Advisers Weigh Gold’s Value After Volatility Tarnishes Record Run-up

Few investment options divide the financial advisory community like gold.

Some view bullion as a standard minor allocation that’s useful for providing non-correlated portfolio ballast while others are turned off by its inability to either generate income or throw off dividends.

Regardless of the perspective, however, there’s no ignoring gold’s performance over the past few years, including a nearly 64% gain in 2025 that followed a climb of more than 26% the year before. In fact, bullion has outperformed the S&P 500 Index in three of the past four years.

The strong run-up for the asset, which hasn’t seen a negative year since 2021 when it dropped 4%, suffered a jarring disruption after hitting an all time high of $5,589 an ounce on Jan. 28, however. In the span of three trading days following the peak, gold tumbled nearly 18%, in a move attributed to multiple catalysts.

While gold is still up nearly 20% from the start of the year, the recent volatility has financial advisors rethinking allocations in client portfolios and others doubling down on the prospect of an even more historic run.

A Matter of Timing

“For clients whose portfolios have an appetite for commodities, we view significant pullbacks like this as a buying opportunity for long-term investors,” said Sam Diarbakerly, founder and chief executive at Generation Capital Advisors.

“The structural tailwinds are unchanged,” he added. “Central bank accumulation remains historically elevated, de-dollarization is accelerating, US debt levels keep climbing and geopolitical risk persists.”

Unfazed by the latest price dip, Diarbakerly cites a host of financial services industry forecasts that predict gold may finish the year as much as 20% higher than its current price.

“For investors looking to increase their exposure to metals but concerned about volatility, dollar-cost averaging can be a great strategy to hedge entry-point risk rather than trying to time a single purchase,” he said.

Widely viewed as a safe haven asset, gold has long-been susceptible to geopolitical shifts. The recent volatility, for instance, occurred amid US talks with Iran over nuclear weapons, a more hawkish signal on interest rates from the nomination of Kevin Warsh as the next Federal Reserve chairman and aggressive profit-taking following gold’s historic surge.

To Hold or Not to Hold

“Gold does appear to be stabilizing,” said Gabriel Shahin, founder and chief executive at Falcon Wealth. “When you get that kind of run-up, consolidation is actually healthy.”

Shahin isn’t yet ready to call the current price level a buying opportunity. “When everyone is rushing into gold, that’s usually closer to a top than a bottom, and we’ve already seen some pullback,” he said. “At this point, it’s more of a hold situation, and for some investors, possibly even a trim.”

Nolan Mauk, investment research analyst at Orion, is among those holding a bullish long-term outlook for the price of the precious metal.

“Central banks continue to buy gold in large quantities, even at higher prices, which is a trend that’s been accelerating for some time,” he said. “Geopolitical volatility, a weakening dollar, and a downward projected path for interest rates all remain structural tailwinds for the metal.”

Mauk describes the drivers as “regime-level factors that typically persist over several years.”

“The recent volatility in gold has given us no reason to change our thesis,” he added. “In terms of position sizing, we recommend allocating no more than 5% to gold in an otherwise diversified portfolio.”

Matthew McKay, portfolio manager at Briaud Financial Advisors, is firmly aboard the gold train and believes “we have re-entered a commodity super cycle that will last many years.”

Opportunities to Buy

“This cycle started several years ago and the recent volatility is endemic to that cycle,” he said. “The desire to hedge dollars, diversify capital across hard assets, and the attractiveness of gold as a safe haven” is propelling both gold’s long-term climb and its recent volatility, McKay added. 

He recommends a minimum gold allocation of 5%, but said his most risk-tolerant clients have allocated more than 12% of their investments to the metal. “Pullbacks of any material size are opportunities to buy, in our view,” he said. 

Since Briaud’s most recent price target of $5,500 was reached in January, McKay said, he expects the price of gold to “move sideways until the next leg higher,” which he predicts will be in the $7,500-per-ounce range.

“With more individuals and institutions buying, the price could even reach $10,000 per ounce relatively quickly, as most people do not have exposure to this asset in a material way,” he added. “This does not come without volatility on the downside, as commodities do not move smoothly, but rather sharply, which is why being nimble is paramount.”

Most advisors who favor gold recommend allocations that, while small, are sizable enough to have a meaningful effect on portfolio risk and return characteristics.

They tend to “recommend it at 5% to 15% of a portfolio as a diversifier and inflation hedge,” said Diarbakerly of Generation Capital Advisors. “The consistent guidance is to stay disciplined, avoid chasing spikes or panicking during corrections, and let a long-term thesis play out.” 

‘What Lies Ahead’. Diarbakerly also recognizes the divisive nature of gold investing within the financial planning community. “Most advisors fall into two camps when it comes to gold: Never touch it, or maintain high exposure,” he said. “There isn’t a lot of middle ground, and that’s largely because gold is difficult to value using traditional frameworks.”

Brett Lozowski, a financial advisor at Life Planning Partners, plants his flag firmly in the no-gold camp. “I never recommend my clients invest in gold because gold doesn’t do anything,” he said. “Gold produces no income, the price moves based on speculation and, historically, gold has experienced massive run-ups in its price followed by years of slower gains.”

Lozowski compares the current gold price cycle to that of the 1970s when the price rose due to spiking inflation and the US dollar being taken off the gold standard. “The ’80s and ’90s saw much lower returns for gold,” he said. “The challenge with gold is you never know what lies ahead.” Lozowski added that for clients who are determined to hold gold in their portfolio, he recommends no more than a 10% allocation.