have become increasingly volatile, while returning a comparatively modest 34%.

Holding a fund such as PNL rather than gilts would have done a far better job in smoothing performance for a much lower sacrifice of returns: a combination of 60% equities and 40% PNL would have returned 53%. That is why it is included as part of the MoneyWeek model portfolio.

Personal Assets Trust has a cautious portfolio

PNL’s positioning is cautious. The portfolio, which is run by Sebastian Lyon and Charlotte Yonge of Troy Asset Management, has just 38% in equities, mostly in blue chips.

The top five stocks (out of 17 holdings) are Unilever (4.5% of the total portfolio), Alphabet, Visa, Diageo and Microsoft.

Meanwhile, 48% of the portfolio is invested in government bonds. Of this, 24% is US inflation-linked bonds, 8% is Japanese government bonds, 9% is short-dated gilts, 4% is UK inflation-linked bonds, and 3% is short-dated US Treasuries. The focus on short-dated and inflation-linked bonds suggests that Lyon and Yonge don’t believe that the rise in bond yields has ended.

The single largest position is gold bullion (currently 10.7%), but Lyon and Yonge are not paid-up members of the-end-of-the-world-is-nigh crowd. They have taken “material gains” on their holdings in gold over the last nine months and also point out that “the strong recovery in equity markets is a reminder [of] why transposing geopolitical predictions onto financial markets is challenging”.

Personal Assets Trust: discount control

Of course, steady returns from a strategy like this can be made more volatile for investors if an investment trust’s discount to NAV fluctuates. The discount might be expected to widen when equity markets were performing well and PNL was lagging badly, but narrow when it was at least preserving value in difficult markets.

To prevent this, PNL has a rigid discount control mechanism: buying back shares when there is excess supply, and issuing them when there is excess demand. This keeps the shares trading close to net asset value. In the year to 30 April, the trust bought back 26 million shares (6.2% of those in issue at the start of the year) and issued just 0.6 million.

PNL has returned 204% in share-price terms since Troy’s appointment in 2009, which is more than double the 90% increase in the retail price index. Taking more risk has paid off for investors over the past five years, hence its returns have lagged the market. Still, PNL’s time will come again – maybe not yet, but very likely within the next five years.

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If you had £1,000 to tuck away, would you consider spending it on gold?

Investing in gold can feel like a risky business. Like any commodity, the gold price rises and falls, and the circumstances behind this aren’t always within your control.

Tucking your windfall away into a cash ISA or a savings account to keep it safe might seem like the better option. Here it can earn interest, and there is no risk of the nominal value of your cash savings being depleted.

But with inflation running at 3.4%, and the best savings accounts paying no more than 5% interest, the real value of your cash savings might not sparkle quite as brightly once its real spending power is factored in.

Investing £1,000 into gold a year ago would have yielded significantly greater returns than putting the same amount into a savings account, according to research from The Gold Bullion Company.

That might not sound surprising. A gold sceptic could reasonably point out that gold prices have surged over the past year or so thanks to rising turbulence in global markets.

“In 2025, gold has outperformed all major asset classes – thanks not only to its safe haven appeal, but also its liquidity and reserve status,” said Tom Stevenson, investment director at Fidelity International. “With investors looking for alternatives to the dollar and dollar-denominated assets like US Treasuries, gold has become a go-to safe haven again.”

It’s a specific set of circumstances, but many argue that cash is always king.

So over the long term, does gold beat cash as a store of value?

Gold versus savings

Experts from the Gold Bullion Company compared the impact of putting a £1,000 windfall into various popular high street savings accounts for a year, versus investing it into gold.

According to the research, the high street savings account with the highest return in May 2025 was the Fixed Rate Cash ISA from HSBC. An AER of 4.10% would yield profit of £41 over the course of a year. 

If the same sum had been invested into gold last April, the value would now be £1,319.40. Assuming 3% fees to buy and to sell gold bullion, that means gold would have generated a profit of £249.82, or nearly 144% more than the best savings account.

^{Source: The Gold Bullion Company}

*Value of gold based on gold price movements between April 2024 and April 2025.

“Global geopolitical tensions and trade uncertainty have put the price of gold in a strong position, with many experts believing there has never been a better time to invest in the metal,” said Rick Kanda, managing director at the Gold Bullion Company.

However, he stressed that gold has its own considerations. “Like any asset, it’s subject to price fluctuations,” said Kanda. “There are also practical costs to consider. Secure storage, for example, usually costs around 0.65% of the gold’s value per year (plus VAT).

Generally, it is recommended that people have three to six months' worth of emergency savings in an easy to access account, before investing. We look at how much people of different ages tend to have in savings in our average savings by age guide.

“On the flip side, savings accounts also come with caveats. Many have enticing AERs and promotional periods, but only deliver if no withdrawals are made. Others cap the amount you can earn interest on. And while your savings are protected up to £85,000 under the FSCS, returns can be low and may be taxed depending on your income bracket.”

It’s important to remember that past results are not indicative of future performance.

Gold versus savings accounts: The past 10 years

Again, it’s reasonable to think that this is an unfair comparison given the last year has been a particularly strong time for gold. Does gold’s outperformance compared to cash hold true over a longer timeframe?

The Gold Bullion Company’s research also compared the profits that would have been made on gold versus cash over the last ten years.

£1,000 invested in a traditional savings account in 2015 would now be worth £1,180.84, a profit of just under £181 in 10 years. Investing that same amount in gold at the same time would have left you with £2,978 worth of gold now; a profit of more than £1,978, or more than 11 times the typical savings account.

Gold has always held economic value because of several qualities.

It is inert, which means it doesn’t decay (or irritate your skin if you wear it as jewellery). It is relatively soft, so it can easily be made into small units that can be exchanged.

But the quality that has made humans throughout history want to invest in gold is the fact that it is rare.

There is a finite amount of gold in the world. The World Gold Council estimates that around 216,265 tonnes have been mined in all human history, and that if all that was condensed into a single cube it would be roughly 22 metres long on each side.

Of course, there is more gold underground that could be mined, but the supply is finite. Or is it?

Scientists at ALICE – standing for A Large Ion Converter Experiment, which operates at CERN’s Large Hadron Collider (LHC) – published research earlier in May that quantified the conversion of lead atoms into gold.

Only 29 picograms of gold were produced – an almost unimaginably small quantity, “trillions of times less than would be required to make a piece of jewellery”, according to CERN. They also only existed for nanoseconds, before fragmenting into their constituent sub-atomic particles.

But, in essence, the ALICE team has achieved the stated goal of medieval alchemists: the conversion of base metals (particularly lead) into gold.

“At the current stage, it’s very economically unappealing, and not scaleable,” Hakan Kaya, senior portfolio manager at Neuberger Berman, tells MoneyWeek. “But at the end of the day, a lot of things, when you look at the history of economics or especially of commodities, that were considered uneconomical have over time become economical.”

What would turning lead into gold mean for gold prices?

The LHC is an eye-wateringly expensive piece of equipment. It took a decade and cost $4.75 billion just to build, and the cost of running experiments there runs to around $5.5 billion annually.

Its gold output, to date, is less than a trillionth of a gold ring that existed for less than a second.

So the breakthrough, while eye-catching, is not about to disrupt the gold investment case in its own right. The chances of it being scalable to any practical degree are miniscule, and it would likely take decades to develop the technology sufficiently if so.

But suppose for a moment that it was possible to scale this technology, and convert lead directly into gold.

“In that hypothetical, low-probability state of the world, there would be an impact on gold prices,” says Kaya. “Gold would be likely to be more abundant, and its scarcity value to a certain extent gets destroyed.”

He compares this to diamonds. When artificial diamonds became available, they dented diamond prices.

They didn’t completely kill them, though, and outside of industrial use cases (where artificial diamonds are often more effective than natural ones), Kaya points out that there is still something of a premium on “real” diamonds. The same might be true if gold were ever manufactured at scale.

The gold produced by ALICE was an isotope of gold, meaning it has a slightly different chemical composition to the gold that occurs naturally. While that may or may not affect its chemical properties, it would make it distinguishable from natural gold, and as such enable a premium on naturally-occurring gold.

“I would still think gold would continue to function as a store of value, even in that kind of environment,” says Kaya.

Alchemy and collectible gold

The thought experiment has all sorts of interesting connotations. Kaya suggests that “real” gold could become something of a collector’s item.

“There can be gazillions of Mona Lisa paintings out there, but it doesn’t reduce the value of the original. That cannot be replicated,” he says.

Similarly, if gold were ever produced from lead at scale, then perhaps items made from lead from before this was possible – such as gold bullion, or especially collectible gold coins – could take on even more lustre, standing out as relics in time from a bygone era.

“It may even increase the value that people ascribe to real, authentic gold,” says Kaya.

Massive technological advances would be needed in order for any of this to become more than conjecture. Kaya believes that there would be undoubted interest among the less risk-averse in investing into that research, at least in the longer-term.

In the here and now, though, there may be cheaper, more realistic means of increasing the gold supply.

“If you’re a gold miner, then maybe you just go out and explore mining gold from asteroids,” he says. “That’s probably within closer reach, and more economical [at this stage].”

The gold at the Museo del Oro in Bogotá, Colombia, is one of the most stunning collections you will ever see – diadems, helmets and crowns, rings, necklaces and bracelets, beads and breastplates, even fishhooks and penis covers. The smiths of ancient South and Central America were quite brilliant artisans. The Spaniards who saw their work said Aztec goldsmiths were more skilled than their European counterparts.

In Mexico, the conquistadors found life-size figures of men and women, great jars and pitchers, half pottery-half gold vases sculpted in relief with birds, animals and insects, and more. In Peru and Ecuador, the conquistadors found miniature gardens made of gold – earth of gold granules, gold cornstalks, and gold figures of men and llamas.

Unfortunately, what sits in the Museo del Oro is just a fraction of what was made. The Spaniards valued bullion on weight alone, ascribing no value to art, beauty or workmanship. What they sent to their king intact got melted down once back in Europe. “What was being destroyed was more perfect than anything they enjoyed and possessed,” said a young priest travelling with the conquistador Francisco Pizarro.

The conquistadors were by no means alone in this. It has happened repeatedly through history. Though gold may last, art made from gold rarely does. People always seem to melt it down. That should mean ancient gold workings should command an even higher premium for their antiquity, because they have survived the meltdown risk. But for some reason, it doesn’t seem to work like that.

You can’t destroy gold, as I’m sure you know. It lasts forever and never loses its shine. It was present in the dust that formed the solar system, and sits in the Earth’s crust today, just as it did when our planet was formed some 4.6 billion years ago.

That means that little bit of gold you may be wearing on your finger or around your neck is actually older than the Earth itself. In fact, it is older than the solar system. Who knows? It might once have adorned a pharaoh or sat in a conquistador’s treasure chest. Gold may be antique, but it’s very rare that you get vast premiums for its antique value.

The gold coinage that never was

If you buy a gold sovereign minted recently, you would typically pay £600 to £630. For a Victorian sovereign minted 150 years ago or more – which has the same gold content – you would pay £660 to £680. So, for all that history and antique value, you pay just 10%. Sovereigns are not uncommon. A billion are thought to have been struck. So you get little rarity value. But even so, you’d think you would get more of a premium.

The main exception is the 1937 sovereign struck for Edward VIII. Since he abdicated a few weeks before the coins were struck, they were never circulated. They are often called the “coinage that never was”, and only a few were ever minted. One sold in 2020 for £1 million. That’s quite the premium. But this is rare.

About ten years ago, I picked up a Justinian solidus, minted in 600AD – the solidus was the dominant coin of the Mediterranean after the Roman aureus. I got it for a 20% premium to the spot value of the metal. And I bought it from a shop in W1, so I was paying the Mayfair premium too.

An ingot recovered from the SS Central America, which famously sank off the Carolina coast in 1857 carrying Californian gold to New York (and triggered a financial panic because so much bullion was lost), recently went up for auction. It weighed 649 ounces, but it was only 21-carat gold (.875 purity). If melted down, you would have 568 ounces of pure gold, which, at today’s price of $3,300 per ounce, would have a spot value of $1.9 million. It sold for $2.1 million, including the buyer’s premium – little more than the spot value, in other words.

Antique gold very rarely catches the huge premium you might think it deserves. Unscrupulous coin dealers will often try to flog you graded coins. If a dealer tells you that some recent sovereign, for example, is extremely rare, that it was one of the last coins minted under Queen Elizabeth II, or some such, and that it has been graded and has a special certificate and blah blah... and it therefore carries a huge premium, they are trying to pull a sly one.

The reality is that the extra premium paid is almost impossible to claw back when you come to sell. In almost all cases, they are trying to rip you off. Don’t pay a premium for graded coins.

A dealer might buy a large stock of coins from the Royal Mint. Coins are often of a slightly different quality. Dealers then send them off and pay a small fee to get them graded according to their “Mint State”. The scale ranges from MS-60 to MS-70, with MS-70 being a perfect, flawless coin. They then charge a large premium for coins with high grades, even though they barely paid any premium when they bought the coins.

The margins when dealing in gold are on the slim side – sometimes just a few percent. But if they get an additional premium for the rarity, that margin can rise to 100%. No wonder there are so many unscrupulous salesman trying to flog graded coins.

Fractional coins – quarter or half sovereigns, for example – or older coins do trade at a higher (though not enormous) premium. These can trade for 15 - 20% above the spot value of the gold content. But you are likely to get that back when you sell.

You are not buying gold to try and be clever and hope that your coin gets some kind of rarity value. In most cases, that will not happen. There are clever people who know this market better than you already playing this game. Don’t get involved is my advice. Your priority is to get as much gold for your money as possible. You are buying gold to preserve purchasing power, not to lose it.

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Gold is a popular talking point, whether it’s discussing a much-coveted piece of jewellery or because the price per ounce has gone through the roof – again.

The precious metal dates back to 3600BC according to the Royal Mint. It says that this is when gold was first smelted – extracted – in Ancient Egypt.

Much later in 2600 BC, Egyptian hieroglyphs describe gold as being “more plentiful than dirt”. The earliest known map dates from this time and shows the plan of a gold mine. It’s also when the first gold jewellery is seen.

Gold remains iconic today. You can own it in the form of jewellery, gold bars and gold coins. You can even own digital gold, courtesy of The Royal Mint which offers the chance to purchase a percentage of a physical gold bar from as little as £20 and store it in The Royal Mint’s state of the art vault.

Gold is often considered a safe-haven asset, with investors turning to invest in gold as a store of value in an increasingly volatile world.

Demand for the precious metal hit a record in 2024 and has been climbing ever since. Its value becomes more attractive as interest rates fall. But just how much gold is in the world?

How much gold is in the world?

The World Gold Council (WGC) estimates that around 216,265 tonnes of gold have been mined throughout history.

It reports that about two-thirds of this gold has been extracted since 1950. This huge increase in production is thanks to advancements in mining technology and the discovery of new gold deposits.

The WGC estimated that if all of this gold were to be gathered into a single cube, it would measure around 22 metres on each side.

Yet gold is still being mined. The WGC reported that the total Q1 gold supply grew 1% year on year to 1,206 tonnes with mine production hitting a first-quarter record of 856 tonnes.

Top countries with the most gold reserves

WGC data shows that the United States holds the most gold in reserve, followed by Germany, International Money Fund (IMF), Italy and France.

Source: World Gold Council

How much gold is in the UK?

WGC data shows that the UK holds 310.3 tonnes of gold. In 1999, Gordon Brown made the controversial decision to sell more than half of the UK's gold reserves – around 400 tonnes – for $3.5 billion. That's the equivalent of around $6.6 billion (£5.2 billion) in today's money.

The price of gold soared in the years that followed the sell-off. There were plenty of people warning against the move at the time – including at the Bank of England.

The Bank of England reports that its gold vaults now hold around 406,650 bars of gold, worth more than £390 billion. That makes the Bank of England the second largest keeper of gold in the world (the New York Federal Reserve comes top). The Bank stores the UK’s gold reserves on behalf of HM Treasury, and on behalf of other central banks and certain commercial firms.

However, there are many more vaults than just this one in the UK. According to LBMA (London Bullion Market Association) as at end March 2025, the amount of gold held in all London vaults was 8,488 tonnes, valued at an eye-popping $850.1 billion, which equates to approximately 679,068 gold bars.

In the past you could exchange banknotes for the equivalent value in gold at the Bank of England, but this has not been possible since the early 1930s. You can hold a real gold bar in the Bank of England Museum – there are two on display.

How much gold is in the US?

WGC data says that the US holds 8,133.5 tonnes of gold in reserve.

The Federal Reserve Bank of New York houses the world's largest gold depository, holding gold for central banks and monetary authorities worldwide, as well as a small portion of the US government's gold. It states: “None of the gold stored in the vault belongs to the New York Fed or the Federal Reserve System.”

Some of the vaulted gold arrived during and after World War II when other countries wanted to ensure their gold reserves were stored in a safe location.

Is there still demand for gold?

The World Gold Council’s Q1 2025 Gold Demand Trends report reveals demand increased by 1% year-on-year, driven partly by revived strong bar and coin demand, particularly in China.

It said that central banks are now entering their 16th consecutive year of net-buying, adding 244 tonnes to global reserves in Q1 amidst ongoing global uncertainty.

While this level of demand was 21% lower year-on-year, it remains robust and in line with the quarterly average for the last three years of sustained, strong buying.

How is gold valued?

The price of gold has fluctuated greatly over time and its value can be driven by factors like supply and demand, interest rates, and market volatility.

The value of gold doesn’t tend to move in line with other assets such as shares or property, and often rallies when stock markets fall. That’s why many people value it as an investment.

How much is gold worth?

The price of gold reached a low of $274 per ounce in 1970 and a high of $2,499 per ounce just ten years later, in 1980.

The price of gold in 2025 has been setting record highs passing the $3,000 mark in March. It then reached an eye-watering $3,500 in April amid the moves by investors to seek a ‘safe haven’ for money in times of turbulent stock markets.

However, things can change quickly. While gold is perceived as a safe haven, the price of gold itself can be volatile.

Two rumours have been swirling around the gold markets for many years. Some have called them conspiracy theories. Others note that conspiracy theories often prove true. What’s the difference between conspiracy and truth? About 30 years.

The first notion is that China has far more gold than it says it does. We actually now know this to be true. The other is that America has far less than the 8,133 tonnes of gold it says it possesses.

This has been doing the rounds since 1971, when Peter Beter, a lawyer and financial adviser to former president John F. Kennedy, said he had been informed that gold in Fort Knox had been removed. He went on to write a best-selling book about it: The Conspiracy Against the Dollar.

The problem is a total lack of transparency on the part of the US authorities, something that, according to current US president Donald Trump, and the head of the Department of Government Efficiency, Elon Musk, will not be the case for much longer.

Roosevelt triggers a boom

But to understand this situation we need to go back in time, all the way to 1933, when the US left the gold standard in order to bolster growth. US president Franklin D. Roosevelt famously devalued the US dollar in relation to gold, revaluing gold upwards by 70%, from $20 an ounce (oz) to $35/oz. US gold reserves would increase to unprecedented levels in the next 15 years.

Some of the gold came from US citizens. It was now illegal for them to own gold and they had to hand any they owned over to the authorities. Some came from the fact that the government then bought all US mined supply (the upwards revaluation of gold triggered a mining boom) and any gold imported to the US assay office. The US even began buying gold on foreign markets to protect the new higher price at higher levels.

Thus US official holdings in 1939 on the eve of World War II totalled 15,679 tonnes. They would only increase. With Nazi invasions and expansion, European nations sent all the gold they could across the Atlantic, either for safekeeping or to buy essential supplies; 1949 saw the high watermark of US gold holdings – 22,000 tonnes, as much as half of all the gold ever mined.

In July 1944, with it clear that the Allies were going to win the war, representatives from the 44 Allied nations met at the Mount Washington Hotel in Bretton Woods for the United Nations Monetary and Financial Conference to design a new system of money for the new world order.

International accounts would be settled in dollars, and those dollars were convertible to gold at $35/oz. Countries had to maintain exchange rates within 1% of the US dollar. In effect, the US was on a gold standard, and the rest of the world was on a dollar standard.

The system relied on the integrity of the US dollar’s gold-backing to work, and that integrity was in question, even before the end of the war. The June 1945 Federal Reserve Act reduced required gold reserves for notes outstanding from 40% to 25%, and against deposits from 35% to 25%. Between 1944 and 1954, because of increased supply, the dollar lost a third of its purchasing power, though the $35 Bretton Woods price remained.

US government spending was soaring, and it began running balance of payments deficits – made worse by the costs of foreign aid, America’s new welfare systems and maintaining a military presence in Europe and Asia. Gold began leaving the US. By 1965 reserves had fallen by 9,500 tonnes, down 40% from the 1949 peak.

Successive US administrations tried to stop the outflow, without success. Dwight D. Eisenhower banned Americans from buying gold overseas, Kennedy imposed the “equalisation tax” on foreign investments, and Lyndon B. Johnson discouraged Americans from travelling altogether. “We may need to forgo the pleasures of Europe for a while,” he said.

Fears that the dollar would devalue following the election (won by Kennedy) sent the gold price in London to $40/oz. The Bank of England, in collusion with the Federal Reserve, began increasing gold sales to keep the price down.

Thus did the London gold pool begin, with the addition of six major European nations the following year (Belgium, France, the Netherlands, West Germany, Italy and Switzerland), which co-ordinated sales to suppress, or “stabilise”, to use their word, the gold price and defuse unwanted, upward market pressure.

But the pool struggled against growing demand. In 1965, an ounce of gold was still $35, but the purchasing power of the dollar had decreased by 57% from 1945, while gold reserves had also fallen sharply. The culprit was the costs of the US government, in particular the Vietnam War and president Johnson’s enormous welfare spending.

Bretton Woods under pressure

With inflation rising at home and international confidence in the dollar waning, these programmes were not just costly – they undermined Bretton Woods. Non-American nations felt aggrieved that they had to produce $100 worth of goods and services to get a $100 bill, when the US could just print one. French finance minister Valéry Giscard d’Estaing called it “America’s exorbitant privilege”.

President de Gaulle, meanwhile, had had enough. He ignored the pool to turn all French dollars and sterling balances into gold. The French even sent battleships to New York to collect their gold. De Gaulle became the target of several assassination attempts – coincidence, I’m sure. There were rather more US dollars in the world than there was gold to back them, he felt, and he was right.

By 1967, US foreign liabilities were $36 billion, but it only had $12 billion in gold reserves – a third of what was needed to back the dollar. West Germany, Spain and Switzerland began demanding gold for their dollars. Even the British, with sterling going through one of its quadrennial collapses, asked the Americans to prepare $3 billion worth of Fort Knox gold for withdrawal. Private gold demand was overwhelming.

In November 1967, the British government devalued the pound by 14%, from $2.80 to $2.40, in order to “achieve a substantial surplus on the balance of payments consistent with economic growth and full employment”.

In that month, the London market saw greater bullion demand than it would typically see in nine: as much as 100 tonnes per day. To stem demand, they banned forward buying, leverage and the purchase of gold with credit. The pool still lost 1,400 tonnes that year, more than a whole year’s mined supply.

Selling pressure on the US dollar only increased when the Viet Cong and North Vietnamese People’s Army of Vietnam launched the first of a series of surprise attacks on US armed forces in South Vietnam in January 1968.

Desperate to prop up the system, US military aircraft flew tonne after tonne of gold to RAF Lakenheath from where it trucked in military convoys to the back entrance of the Bank of England: at one point the floor of the Bank of England’s weighing room collapsed under the weight of all the gold.

Shoring up the system

In the four days between 11 March and 14 March 1968, some 780 tonnes were sold to market. The effort to protect the price was deemed hopeless. On 15 March, UK chancellor Roy Jenkins declared a bank holiday, and the gold market was closed for a fortnight, “at the request of the United States”.

Zurich also closed. Paris stayed open with gold trading at a 25% premium. All in all, the final 15 months saw over 3,000 tonnes sold to market to protect that $35 price. The pool had lost more than an eighth of its reserves.

Two days later, in the rushed-through Washington Agreement, governors of the central banks in the gold pool declared there would be one fixed gold market for official government transactions at $35/oz and another, free-market, price for private transactions. Not for the last time, central bankers were living in a world of their own.

Gold is one thing. Gold standards are another. They tend not to last, particularly bogus ones such as this one, under which citizens themselves did not handle gold. Keynes called them barbarous – ironic, perhaps, given that he was one of the architects of this one.

In August 1971, president Nixon took the US off the gold standard, a “temporary” measure that remains more than 50 years later. For the first time in history, gold – Switzerland aside – played no part in the global monetary system.

Of course it was the fault of the speculators. It always is. “I have directed the secretary of the Treasury to take the action necessary to defend the dollar against the speculators,” Nixon said, deflecting responsibility, and “to suspend temporarily the convertibility of the dollar into gold”.

High time for a US gold audit

The US keeps its gold in four places: at Fort Knox, Kentucky (roughly 56% of its 8,133 tonnes); at the Federal Reserve Bank of New York (8%); and the remaining 36% at the mints in Denver and West Point. There has not been a proper public audit of this gold since 1953. There have been internal audits, especially between 1974 and 1986, but these were not transparent.

There are many people, among them gold experts, who do not believe the gold is there. The US spent it trying to suppress the gold price in the 1960s, they say. In this new age of American transparency, both Trump and Musk have repeatedly pledged that this gold will be audited.

There is talk of it being done on a livestream. Trump has even suggested the gold has been stolen. “We’re actually going to Fort Knox to see if the gold is there,” he said, “because maybe somebody stole the gold. Tonnes of gold.”

They’ve been making such light of it, one has to assume they know the gold is there. Musk was laughing about the conspiracies on podcasts, and he even posted a picture of a Fort Knox starter kit: a brick and some gold spray. I can’t see how they would be joking if there were any serious doubts.

Secretary of the Treasury, Scott Bessent, has said quite categorically that the gold is there. The last audit was in September 2024, he said in a recent Bloomberg interview, before looking down the camera and assuring the US people that “all the gold is present and accounted for”. But this would only have been an internal audit, and it would not have been a full audit.

According to the US Mint, “the only gold removed has been very small quantities used to test the purity of gold during regularly scheduled audits”. No other gold has been transferred to or from the depository “for many years”. How long is many years, though? As far back as the 1960s.

It’s quite astonishing just how secretive the whole thing is. They opened the vaults for a congressional delegation and certain members of the press to view the gold in 1974. There were rumours swirling about then too. “We’ve never done this before and we’ll probably never do it again,” said the then director of the US Mint Mary Brooks.

Then in 2017, during Trump’s first administration, Treasury secretary Steven Mnuchin and Senate majority leader Mitch McConnell were invited to view the gold. “The gold was there,” Mnuchin said. He is “sure” nobody’s moved it. There are “serious security protocols in place”. But there are more than 4,000 tonnes in Fort Knox. A tonne would be about the size of a medium to large suitcase. Did he see all 4,000 of them?

The other big issue is the purity of the gold. What is there might not all be of good delivery quality, meaning it would not be readily accepted in international bullion markets. If much of the gold is the bullion Roosevelt confiscated in the 1930s, it will be in the form of “coinmelt”: melted down coins.

The commonly confiscated coins, such as the $20 double eagle, were only 90% pure and mixed with copper to make them harder. When melted down, they were not always properly refined to modern standards, while the bars they were melted into weighed 320-330 ounces, not the 400 oz bars of good delivery standard today. In practice, this means Fort Knox gold would not be accepted without additional processing.

But, until a proper audit takes place, this is all speculation, albeit reasoned speculation. We don’t know the full facts. The reasons given for not conducting a full audit are flimsy: we don’t need to, it would be too much of an undertaking. Please!

If the US gold turns out not to be there, then the gold price goes up – potentially a lot. If it is there, it’s business as usual.

For now, I’d say the markets are behaving as though it is business as usual. They are climbing, and every dip is being bought, largely, it seems, by central banks (especially in Asia), who are diversifying their holdings and de-dollarising. But this audit cannot come quickly enough.

Finally, I would just like to debunk one theory doing the rounds. US gold is currently marked to market at $42/oz. After the audit, those 8,133 tonnes – assuming they are there and of good delivery quality – could be marked to market at current prices, meaning a significant uplift in the value of holdings.

The theory doing the rounds is that Treasury secretary Bessent will use some of the upwards revaluation to monetise the balance sheet – not unlike how Roosevelt did in 1933 – to create funds for, among other things, the strategic bitcoin reserve. But Bessent has quite clearly stated that is not his intention.

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I am not as much of a gold bug. I sympathise with many of the criticisms. It is not a productive asset. It does not generate an income. It incurs storage costs, so you can even say that it has a negative yield. We are not returning to a gold standard, so the idea that it represents sound money is wishful thinking. These arguments are all very logical.

Yet gold also has a long history as a trusted store of wealth and there are logical reasons for that as well. It’s rare and expensive to mine. It looks the part – this is a social judgement, but one that has lasted for thousands of years. It does not tarnish, rust or corrode. It is dense. It has few industrial uses, so its value is set by investment or jewellery demand (ie, wealth-related purposes). Other materials have some of these desirable traits, but gold combines them all.

So regardless of any persuasive case against gold, it is still seen as valuable by a large number of people and that’s ultimately what matters. You don’t need to be a gold bug to recognise that it behaves differently to other assets and there are solid reasons why that’s likely to continue for the foreseeable future, which means that it can have a very useful role in an investment portfolio.

Gold hits a new record high

Gold has certainly done very well for investors of late. The price has reached a record high in real (inflation-adjusted) terms, passing the record set in 1980. Yet this has been a surprisingly stealthy bull market: it would be an exaggeration to say that it’s gone unremarked, but there has been far less discussion about gold than during the big mid-to-late 2000s bull run. Even more surprising is that the amount of gold held by exchange traded funds (ETFs) – the most convenient way for most investors to hold gold – is lower than it was in 2020-2022, when the gold price perked up again after a few flat years.

This lack of curiosity is starting to change. Earlier this month, both Bloomberg and the Financial Times had lengthy articles about gold’s new highs. In truth, neither were very complimentary, implying that buyers are somewhere between mad and miserly. Gold bugs sometimes see this kind of commentary as a deliberate attempt to talk their favourite metal down, which is a stretch (the only asset that the investment industry is really desperate to discredit is cash because it earns nothing on cash savings, hence the incredibly misguided lobbying campaign to kill off the cash individual savings account (Isa) that the City is now waging). However, it reminds us that there is something about gold that makes many investors a little bit uncomfortable.

Perhaps it’s the nagging sense that gold is going up not because of a mania or a bubble (yet), but because the world is in a state of flux. In particular, a critical driver of demand has probably been the accumulation of gold reserves by central banks in emerging markets (eg, China), as they try to diversify away from the dollar. This still feels like a long-term trend. Any additional buying as gold comes out of the shadows – watch those ETF flows – would be a helpful extra boost.

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Flows into gold ETFs totalled $3.04 billion in January, more than tripling the total global flows seen the previous month. European gold ETFs accounted for more than the global net total, though, as North America posted $500 million of outflows.

ETFs are a popular means of investing in gold, and flows in and out of these products can often give a sense of which markets and events are driving gold demand.

Gold prices hit record highs during 2024, gaining 29.3% and outperforming many of the major stock market indices in the process. The yellow metal has gone on to bigger and brighter things already in 2025, peaking at just under $2,940 per troy ounce on 11 February.

January this year marked the second consecutive month of positive gold ETF flows, according to data from the World Gold Council.

Gold funds registered a net $3.4 billion inflows during the whole of 2024, bringing total assets under management (AUM) to $271 billion – the highest they have ever been. 2025 has got off to a positive start, with physically-backed gold ETFs adding $3 billion of assets in January.

There has historically been a close link between gold ETF flows and the gold price. Adrian Ash, head of research at BullionVault, tells MoneyWeek: "ETFs have played a huge role in gold’s long-term bull market so far this century, helping make it the best-performing asset bar none of the past 25 years."

Regional gold ETF flows

The strongest demand came from Europe, in particular the UK, which saw $1.57 billion of fund flows during January – the largest of any individual country – and Germany, which came second with flows of $1.17 billion. European gold ETFs as a whole registered fund flows of $3.42 billion during the month.

Having been a major driver of 2024’s gold rally, Asian fund flows fell back from $748 million in December to $57 million. There was some variation within the region: Indian funds posted record inflows of $400 million during the month, but China, which had been a key driver of flows last month, saw nearly the same level of outflows.

North America posted its second consecutive month of gold ETF outflows, with president Trump’s inauguration reversing a trend of positive flows that had kicked off the month. In total, $499 million of funds flowed out of North American gold ETFs in January.

Source: World Gold Council

Which gold ETFs saw the largest inflows?

The gold ETs that saw the biggest positive flows during January were:

Source: World Gold Council

The iShares Physical Gold ETC (LON:SGLN) saw the largest inflows during January, underscoring the extent of investor demand in the UK.

Three of the top ten ETFs for January inflows were UK-based, along with three from Germany and two from Switzerland. Only one US gold ETF made the top ten.

Which gold ETFs saw the largest outflows?

At the other end of the scale, these gold ETFs saw the largest outflows:

Source: World Gold Council

Three of the top ten ETFs for January outflows were based in mainland China, though the fund that registered the largest outflows in the month was the US’ SPDR Gold Shares ETF.

Despite gold being prized among some investors because of its qualities as a store of value and a hedge against global instability, the tumultuous geopolitics of 2026 seem to have put the brakes on what had been a promising gold rally.

Gold enjoyed its best year since 1979 last year. The price of gold rose 64% through 2025, and kept going early in 2026, hitting an all-time high of $5,595 per troy ounce on 29 January.

But despite its safe haven appeal, gold prices started to fall as war broke out in Iran – and haven’t recovered since.

Between 27 February, the last trading day before the Iran war started, and 26 May, the price of gold fell 14.4%.

Why has gold sold off like this, just when the kind of turmoil it is supposed to protect against is at its worst? And with that in mind, is gold still a good investment – or is it time to trim your gold holdings?

Why has the gold price fallen?

The point of safe haven assets is to provide a source of liquidity when it is needed.

As stock markets fell through the course of the Iran war, people of all types – traders, investors, and everyday consumers – cashed in what they could in order to cover the shortfall.

Gold was a prime candidate. It is a highly liquid asset, and its rapid gains last year and early in 2026 meant that there were profits to be made from selling it.

In the run-up to reaching all-time highs around $5,600 in January, a troy ounce of gold gained around $1,000 in about a month. “Normally, it takes years to gain $1,000 on gold,” said Nitesh Shah, head of commodities and macroeconomic research at asset manager WisdomTree.

A selloff from what Shah calls January’s “unsustainably high levels” had begun in February, but the fallout of the Iran war accelerated this.

“A traditional phenomenon in geopolitical shock events is that usually, when a shock event happens, gold prices initially fall,” said Shah. This happened after various historical stock market crashes, including 9/11 and the global financial crisis in 2008.

“The mechanism here is that gold is a liquid, cash-like investment. When there is stress in the market, people need to unlock that liquidity,” said Shah.

Gold prices are also being weighed on by higher US interest rate expectations in the wake of the conflict. The Federal Reserve (Fed) – the US’s central bank – had been engaged in a steady rate-cutting cycle in the run-up to the war, but the inflationary shock that followed has stalled this trend.

The Fed held rates steady at its last meeting at the end of April, and some experts now believe it may be forced to start raising interest rates.

Higher interest rates are negative for gold’s price performance.

“As a non-yielding asset, gold performs best when real yields decline and the US dollar depreciates,” said Kiran Kowshik, global FX strategist at Lombard Odier in a research note published by the private bank. “However, an energy supply shock can have the opposite effect, resulting in markets pricing higher central bank rate expectations, higher yields and a firmer US dollar.”

Is there a buying opportunity for gold?

The big question is how this affects the investment thesis for gold, particularly its status as a safe haven.

“If the Middle East conflict de-escalates and energy prices fall, in line with our base scenario, gold could recover,” said Kowshik. He added, though, that this is not the only variable impacting whether or not gold might recover in future.

While short-term headwinds like a stronger dollar and higher bond yields have worked against gold prices, longer-term structural drivers that have driven higher gold prices remain intact.

“Cooling investor sentiment does not undermine the structural case for gold, but instead shifts focus back to slower-moving drivers including central bank demand, portfolio allocation and fiscal uncertainty,” said Kowshik.

“I don’t think that, behaviourally, gold is broken,” said Shah. “If gold is supposed to be a highly liquid asset, then it’s doing its job.”

The gold landscape today is characterised, relatively speaking, by broader sources of demand than in the past: Chinese insurance companies and Indian pension funds have become eligible gold buyers since the start of last year, while the rise of gold-backed tokens like Tether gold mean that digital asset managers are now buying up gold in large quantities.

All of that suggests that the recent selloff could constitute a buying opportunity for would-be gold investors.

“When prices fall this much, it’s a good time to buy, especially if you were considering buying in the months prior to that,” said Shah.

Gold for diversification

One of the most compelling arguments for investing in gold is the diversification that it can offer to a portfolio.

“When bond yields stand at higher levels, shares and fixed income investments tend to track each other higher and lower,” says Tom Stevenson, investment director at Fidelity International. “That reduces the incentive to own a mixture of both bonds and shares. And it means that investors need to look further afield, into commodities and property, to gain that portfolio balance.”

Gold, by contrast, has “low-to-negative correlation to equities”, according to Raymond Backreedy, chief investment officer at Sparrows Capital.

An allocation to gold within a portfolio can therefore act as a source of diversification during certain market conditions.

When building multi-asset portfolios, “we typically allocate 3-10% [to gold] using the gold ETCs available on the market, depending on user case and overall percentage allocated to the defensive asset class”, said Backreedy.

With gold providing strong performance in 2024, many investors are looking to gold miners. The AuAg ESG Gold Mining Ucits ETF (LSE: ESGO) is an exchange-traded fund (ETF) offering equal-weighted exposure to mining companies with high environmental, social and governance (ESG) standards.

This ETF therefore has two unique features. Firstly, it is equally weighted, so its holdings are not dominated by one single stock or a handful of them. Secondly, the ESGO ETF allows investors to gain exposure to the best-in-class gold miners from an ESG perspective. As well as allowing investors to align their investments with their values, the ESG screening approach helps to mitigate risk. Companies with poor ESG scores, which the ETF does not provide exposure to, may be more at risk of being involved in controversies that can affect their bottom line.

Top gold and precious metal stocks to reduce risk

1. Wheaton Precious Metals (NYSE: WPM) is one of the largest players in the precious metals streaming business. Wheaton finances mining projects in exchange for a percentage of the production, allowing it to reduce operational and environmental risks.

In the second quarter of 2024, Wheaton reported revenues of $299m, a 13% year-on-year increase. It achieved a return on equity of 8.54% and a net margin of 50%. Wheaton is focused on minimising its environmental impact. The group’s latest Climate Change Report noted that 87% of emissions from firms it finances are now covered by reduction goals, while 70% of Wheaton’s current revenue is sourced from mines that are producing metals required for the clean energy transition. The company also noted that it is one of the top-rated companies by Sustainalytics and holds an AA ESG rating from MSCI.

2. B2Gold (NYSE: BTG) is a Canadian gold producer with mines in Mali, Namibia, and the Philippines. The company also has a 25% interest in Calibre Mining and a 19% interest in BeMetals. In addition, it has a portfolio of other exploration assets in Mali, Uzbekistan and Finland. B2Gold’s current valuation is attractive.

The miner has a forward price/earnings (p/e) ratio of 12.84, which is below the industry average of around 15, using the NYSE Arca Gold Miners index. This suggests that the stock is trading at a discount to its peers in the gold mining sector. B2Gold has been integrating renewable energy into its mining operations: 22.9% of total electricity consumed was from renewable sources in 2023. Its Otjikoto mine in Namibia is now principally powered by clean-energy sources, with renewables accounting for 81.4% of the electricity used.

A play on the monetary metals

3. Pan American Silver (NYSE: PAAS) While primarily a silver producer, Pan American Silver also produces significant amounts of gold. Its operations are spread across Latin America. As of 30 June 2024, Pan American reported 6,893 kiloounces (one thousand ounces) of proven and probable gold reserves. To translate this into more familiar terms, it is approximately 194.8 metric tonnes of gold reserves.

Its latest earnings report for the second quarter showed revenue of $686.3m, representing growth of 7.3%. Pan American has an ambitious goal to achieve net-zero emissions by 2050 and has been investing in energy efficiency at its sites. The miner hopes to reduce emissions from its operations by 30% by 2030.

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The price of gold has been on a tear this year; it had gained a fifth by the start of September. But its recent stellar performance notwithstanding, for many investors, gold is a vital piece of insurance in their portfolio. As the old saying goes: “Gold is money, everything else is credit.”

Gold is the only monetary system that has been with humanity for most of its history on earth. Therefore history and stability are the key reasons you buy and hold physical gold. Historically, if investors wanted exposure to gold, they would have had to purchase physical bullion themselves. This can be complicated and makes buying and selling to maintain a target weighting in a portfolio tricky.

Many investors now use physically-backed exchange-traded commodities (ETCs). Investors can buy shares in an ETC, just as they would in an exchange-traded fund (ETF), to gain direct exposure to the price of gold. The Royal Mint was established in 886, over 1,100 years ago, and has been intimately involved in gold markets since. Alongside its coin and bar offering, the Mint has produced an ETC to leverage gold’s history and stability: the Royal Mint Responsibly Sourced Physical Gold ETC (LSE: RMAU). Below I will outline three of the key features of RMAU.

Firstly, as the name suggests, this is an ETC held in custody by The Royal Mint, one of the world’s oldest companies. Its origins stretch all the way back to Alfred the Great. Since then, the scope of The Royal Mint has drastically changed, now ranging from producing commemorative coins to offering gold-based investment options. The RMAU ETC is one such offering.

Using a gold ETC managed by The Royal Mint means tapping into that long and storied history, while the gold you have gained exposure to is stored in The Royal Mint’s vault in Llantrisant, Wales, one of the world’s most secure. This is in contrast to the vaults of a financial institution, as is the case for other gold ETCs. As a result, the gold is outside the financial system and away from big cities.

Gold goes green

Another key point about the RMAU ETC is sustainability. In 2022, the RMAU ETC was the world’s first to ensure it was partly backed by certified 100%-recycled gold bars. At present, around 60% of the gold backing the ETC is 100% certified recycled. Gold mining is energy-intensive. But recycled gold can be more than 90% less carbon-intensive than mined gold. We’ve seen electronics firms such as Sony and jewellery brands including Pandora commit to using recycled gold. Why should investments be any different? At the same time, all of the bars are 100% backed by the LBMA (formerly named the London Bullion Market Association), the independent precious metals authority, and responsibly sourced. This sustainability focus is part of a wider sustainability commitment across The Royal Mint.

Finally, physical gold ETCs are physically backed. But RMAU actually allows the investor to get their hands on the gold they are investing in. An investor in the RMAU ETC can exchange their shares in the ETC for gold itself. If an investor wants to do this, they can select from the various gold cuts available from The Royal Mint, from Sovereign and Britannia gold coins to multiple-size bars, depending on the value of their investment. Gold is supposed to be a safe-haven asset, so knowing you can physically call in the actual gold, should you so desire, offers great peace of mind.

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The gold-silver ratio has long been considered an important metric to gauge the best time to invest in precious metals.

If you monitor gold, you’ll know that the yellow metal is usually seen as a stable investment. The gold price had a glittering start to 2025, with investors flocking to the metal as a hedge against inflation.

Central banks are also buying up the commodity due to its diverse use in various industries like nanotechnology and cancer therapy.

Silver is traditionally more of a volatile investment, however, the ‘devil’s metal’ gained 21.5% last year and is up around 12% so far in 2025, leaving some investors wondering if now is a good time to invest in silver.

Whether you are new to precious metal investing or want to diversify your portfolio, it’s useful to know the relative value of silver against gold.

It can affect investor sentiment, help understand economic trends, offer a hedge against inflation, and influence your investment strategy.

What is the gold-silver ratio?

The gold-silver ratio compares the price of gold to the price of silver. Essentially, it tells you how many ounces of silver are needed to buy one ounce of gold and it is calculated by dividing the current market price of one ounce of gold by that of one ounce of silver.

The gold-silver ratio is the oldest tracked exchange rate that is still in use, and it is a guidepost for investment decisions, be it inflation, deflation, market crashes, and broader economic trends.

At the time of writing, gold was priced at £2,342.66 per ounce, and silver at £25.53 per ounce, so the gold-silver ratio was 92:1, according to UK bullion dealer Chards. Therefore, gold is currently 92 times more expensive than silver.

The higher the ratio, the more expensive gold is relative to silver. While there’s no definitive benchmark for the ratio, assessing the current gold-silver ratio against its average in recent years can be one factor that investors can use when making an assessment on when to buy or to swap holdings of either metal. Divide the current ratio by the average and you can calculate whether one metal looks too expensive or the other too cheap, based on average performance.

All-time gold-silver ratio

History of the gold-silver ratio

Gold and silver have been precious metals for a long time, and many may be surprised to know that the gold-silver ratio has been measured ever since ancient Roman times. The gold-silver ratio has evolved significantly over the centuries, due to changes in economic conditions, market dynamics and geopolitical events.

Long ago, the ratio between the two metals was set by governments and empires to control currency and coinage. The earliest record available dates back to around 3200 BCE, when ancient Egypt recorded a ratio as low as 2.5:1. The Roman civilisation was one of the earliest to set the ratio, which started at around 8:1, and over the decades, was bumped up to 12:1.

Since then, the value of gold has only risen, as the difficulty of mining and production of the two metals, notably gold, increased its scarcity value.

By the 18th century, most countries had moved away from using silver as common coinage and switched to gold alone. The US government's Coinage Act of 1792, which confirmed the dollar as the US standard currency unit also fixed the gold-silver ratio at 15:1. This ultimately resulted in gold being valued over silver, making the yellow metal more expensive, and causing gold coins to be hoarded and/or exported. The ratio was later adjusted to 16:1 in 1834.

By the 20th century, the ratio had already begun reaching dramatic heights of around 40 ounces of silver for one of gold, and even peaked at nearly 100:1 with the advent of World War II.

If the gold-silver ratio was still based on the availability of the natural supply of the metals it would stand at 15:1– estimates suggest there is roughly 15 times more silver in the Earth’s crust than gold.

But gold has been seen for years as a store of value, a hedge against inflation and the gap between gold and silver is ever mounting.

In April 2020, the gold-silver ratio reached a record 125:1, as a response to the onset of the Covid pandemic. Today, the ratio has dropped from those heights and is now sitting around 92 ounces of silver to one ounce of gold.

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“There’s a new gold rush,” says Paul La Monica in Barron’s. Not in California, but “on Wall Street”. 

The yellow metal has climbed a fifth this year and recently gold hit a new record high in dollar terms. It has eased back from August's record of $2,531.70 an ounce (oz) to trade at around $2,475/oz (£1,886/oz). 

How are US rate cuts helping gold?

Gold’s latest spurt came as the Federal Reserve chair Jerome Powell signalled interest rate cuts ahead. US rate cuts help gold in two ways. Firstly, gold is normally priced in dollars. Lower interest rates tend to weaken the greenback, meaning that more dollars are required to buy an ounce of gold than before. Secondly, interest-rate cuts reduce the yields available on bonds, which are gold’s main competitor as a safe-haven asset, says Étienne Goetz in Les Echos. With less competition, the yellow metal is able to shine.

The “surge” in gold prices has been underpinned by “phenomenal appetite” from central banks – especially in countries not aligned with the US. Monetary authorities have bought more than 1,000 tonnes of gold each year for the past two years, a level of buying not seen in five decades.

What's driving the demand for gold? 

Gold has no counterparty, making it “the anti-currency” and anti-banking asset of choice, Keith Weiner of Monetary Metals told Aly Yale for CBS. 

When people “lose confidence in the stability of their national currencies, they turn to gold as a hedge”. Demand is being driven by deep anxieties about “debt levels, abuse of monetary policy, and either fear or desire for de-dollarisation.” With a contentious presidential election coming up, there is plenty of fear to go around. Analysts tip the metal to reach anywhere from $2,600 to $3,000 an ounce over the coming months.

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Read more

• Gold price hits record high – could it soar higher?
• Gold or silver: which is the better bet?
• How to invest in gold

'Should I invest in gold or silver?' is a question that comes up a lot. In fact, a friend was asking me about it just this week. So let’s try to resolve it here and now, once and for all: gold or silver – which should you buy? Full disclosure: in my own portfolio at one stage I was geared as much as 70% towards silver and 30% towards gold. But in 2011, when silver went to $50, I rolled into gold and never went back. My physical allocation is now probably something like 90% gold and 10% silver. To be clear, we are not talking about mining companies, which are a different kettle of fish altogether – just physical metal. 

Silver has a great deal more potential than gold. There is every possibility that the silver price could triple or quadruple from today’s price of just below $30 per ounce (oz). It could even go to $200. But my experience of 20 years’ investing in silver is that if it can find a way of disappointing, it will. The out-and-out silver bugs all scream manipulation, and maybe the silver market is manipulated and suppressed. Certainly, if all the longs on the futures exchanges were to hold out for delivery, the silver price would go shooting up. There is not the physical supply to deliver on all the contracts. That applies to many commodities, although to none, it seems, as consistently as to silver. 

But why invest in something if forces are stronger than you are repressing it? It is unlikely, meanwhile, that gold will triple or quadruple from today’s price of $2,500/oz unless we enter into some kind of currency crisis or extreme inflation. Then again, the silver price could easily halve from $30/oz. I don’t think a 50% correction in gold is likely, except in the event of some deflationary financial panic or liquidity crisis such as we saw with Covid in 2020. In any case, such a correction would be temporary.

What's the right silver-to-gold ratio

My friend was told to buy silver because the silver-to-gold ratio at 86 is high and should go lower. Let’s consider that argument. There is 15 times as much silver in the Earth’s crust as there is gold, and throughout all of history the monetary ratio between the two reflected natural supply. Fifteen silver coins got you a gold coin. But silver stopped being used as money in the late 19th century. The many gold rushes of the period increased the gold supply, and most countries around the world followed Britain’s model and adopted pure gold standards. 

By 1900, China was the only major country in the world on a bi-metallic standard. Every other nation was on gold alone. In my lifetime, the silver-to-gold ratio has only once gone back to its natural levels of 15, and that was in 1980 for an afternoon, when the Hunt brothers’ infamous attempt to corner the silver market reached its climax. The reality is that the silver-to-gold ratio has gradually been climbing for a generation now, averaging between 50 and 85, although going above or below those levels at times of market extremity. In 2020, it went to 125. 

I accept that the silver-to-gold ratio “should” be 15. In fact, perhaps it should be even lower because silver gets consumed, while gold does not. But in practice, I don’t think that ratio will ever go to 15 in my lifetime, certainly not for any extended period. The other argument that my friend was given to buy silver instead of gold was that silver has many industrial uses. This is indeed the case. But even though the range of silver’s industrial applications is expanding, the silver price has not taken off. Gold’s use throughout history has been to store or display wealth; silver’s has been to exchange it. Silver no longer has that use, nor is it likely to. We don’t use metal as a medium of exchange anymore. Money is digital. We don’t buy gold to become millionaires.

We buy gold to protect the value of what we have already earned. Gold will continue to do that. Silver might not. Silver is much more speculative. It has the potential to earn you more money than gold, but it also has the potential to lose you more than gold. Why not own both? Are you buying precious metals because you think fiat money is going to collapse and, in this hyperinflationary scenario, you’re suddenly going to become a multimillionaire, sweeping up assets at bargain basement prices because you own precious metals? Or are you buying them because you think the purchasing power of fiat money will continue to erode over the next ten or 20 years and you want to protect what you have? 

If your purpose is speculation and you want to get rich, then maybe silver or silver options are a way to do that, or silver mining companies. But they are all also ways to become poor. If your purpose is simply to protect what you have earned, then gold is the way. There is a definite case for both. But understand why you are buying the metal and be truthful with yourself as to why you’re buying it. That will give you the answer between gold and silver. As for my friend’s question, I hedged: I suggested buying 75% gold and 25% silver.

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Interest rate cuts aren’t always a cause for celebration if you are an investor. While rate cuts ease pressure on individuals and businesses by lowering borrowing costs, they can also signal that the health of the economy is declining.

For the past three years, investors and economists have been speculating about the likelihood of a “soft landing”. Would central banks be able to raise rates just enough to tackle inflation, before lowering them in time to prevent a recession?

For a while, the picture looked positive. Economies proved surprisingly resilient in the face of higher rates and stock market performance looked good. After a rough year in 2022, the S&P 500 delivered back-to-back returns of more than 20% in 2023 and 2024. Global equities weren’t too far behind.

Despite this, the picture has become more complex in recent weeks. US president Donald Trump has spooked businesses, households and investors with his erratic tariff regime which threatens to push inflation higher and dampen economic growth.

While interest rates remain an important consideration for investors as they construct their portfolios, it is impossible to take advantage of the shifting interest rate environment without first considering the latest geopolitical developments.

Firstly, geopolitical developments will influence the speed and extent of rate cuts. Secondly, they will influence what's behind them. In other words, are central bankers cutting rates because inflation has come under control or because growth has become a concern?

These considerations will shape whether investors are bullish or defensive in their approach.

1. Gold

The current interest rate environment could make gold attractive. The gold price tends to rise when interest rates are cut, as gold (which pays no interest) becomes more attractive on a relative basis as the yield on cash falls. The gold price has continued to hit new highs so far this year and is up around 11% year-to-date.

Beyond interest rate considerations, gold bugs will tell you that the yellow metal is always a good thing to have in your portfolio. It holds its value well, meaning it can act as a hedge against inflation. It also has a low correlation with equity markets, which means it offers good diversification potential.

Demand for the asset remains strong, and safe-haven buying could propel it even higher going forward. Physically-backed gold ETFs saw significant inflows in February totalling $9.4 billion, the strongest since March 2022, according to the World Gold Council.

“Recently, Trump's tariffs have increased uncertainty and market volatility, which supports the likelihood of gold being viewed as a safe-haven asset. These factors have traditionally driven investors toward gold as a reliable investment during unstable times,” said Rick Kanda, managing director of The Gold Bullion Company.

See MoneyWeek’s round-up of the best gold ETFs.

2. Bonds

Bond prices tend to rise when interest rates fall, as the coupons on existing bonds start to look more attractive than those on new issues. With further interest rate cuts expected over the course of 2025, the asset class could be worth a look. Yields are still high, meaning a decent level of income is on offer too.

When weighing up which sorts of bonds (or bond funds) to include in your portfolio, there are a range of considerations – from credit quality to duration. As recessionary risks ramp up, investors might want to opt for more creditworthy parts of the market. This could include developed market government bonds or high-quality investment-grade corporate bonds, where the risk of defaults is minimal.

Another reason for opting for more creditworthy bonds in today’s environment is that credit spreads (the premium investors get paid for taking on more credit risk) are currently quite tight. In other words, investors are not being compensated that well for buying riskier bonds.

When it comes to duration, some might make the case for investing in bonds with longer maturities to “lock in” higher interest rates for longer. However, with inflationary pressures heating up again, this approach could come with risks.

“Although longer-dated bonds have high yields which can be locked in, the market volatility of these bonds can result in significant swings in value,” said George Martin, senior fixed income analyst at wealth management firm Charles Stanley. For this reason, he favours shorter duration bonds around the two-to-three-year level.

The longer a bond’s duration, the more sensitive it is to changes in inflation expectations. “Longer-dated bonds therefore carry a higher level of risk, and in a world where inflation doesn’t get back to the central bank's 2% target, investors could see losses, despite the bonds having a high yield on paper,” Martin added.

3. UK dividend stocks

Although bond prices will rise as interest rates fall, the level of income on offer in the bond market will start to come down. The same is true for cash yields. We have already seen a barrage of interest rate cuts in the savings market over the past year. As this takes place, investors who are reliant on income may need to consider increasing their allocation to dividend-paying equities.

The UK market is a fertile ground for dividend stocks. Currently, the FTSE 100 is offering a 12-month forward dividend yield of 3.8%, based on Factset data. The FTSE 350 is slightly higher at 3.9%. This is not too far behind 10-year government bonds, which are yielding 4.7% at the time of writing. Share buyback activity has also risen in the domestic market in recent years, meaning the real cash return investors are getting is higher than the dividend yield would suggest.

“Thus far in 2025, the UK equity market has offered more dividend increases than it has cuts, more share buyback announcements in value terms than at the same stage in 2024, and more positive surprises than negative ones,” said Russ Mould, investment director at platform AJ Bell. “This is all despite what appears to be, on the surface, a gloomy macroeconomic backdrop and a tense geopolitical one.”

If the domestic market continues the year as it started, with strong share price performance, you could also benefit from capital growth. Stock markets around the world have taken a hit in recent days, but the FTSE 100 is still up around 3% year to date. This compares favourably to the S&P 500, which is down almost 5% over the same period.

Alternatively, if the market takes a downturn, dividend stocks could prove a defensive play. The ability to regularly pay a consistent (or rising) dividend to shareholders is often a sign that a company has good financial discipline.

4. If you are more bullish on the growth outlook… small caps

Those who are more optimistic about the economic outlook might want to focus on less defensive areas of the market. For example, if you think recessionary fears are overblown, small cap stocks could be worth a look.

Smaller businesses typically suffer during periods of high inflation and interest rates. It can be more difficult for them to swallow price increases and they are often more leveraged (and more exposed to floating-rate debt) than their larger counterparts. As inflation comes under control and interest rates fall, they can rally.

Research from global investment company Aberdeen, published earlier this month, suggests UK small caps offer particular opportunities, trading at a discount of more than 24% compared to their 10-year average.

That said, it is worth pointing out that they could take a hit from the increased labour costs coming in from April. “Smaller firms may find it harder to adjust to the increased costs brought by the [higher] minimum wage and higher national insurance contributions,” Mould notes.

Never mind central banks, investment banks or private investors. The jewellery industry is, by some margin, the single largest buyer of gold, comprising almost 50% of annual demand for the yellow metal. Another 23% stems from investment, and 21%, last year at least, came from central banks. Just 6% of the demand for gold is industrial (excluding jewellery, of course). 

Demand from technology is at the margin, but might we see growth there? Let’s investigate. While silver and copper are better conductors of electricity, gold is more resistant to corrosion and oxidation. Therefore, it finds considerable use in electronics as a coating, especially where long-term stability is important. It is used to cover connectors, switches and relay contacts; in printed circuit boards, microprocessors and memory chips. This resistance means it is utilised in both aerospace and outer space, where it coats satellite components and spacecraft. 

At the final frontier, it can reflect infrared radiation and protect the craft from overheating, which is key in the huge temperature fluctuations of outer space. It is also used in the heat shields that protect sensitive equipment from high temperatures during re-entry into Earth’s atmosphere. The cord binding an astronaut to their spacecraft is plated with gold. The visors of astronauts’ helmets are plated with it to protect their eyes from harmful ultraviolet radiation. Ultimately, gold’s permanence is the fundamental reason for its use. You need durable materials when you send a spacecraft to outer space – you can’t repair it. Space usage is not yet significant enough radically to affect demand for gold, but that could change dramatically as space exploration increases. 

At the 2021 Olympics in Tokyo, the metals to make the medals came from a recycling initiative. The Japanese handed in nearly 80,000 tonnes of electrical gadgets, including laptops, digital cameras, gaming devices and six million phones. The appliances yielded 32kg of gold and 3,500kg of silver. There is, I learn, about 80 times as much gold in one tonne of mobile phones as there is in a typical tonne of rock at a gold mine. Increased high tech means greater demand for gold, but perhaps not enough to affect the price.

Will gold rally?

Gold’s reflective properties, combined with its stability, mean it finds use in optics: in lenses and mirrors, especially space telescopes, to reflect infrared light. Gold plates the mirrors of the celebrated James Webb telescope, the largest optical telescope in space, to optimise the mirrors’ function, allowing it to view objects too old, distant or faint for the Hubble Space Telescope. There is a Canadian company, Totenpass, which has been developing some interesting gold tech, also related to gold’s longevity: “a permanent digital storage drive constructed from solid gold that requires no energy and has no movable parts. This technology allows for the permanent storage of precious digital data, thereby eliminating any future dependence on the internet and the vast amounts of energy presently required to store content”. Here, it seems, is a very modern application for the extraordinary permanence of gold. 

Gold is increasingly being used in nanotechnology. Gold nanoparticles are used in photonics (the science of light waves), especially in the development of light-based technologies for imaging and sensors. Gold’s inertness makes it an excellent material for nanoparticles used as catalysts in various chemical reactions. For instance, gold nanoparticles are employed in the oxidation of carbon monoxide in air-purification systems. Researchers are also exploring gold’s potential as a catalyst to improve renewable energy efficiency and solar cells. Again, its conductivity and resistance to oxidation make it ideal for nanoscale electronic components. 

As for the medical industry, gold and healing have a long intertwined history. Gold was associated with the sun gods who bestowed health and vitality, or “helped the body produce vitamin D”, as we might put it today. Gold nanoparticles are used today in medical diagnostics and treatments, including targeted drug delivery and cancer therapy because they can easily be detected and manipulated. Additionally, gold’s biocompatibility ensures it does not provoke an immune response, making it suitable for use in various biomedical applications. In 2013, researchers found that gold nanoparticles reduced the ability of HIV to reproduce and infect new cells. 

Gold is also becoming one of the weapons in the battle against malaria. Of the hundreds of millions of malaria tests sold each year, many contain the yellow metal: gold nanoparticles bind with specific malaria antigens, which help quick and accurate detection of the disease. The test results can be ready in 15 minutes. Gold nanoparticles are also being used in building materials to enhance strength and thermal regulation. Coating glass with gold can reflect the sun’s heat in summer, while bouncing internal heat back into rooms in winter, resulting in substantial energy savings. It is corrosion-resistant too, which increases longevity. To use gold on a roof or façade is extravagant, but perhaps not as extravagant as you might think: an ounce of gold will cover up to 1,000 sq ft (90 square metres) in gold plate and it brings substantial savings. 

All in all, exciting stuff, but none of this demand will be enough to affect the price of gold. In most cases, we are talking about plate and nanoparticles. The main sources of demand for the yellow metal will remain what they have always been: as a store and a display of wealth. Jewellery and investment, in other words.

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Physical gold – whether that’s a stack of gold bars, a trove of gold coins, or any other form of gold bullion – is one of the most evocative images when we come to talking about wealth.

That’s with good reason. Gold has been one of the most effective stores of wealth in human history.

There are many ways to invest in gold, from gold ETFs to gold funds, but the most direct way is to buy gold bullion, or physical gold, outright.

The price of gold hit an all-time high of $5,600 in January 2026, following on from the best calendar year for gold price increases since 1979 in 2025.

The outbreak of conflict in the Middle East prompted a selloff in gold, though, with prices falling 11% between 27 February and 31 March.

“Precious metals have experienced an unusually sharp and rapid sell‑off in recent weeks, catching many investors off guard,” said Patrick Farrell, chief investment officer at wealth manager Charles Stanley. “Gold, in particular, has seen one of its steepest pullbacks in years, despite the kind of geopolitical uncertainty that would typically push prices higher.”

But these price moves appear to be a response to the need for liquidity, rather than a fundamental shift in the long-term wealth-preserving powers of gold.

“This sell‑off in precious metals looks less like a fundamental shift and more like a positioning reset driven by liquidity needs and crowded trades,” said Farrell. “The underlying drivers of long‑term demand for gold remain intact.”

The benefit of owning physical gold (in the form of gold bars or coins – known as gold bullion) is that you can keep it close to hand in the event of a crisis, if you are concerned about a financial or societal breakdown, for example.

Not so long ago the idea of such a breakdown would seem far-fetched. But then we had the 2008 global financial crisis. And in more recent times, Brexit, a global pandemic, and now wars in Eastern Europe and the Middle East – so it seems a little more likely these days than it did not so long ago.

So if you want to buy gold bullion, what’s the best way to go about it?

How to buy gold bullion

You can buy gold bullion in two main forms: gold coins or gold bars (sometimes called ingots). The advantage of gold coins over gold bars is that they allow you to be more flexible. After all, it's easier to sell 20% of your gold if you own ten gold coins than if your whole investment is in one gold bar. By the same token, given this flexibility, you'll probably find that coins are more liquid (easy to sell) than big bars.

But if you want to buy in bulk, then gold bars are a more cost-effective option.

This is because it is more expensive to produce several smaller gold coins or bars than one large one, even if the amount of gold used is the same.

According to the World Gold Council, the most cost-effective approach is to buy fractions of large gold bars that are stored professionally.

This means, though, that you don’t have the gold to hand, and if you’re buying it for peace of mind against a crisis, you might want to have it at home. But remember, this comes with risk and you will need insurance to cover against theft.

Where can you buy gold bullion?

The best option for most UK investors who want to buy and store physical gold is to buy from large, established British dealers. They will deliver it straight to your house, through trackable insured couriers. It's better to go with a well-known, large firm with a good record.

It’s important to ensure that you are buying and selling gold bullion with a reputable dealer. Be especially careful if you have been approached via email or online adverts: consider the risk of scams by searching for the name of the company online before engaging with them.

The World Gold Council recommends ensuring that the provider has a physical office and support staff you can contact via phone or email, and to check if the gold products you are considering buying qualify as regulated investment services and are covered by a compensation scheme in cases such as fraud or financial error.

The London Bullion Market Association (LBMA) lists the following UK-based dealers as full members, meaning that they adhere to its high standards of quality and ethics:

• Amalgamated Metal Trading
• Baird & Co
• BASF Metal Limited
• BullionVault
• Chards Coin and Bullion Dealer
• Jewellery Quarter Bullion (including BullionByPost and Gold.co.uk)
• Marex Financial
• Merrill Lynch International
• Mitsubishi Corporation
• Sharps Pixley
• Sucden Financial
• Triland Metals

You can also buy gold bullion directly from the Royal Mint.

Do you have to pay tax on gold bullion?

One of the advantages of buying gold bullion coins from the Royal Mint is that they are exempt from capital gains tax (CGT), because they are technically legal tender.

All coins minted by the Royal Mint are exempt from CGT, with the following exceptions:

• Some coin sets (potentially because there's value in the curation of the set);
• Some older coins (anything demonetised, such as Halfpennies, and Sovereigns minted before 1837);
• Any coins that are not UK coins (such as Alderney, Guernsey, Isle of Man, Gibraltar).

Gold coins produced by any other organisation are not considered legal tender, and you could therefore be subject to a tax bill if you sell them at a profit. Additionally, all gold bars are subject to CGT.

This is another advantage of buying smaller quantities of bullion, or owning fractions of remotely-stored gold; you can sell smaller amounts each year using your £3,000 annual CGT allowance, rather than selling the whole lot in one go and triggering a tax bill.

Another way to avoid paying CGT on your physical gold is to buy it through a

self-invested personal pension (Sipp)

. You can request your Sipp administrator to open an account with a gold bullion dealer, and you can then buy gold into your Sipp.

The gold will be stored remotely, which has some advantages and disadvantages compared to keeping your gold at home.

Physical gold storage: should you store gold at home or buy gold online?

A problem with taking physical delivery of gold is that you will need to store it securely. A home safe, or a bank safety deposit box, is the most obvious option for storing your physical gold close by.

If you do plan to store your gold bullion at home, you will need to tell your insurer. Depending on how much gold you have this could significantly bump up your premium.

An alternative is to buy your gold through a firm that offers remote storage. The trouble with that – depending on why you're buying your gold – is that you don’t have physical possession of it and you must have utmost trust that whoever is holding your gold is holding it securely. And indeed, that it does actually hold the gold that it says it does.

Firms like BullionVault, Chards and Sharps Pixley all offer remote gold storage services.

The thing that doomed the American empire more than any other was its currency. When the US substituted a fake, paper-only, dollar in 1971, it set in motion a financial doomsday machine. 

For a long time, it seemed to Americans and foreigners alike to be a blessing, an “exorbitant privilege”. We didn’t have to make things; we could just print money. Since the dollar was the world’s “reserve currency”, other nations took it willingly and even lent it back to us by buying more of our bonds. But now, the great weakness of paper money is (once again) becoming apparent. Since it can be produced at will, it can also be lent out at will – but in a crunch, it gives way. 

When the US switched from asset-backed money (dollars backed by gold) to a credit-backed system (dollars backed by an IOU from the US government) it lost its anchor. Gold is limited – and precious. People are careful with it. And when the wind picks up, it holds fast. 

Typically, in a correction or a crisis, prices fall and money becomes more valuable. People discover they’ve made mistakes. Those who’ve put their faith in promises and speculations lose money. Asset prices fall. And those who have real money can buy up the distressed assets and get back to work. In a fake money system, however, the money reserves at the heart of the system – “invested” in US bonds – don’t become more valuable; they disappear. 

US banks have some $685billion in unrecognised losses. These reserves were not really a solid asset, but a dubious credit, in which the world’s largest debtor promised to pay its debts with its own fake money. Now, in a pinch, they discover that they aren’t worth what they paid for them. What can banks do? For now, it’s “don’t ask, don’t tell”. They’re hoping the Fed will lower rates this year; then, things will go back to “normal” — the value of their bonds will go back up. In other words, the only way a fake money system can hold together is for the Fed to create more of its fake money, and lend it out at fake rates. 

Inflate – and make the next crisis worse. 

China's doom loop

That is not just a problem for the US. It’s also a big problem for its fellow delusional, China. Americans thought they could buy things they couldn’t afford, using their new fake money. China thought it could sell products to people by lending them the money to buy them.

Now, the whole fandango has reached a new phase. Chinese factories turned out finished products at low prices; consumer prices, worldwide, fell. This left Chinese exporters with a lot of money – and an almost insatiable optimism. They spent, they borrowed, they invested in more productive capacity, counting on the boom to continue. Economies adjust to whatever conditions they’ve recently experienced. And after 40 years of the fastest expansion ever recorded on planet Earth, many of China’s capital investments now depend on impossibly high rates of growth.

Alas, the boom has come to an end, leaving the Chinese with unsold apartments, silent factories, empty trains – and billions of dollars worth of debt. China’s pool of cheap, abundant labour has been completely drained and wages have soared.

Once the most productive uses of credit are satiated, the new money “flows into unproductive speculation and financial skimming operations”, as analyst Charles Hugh Smith points out. “At that point, all the new money flooding into the system drives inflation.”

And now, China – with billions, perhaps trillions, of dollars worth of “unproductive speculations” – faces a credit meltdown. Its “money” is disappearing along with its customers and its asset prices.

What can it do, but replace the fake money with more fake money – just as the US does? This is probably not the end of China’s drive for full-spectrum dominance of the world economy, but it sure looks like the end of the 1979-2021 boom.

The first piece I ever wrote for MoneyWeek was about gold miners. It was in 2006. "Buy this stock here," I said, with the easy confidence of a young man in a bull market. "It's 50 cents now, but it's going to be three dollars. As for that one there, it's a dollar. It will be five dollars by next year."

Every single one of these claims, made so casually because I knew no better, proved true. I must have tipped six or seven different stocks. There were doubles, triples, five baggers and ten baggers. I recommended one company, Gold Resource Corporation, below $2.The stock went up more than 15-fold to $30. Those bull market days are a long way away now. The bear emerged in 2011. In 2013 he took hold and, apart from six months of respite in 2016, he has refused to let go since.

Today, Gold Resource Corporation is one of the better companies in that it boasts producing mines and pays a dividend that is at $3.75. But that is one of the top performances. Many of the star companies of the 2000s do not even exist anymore some because they were taken out, others because they went to zero. Even the supposedly solid senior producers have been awful. Barrick costs C$16 today, 50% down on its 2006 price. Newmont sits at $32 when it was north of $40 12 years ago. Goldcorp touched $36 in 2006. This week it's $9.

When you compare this performance with America's benchmark S&P500, which has roughly doubled in the same time frame, the opportunity cost is just staggering. But what is perhaps most galling of all is that gold itself is also roughly double where it was in 2006. Today the gold price sits at $1,225 an ounce. In 2006 it ranged between $500 and $720. 

Why have gold miners missed the gold bull?

The received wisdom is that miners give you leverage to the yellow metal. If gold doubles, miners might triple or more. But this has not happened. You certainly get the leverage on the downside: when gold falls, the miners sell off by more. But the opposite has not occurred. The cumulative effect of this asymmetry is a situation where, even if gold is a lot higher than it was, the miners are a lot lower.

Some of the blame for this can be laid at the door of the miners themselves. They are often badly run. They have issued far too much paper. They bought unviable mines at the top of the market, which have since become write-downs. They have suffered from political and environmental risk. They have lacked discipline and financial rectitude. Companies have been run in the interests of management, not shareholders. Managements themselves have bought very little stock. But the companies are not entirely to blame. There is another factor at play here too.

Too much choice for gold investors

To understand this we need to go back to the 1930s. Homestake was the go-to stock of the decade. In the face of the Great Depression and a stockmarket that was in broad decline, Homestake, North America's largest gold miner, bucked the trend and multiplied many times over. The perceived wisdom was that something similar would happen in the great recession following the global financial crisis. And in fact there was a brief period in 2008 when this was the case. But it did not last. The broader trend in which gold outperformed the miners resumed.

Here's why. In the 1930s everyone was allowed to have up to 5oz ($100) of bullion coins. In 1932 President Roosevelt devalued the dollar as part of his New Deal strategy to kick-start the economy amid the Great Depression. The only way Americans could get any legal exposure to the gold price was by buying Homestake.

Fast forward to the 21st century and the reverse applies. There are umpteen different ways to buy gold or gain some kind of exposure to the gold price. You can go old school and buy coins or bars to store at home or in a safe. You can buy bars online and store them in a vault. You can buy the exchange-traded funds (ETFs). If leverage is your thing, you can buy leveraged ETFs, futures, options, CFDs or spread bets. Now there are over 100 gold-backed cryptocurrencies. The bottom line? There are so many ways to play the gold price that owning a gold miner and taking on all the accompanying individual company risk – the competence of the management, the geology of the mine, or even the local politics seems pointless unless there is some kind of special situation.

Miners and gold have diverged since 2006

The shoddy performance of mining operations relative to gold was masked for many years by the fact the gold price kept going up. Between 2001 and 2011 the gold price went from $250 to $1,920. As long as the metal was bullish, the miners were dragged up, even if the correlation between miners and metal was in structural decline. There were two periods of counter-trend action. One, as we have seen, was in late 2008, coming out of the stockmarket crash. The other was in the first six months of early 2016. Otherwise miners have underperformed. 

Consider the chart above of the ratio between miners and the metal over the last 20 years: the HUI index of gold versus unhedged gold miners. Hedged miners sell their gold before they have mined it to guarantee a certain price, a habit many developed during the long bear market of the 1990s. Hedging reduces the scope for losses during a bear market by shielding you from future price falls, but it also means you are likely to miss out on gains when the tide turns and drives gold above the price you agreed. Unhedged miners, therefore, do best in a bull market. When the chart is rising the metal is outperforming the unhedged miners; when it is falling the miners are outperforming. The broader trend has been inexorable since 2006. Compared with the period from 2000 to 2004 that is some considerable underperformance.

Miners that have bucked the trend

There are examples of companies that have bucked this trend. 

Randgold Resources stands out in this context. Its boss, Mark Bristow, successfully constructed a plethora of mines across Africa and his stock has gone against the broader trend – dramatically outperforming the metal, in its early years at least. There are other examples of competent management companies that have excelled in the business of either exploring for, developing, building, or operating a mine. But anything less than excellence, or a notch or two under that, has met with disappointment. If you are to have any success in today's market as an investor, you cannot accept anything beneath a first-class performance by the company you invest in. Otherwise, you will lose your shirt. Conditions are that hard. Bear markets are like that.

A bull market needs buzz...

Gold-mining exploration and development relies on hype. Promoters need to hype properties before they have been mined in order to raise the money to mine them. The better they hype them, and the better the industry backdrop, the easier it is to raise the cash they need and the better the price they can mine it at. The same logic applies to all bubbles. They accelerate investment.

With that accelerated investment essential infrastructure gets built more quickly than it otherwise would. The hype around dotcoms got the infrastructure around the internet built. The hype around railways in the 19th century got the tracks laid and the stations set up. Even if many investors lost money, the broader industry benefited. This is why we need bubbles. Mining, more than perhaps any other industry, is reliant on them.

But the problem is that after a bubble has popped it takes a long time for the narrative that drove the previous bull market to take hold again. Bad memories linger and it is very hard for any promoter to hype anything credibly when the sector is so visibly disappointing. Granted, we need better practice by gold-mining companies. Fewer Ferraris, private jets and nights at the Savoy would be a start, although the decadence witnessed among executives at the peak of the boom has, thankfully, largely disappeared. It would also help if there were fewer scams.

Where will the buzz come from?

Above all, however, we need a rising gold price and that we do not have. Beneath every bull market in gold-mining stocks is the fundamental case for gold. This is a strong story. Gold is money. It is a store of value in turbulent times. It is nobody else's liability. You can buy a similar amount of food, clothing, shelter or energy with the same ounce of gold that you could buy ten, a hundred, or a thousand years ago. Its value never deteriorates. People are always going to want gold.

The problem is, today they don't particularly. Over the last five years, the gold price has meandered between $1,050 and $1,400. Inventory levels in the main exchange-traded funds are close to record lows. Even Google searches for "buy gold" are down. Long gone are the days when a sign saying "we buy any gold" could be seen on every street corner.

Of course, we "should" be in a bull market. There are a million reasons why the gold price "should" be going up. The outlook hasn't been this gloomy in years. The threat of inflation lurks; interest rates outside the US are still extremely low (gold has no yield so it looks relatively appealing when rates are depressed); quantitative easing (money printing) and currency debasement continue; governments keep running up colossal budget deficits; the bond markets look as though they are on borrowed time; political unrest seems to be growing; and trade wars loom. Yet none of it seems to matter.

Expect a bounce

Since 2006, the other period of outperformance by the miners was in the first six months of 2016. The market was brutally oversold and sentiment was bitter beyond belief. There is a possibility a similar relief rally is not far away. There are many parallels, not least that bearish sentiment is almost as bad now as it was back in late 2015. The market could not be more indifferent to gold mining: fertile ground for a change in trend.

That remarkable rally in early 2016 (there were five baggers galore) followed the December tax-loss selling season. In North America, come December, investors sell their losers to offset the tax gains of their winners, and so oversold stocks become even more oversold.

Both 2017 and 2018 have been horrible in mining, and as a result I can say with almost total confidence that this year's tax selling, which begins now, will be brutal. There are going to be bargains galore. There is a very strong case for scooping some up with a view to selling them again before the end of February. Unless there are visible signs that the market is stronger than that, the time frame is that narrow. This would be a speculative bottom-fish with all the associated risk. It is hard to justify any longer-term investment in this sector without some demonstrable excellence on the part of management or some special situation, such as a unique discovery. These are possible to find, but the scope for error is huge.

My attitude will change if circumstances change, of course. But without the underlying support of a bull market in gold, this market is not going anywhere. Nonetheless, perhaps my saying all this in a MoneyWeek cover story is contrarian bullish: perhaps this article in itself will mark the low.

The miners set to shine

September saw the biggest merger in gold-mining history as London's largest listed gold miner, Randgold Resources (LSE: RRS), merged with Barrick (NYSE/Toronto: ABX), once the world's largest gold-mining company. Barrick had, at the time, a market cap of roughly $12bn and Randgold roughly $6bn, so at $18bn it was some merger.

If I had been a Randgold shareholder, I would not have been crazy about the deal. Randgold's outspoken chief executive, Mark Bristow, will become president and CEO of the new company, while Barrick's executive chairman, John Thornton, remains chairman.

But I can't help thinking this was more a takeover by Randgold of Barrick than the other way around. The smaller company wanted to get its hands on Barrick's assets. Given Bristow's track record with Randgold, you rather think he will shape up the new company and its operations.

Some assets he'll sell, some he'll restructure, but you get the impression that within a year or two, Barrick, hitherto a perennial underperformer, will turn a corner, at least as far as its day-to-day operations are concerned. So if you want a play on a senior gold explorer, Randgold/Barrick is probably the one to go for.

Newmont has, as a result of this deal, lost its status as the world's largest gold-mining company. Given machismo, you can't help thinking it would want that positionback. One way it could quickly retake it would be for it to buy out B2 Gold (NYSE: BTG). Newmont's market cap sits around $17.5bn, while B2 Gold's is about $3.25bn.

B2 Gold has producing assets in Nicaragua, the Philippines, Namibia and Mali, and is also developing properties in Burkina Faso and Colombia. The real jewel in its crown is the Fekola mine in Mali, which is proving to be a major cash cow for the company. The balance sheet is good, but you rather suspect that a $4.5bn offer would swing it for Newmont.So B2 Gold is my tip of the smaller large caps or mid-tiers, depending on what you want to call them. It's the best-in-show in this category of potential takeovers.(I hold shares in the group.)

I also have a fairly sizeable position in Regulus Resources (Vancouver: REG), which is developing a large copper-gold-silver project in Peru called AntaKori.

Regulus is a development play: you are basically betting the company's exploration lives up to expectations and it then gets bought out. Regulus's current market cap is about C$125, and it trades around $1.50, although it is not very liquid.

Initial drilling results at AntaKori have been extremely encouraging. Management is reasonably prudent. There is, I gather, enough cash to get it through all the drilling planned for 2019. In that same casual way that I dished out calls for doubles and triples back in 2006, I'm rather hoping this will double or triple before it gets taken out in three years time at $5 or something.

BHP Billiton recently took a placement in SolGold (LSE: SOLG), a huge exploration play in Ecuador at 45p. Newcrest Mining also owns stock. You suspect one of them will eventually take the firm out. Given the stock is currently trading at 36p, there is a slight discount to be had to the 45p BHP paid.

There is no doubting the potential of the resource here. The problem? Ecuador. Ecuador is hardly the most mining-friendly country in which to operate. I don't own shares in this one. This is definitely a stock for the brave.

All prices and information correct at the time of writing.

Gold prices fell 7.1% in the month to 22 June, falling below $4,200 for the first time since March in the process.

Gold has sold off this year as inflation has risen, exacerbated by the conflict in the Middle East, prompting some to question whether gold still acts as an inflation hedge.

While gold is typically viewed as a safe haven during times of crisis, its gains during 2025 made gold holdings an obvious asset for liquidity-hit investors to sell once the conflict in Iran broke out at the end of February.

“Gold is often considered to be a haven in troubled times, but what many people don’t realise is that its price can still drop in a falling market,” said Dan Coatsworth, head of markets at AJ Bell. “Investors often sell what they can in the face of trouble, and gold is a liquid asset.”

But the selloff didn’t start or end with the conflict in Iran. Its price has continued to fall even as the war appears to be drawing to a conclusion.

“Recently, gold has become increasingly sensitive to the same oil-price and inflation dynamics affecting broader markets, meaning its behaviour may be more correlated with other assets than investors have come to expect,” Matt Bance, solutions strategist and portfolio manager at investment manager T. Rowe Price, told MoneyWeek.

What is currently weighing on the gold price, and where might it go from here?

Why is the gold price falling?

Several factors led to the price of gold falling after the US/Israeli war with Iran broke out, besides the aforementioned liquidity rush that set in at the start of the conflict.

Gold is priced in dollars, and had therefore been benefitting from a weaker dollar prior to the outbreak of the war.

Greater inflationary expectations also reduced the chances of central banks cutting interest rates. Hawkish central bank policy, particularly in the US, is typically negative for gold prices because higher rates increase the appeal of bonds compared to gold, which pays no income.

Either side of the war there has been much focus on the policy outlook of the Federal Reserve’s (Fed) new chair, Kevin Warsh.

Warsh is regarded as more hawkish (favouring relatively higher interest rates) than other contenders for the position. Gold prices fell immediately following his announcement as Trump’s pick for the post in January, and with US CPI inflation rising to 4.2% in May markets are expecting the Federal Open Market Committee (FOMC) (the Fed’s committee that sets interest rates – equivalent to the Bank of England’s Monetary Policy Committee) to slow or even reverse its prior cadence of rate cuts.

This was underscored following the FOMC’s first meeting under Warsh on 16 and 17 June, with minutes of the meeting indicating that FOMC members have revised their future interest rate projections upwards.

“The first FOMC meeting with Chair Warsh revealed no resistance to market pricing for hikes,” said Michael Hsueh, research analyst at Deutsche Bank, in a note seen by MoneyWeek. The minutes in fact “underlined potential for a further hawkish shift” from the committee, Hsueh added.

Should you buy gold?

A more hawkish Fed means that the short term outlook for gold isn’t particularly positive, and there are other reasons to believe that gold prices could fall further before they start to rise again.

“A significant portion of the structural bull case is now reflected in prices,” said T. Rowe Price’s Bance. “Central bank demand moderated in the first quarter of 2026, while exchange-traded fund (ETF) demand has also softened.”

Despite this many experts, Bance included, think there is still an argument for holding gold given its long-term diversification potential.

“While market dynamics reduce some of gold’s diversification appeal in the near term, we continue to believe gold deserves a place in diversified portfolios,” he said. “Gold provides diversification against inflation surprises, fiscal deterioration, reserve currency uncertainty, and broader confidence shocks. Those risks remain relevant, which is why we continue to favour maintaining a strategic allocation.”

How to gain exposure to gold prices

If you are considering where to invest and want to add some gold exposure, there are three main approaches.

The first one is investing in the metal itself through a financial contract, such as an ETF or exchange-traded commodity (ETC).

See our article on the best gold ETFs for more information.

You can also get indirect exposure by investing in the miners that dig gold out of the ground. This can be done by investing directly in their shares, or by buying a gold fund or investment trust.

Lastly, you can buy physical gold bars or gold coins.

In terms of how much gold to hold in a portfolio, Tom Stevenson, investment director at Fidelity International, suggests around 5-10% – which is about the same as you might hold in cash.

“The two offer insurance and dry powder to complement the growth and stability of the shares and bonds that make up the bulk of a balanced portfolio,” he said.

Investors are putting more money into gold and other alternative investments due to high inflation and market volatility, new research from the Royal Mint shows. 

Alternative investments are usually defined as alternatives to traditional investment assets, such as bonds and equities. They can be anything from art to property, hedge fund investments, gold and gold funds, and digital assets. 

In a poll commissioned by The Royal Mint, over half (58%) of those surveyed currently hold at least one alternative investment in their portfolio. A total of 11% of respondents plan to increase their holdings, rising to 13% among Gen-Z investors.

What’s more, some 36% of those who haven’t previously invested in alternatives say they would consider them in the future, according to the Royal Mint survey. 

There seem to be two main reasons why investors are looking to boost their alternative allocations. Two-thirds say they’re looking for better returns amid the cost-of-living crisis and a little more than half think alternatives will produce a better long-term return than equities. 

Gold holdings jump  

The Royal Mint says that investors were turning to precious metals and other 'safer' alternative assets to compensate for disappointing returns on traditional assets, such as equities. 

Its figures reveal a 17% increase in first-time precious metal investors in the first half of 2023 compared to last year. And demand has been growing among UK investors for ‘safe haven’ assets like gold for years. The Mint registered a 26% uplift year-on-year in the volume of gold investments during 2022, following growth in the previous years as well. 

“At the Royal Mint, we’ve seen an uplift in gold and silver investments in the first half of the year as investors turn to alternative investments as a means to diversify their portfolio, beat inflation, and generate wealth in the long term,” Andrew Dickey, The Royal Mint’s director of precious metals, says.

Gold, which is usually quoted in US dollars, also provides a hedge against sterling volatility. Since the Brexit vote in 2016, the pound has lost 9% of its value against the dollar, and during the Lizz Truss debacle last year, fell to near parity. As gold is traded in dollars, its value rises as the pound weakens. That’s one of the reasons that’s helped the yellow metal to a 10% annualized return in sterling terms over the past 40 years. 

I once presented a documentary for Italian television declaring that Jakob Fugger – Fugger the Rich – was the richest man in history. He was a German who made his fortune in the 16th century through gold and copper mines, lending money to kings and popes and, above all, selling absolution. 

By the time he died his net worth was equivalent to nearly 2.5% of European GDP, or half a trillion dollars in today’s money.

But, according to the internet (and we all know the internet is never wrong) there was someone even richer: a Malian gentleman, Mansa Musa the Ninth, or King Musa IX. 

The BBC deems his wealth “indescribable”, placing him above the likes of Augustus Caesar, Andrew Carnegie, John D. Rockefeller, William The Conqueror and Colonel Gaddafi in its Wealth Hall of Fame. Fugger doesn’t even get a look in.

So who was this Mansa Musa the Ninth? He was born in 1280 in Mali. At some stage in his early 20s he became king. The eighth Mansa, his brother Abu Bakr, had wanted to go and explore the edge of the Atlantic Ocean and Musa stood in for him while he was gone. Bakr never came back and so Musa become Mansa. 

Many with a dark view of human nature argue that Musa actually saw to it that Bakr never came back: the notion of exploring the edge of the Atlantic Ocean was just a ruse. Who knows? Perhaps Bakr did make it to the edge of the Atlantic Ocean, now known as Brazil, found it to his liking, as many visitors do, and decided to settle there.

At the time, the Mali empire extended through 2,000 miles of West Africa, from what today is Niger in the east, through parts of Mali, Burkina Faso, Guinea, Senegal, Mauritania, Sierra Leone and Gambia. With land ownership came ownership of the natural resources that lay within a territory, and that is how Musa came to be so rich – via salt and gold, mainly. West Africa has always had lots of gold.

A rich region

Even today, Ghana is Africa’s second-largest gold producer, beaten only by South Africa, whose premium deposit, the Witwatersrand Basin, was only discovered in 1886 by an Australian mining prospector called George Harrison. 

Harrison, in what must be considered among the worst business deals in history, sold his stake for £10. That deal was even worse than the record label Decca passing on Harrison’s namesake band, The Beatles, 70 years later. Harrison was never heard of again, but his discovery would provide the world with over 20% of all the gold ever mined. 

However, until the emergence of the Witwatersrand Basin, West Africa was top dog. Indeed, according to the British Museum, something like half of the Old World’s gold came from the Mali empire. 

Musa certainly enjoyed the trappings of wealth. Indeed, he had tens of thousands of slaves to his name. In 1324 he set off on a pilgrimage to Mecca with 12,000 of them – in addition to a retinue of 38,000 others, including soldiers and entertainers, all dressed in gold, brocade and silk. 

Like today’s billionaires, Musa liked attention. He didn’t have rocket ships or Twitter to get it, so Musa’s means was this hajj, a pilgrimage to Mecca, the spiritual home of Islam. The 2,800-mile round trip took him two years. 

Each slave carried four pounds of gold, while camels walking behind towed as many as 300 pounds of gold dust so that the entire procession had around 18 tonnes of gold in tow. There were heralds who bore gold staves and en route, every Friday, this devout servant of Islam had a mosque built.

When he arrived in Cairo, he went shopping. He did the same in Medina and Mecca. The sudden dramatic rise in the supply of gold in those cities caused an inflationary collapse that took about 12 years to recover from.

Ever the businessman, Musa realised that the gold price was being devalued by the new supply, so on his way back, Musa borrowed from money-lenders all the gold he could carry. 

Cynics argue that Musa’s strategy of causing inflation and then collapse was a deliberate ploy to undermine Cairo’s economy and relocate Africa’s commercial centre out to Mali in the west, to Gao or Timbuktu.

Over the course of his reign, Musa conquered some 24 cities (and their surrounding districts), among them Timbuktu, which he took on his way back from Mecca. Once back in Mali, Musa started throwing his gold about there too. For 440 pounds of gold, he hired the services of poet and architect Abu Ishaq al-Sahili to give Timbuktu a makeover. 

Universities and mosques were built and Timbuktu became something of a cultural centre, the “Paris of the Medieval World”, according to some. One of Musa’s buildings, the Sankore Madrasah, where maths, science, languages and the Koran were taught, is still operating today in the same capacity.

Musa died in 1337, at the ripe old age of 57, and the Mali empire began to fall apart soon afterwards. The inescapable laws of unsustainable spending applied as much then as they do today.

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