Gold has had spectacular performance so far in 2025. More recently, it just surpassed the $4,000 mark, which is, of course, record levels.

Two Powerful Sources Driving Gold Prices

So what's behind gold's strength in 2025? We believe is the combination of two powerful sources of demand. On one side, we have central banks, the official sector, which continues to buy at record levels. And on the other side, we have the Western investor, which has finally returned to gold markets, although not in full force.

Central banks around the world have been buying gold at record levels. For reference, in 2022, ‘23, and ‘24, they bought 1,000 tons of gold compared to an average of 500 tons of gold in the previous decade. And we believe this trend will continue in the longer term. Central banks around the world are committed to diversifying and de-dollarizing their reserves. And gold seems to be the asset of choice.

And while central banks have been net buyers of gold for the last several years, the historic driver of gold prices have been lacking. And that's investment demand, primarily investment out of the West.

In 2025, investors finally decided to turn to gold as a safe haven, as a portfolio diversifier, as insurance against this heightened uncertainty and volatility globally.

It’s Not Too Late to Buy Gold

With gold gaining more than 50% this year, trading above $4,000 per ounce today, the main question in investors mind is, am I too late? Or is there more room from here for gold?

After such phenomenal performance over the last few weeks, we wouldn't be surprised to see gold pull back from current levels and consolidate, but at a much higher range compared to earlier this year. Earlier this year, we were trading somewhere around the $3,300 level for a few months. We have moved up a level here with gold potentially finding that new trading range around the $3,500 to $3,600 level until the next catalyst emerges that takes gold higher from here.

We don't think it is too late to consider investing in gold. We're very constructive on the gold price going forward. Investors will continue to turn to gold in this environment. When investors get scared, when there's too much risk, when there is a need to find a place to hide, gold historically has demonstrated that it protects investors. And we think that will drive investment demand from here to levels that will push gold much higher.

We use gold bullion ETF holdings as a proxy for investment demand. And when we look at the levels that we are today compared with previous levels, we're still not at record levels in those holdings, which to me says that there is potential for higher investment demand from here.

And the correlation between investment demand and gold prices has historically been a very strong correlation. Another 5% move in those holdings should translate in potentially another $400 move in the gold price.

Why Allocate to Gold

For investors that don't have a gold allocation today, it's still a good time to start building a position in gold. And when looking at how to get exposure to gold, investors should consider both gold, the metal, gold bullion, and gold equities. Gold equities are coming from very low valuations. And despite the phenomenal performance this year, it still looks very attractive.

Gold equities are supported not just by an outlook of higher gold prices, but also by very strong fundamentals. They are generating cash flow at record levels, margins at record levels, costs seem to be under control, and they're exercising capital discipline and have a focus in returning cash to shareholders.

Despite these high gold prices and strong performance recently, when people ask me should I invest in gold, my answer is always the same. If you don't have an allocation in gold, you should build one. I think gold should be a core portion of an investor's portfolio, not a tactical one.

This environment is precisely the kind of environment that gold has historically shown to be a good asset to own, to offer protection against risks, against uncertainty. And in the long term, gold does what it's supposed to do. So if you don't have a gold allocation, consider building one. Consider making it a core part of your portfolio.