Gold hit another high level recently

Gold can be useful for diversification. It does reduce drawdowns and improve the Sharpe ratio, as it behaves differently from stocks and bonds. But it’s not a core asset, and it shouldn’t dominate your portfolio.

And if you’re thinking, “I should have gone all-in on gold”... that’s not investing—that’s gambling. That’s no different from aping into crypto or meme stocks during their hype cycles. That’s go big or go home, not responsible investing.And then we start seeing bold claims—like this one on Bloomberg saying gold has outperformed stocks this century. Let’s take a step back: This century is 100 years, and we’re only 25 years in. Bloomberg’s already drawing conclusions 75 years too early.

From a portfolio construction perspective, gold is not suitable as a core holding. This has been pointed out by many renowned investors, including Buffett. Gold doesn’t pay dividends like stocks or interest like bonds. It doesn’t grow or compound.

Gold has value because we believe it has value.That said, gold isn’t useless either. While it’s not a core asset, it can serve as a satellite allocation—a smaller portion of the portfolio to diversify risk.

Finally do not  get me wrong—I’m not against gold. What I am pointing out is the driven mindset that can lead to irrational decisions. People extrapolate optimism far into the future just because of recent price action.

# Silver Another High: Continue to Outperform Gold in This Bull Market?

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  • PTOL
    ·10-13
    You make a solid point about moderation.
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