Gold was up over 60% in 2025 and has been fluctuating throughout 2026. Central banks are hoarding it. Retail investors are piling in. And right now, clients are asking about it.
That makes this the right moment for advisers to have an honest conversation. Not about whether gold has had a good run, but about what gold actually is and what it costs to own it over the long term.
I’ve covered this in detail in my video above. But here’s the version you can use with clients.
The three things people believe about gold
Most clients come to the conversation with three convictions. That gold is a solid long-term investment. That it protects them when markets fall. And that it hedges inflation. These beliefs feel reasonable. They’re backed by thousands of years of history. And the evidence largely contradicts them.
On long-term returns: from 1980 to the end of 2019, before the recent surge, gold returned 197% in total. The S&P 500 returned 8,242%. On an annualised basis, that’s 2.8% for gold against 11.7% for US stocks. Inflation over the same period averaged 3.1%. Gold didn’t just underperform equities over those four decades. It lost money in real terms.
The majority of gold’s entire price appreciation over recent decades has been compressed into the last three years. Strip those years out and the long-run case looks considerably thinner. Recency bias is doing a lot of work here.
On crash protection: gold has a very low correlation to equities and has historically provided positive returns in most of the worst quarters for stocks. That sounds reassuring. But in 2008, at the sharpest point of the crisis, gold’s price dropped 30% before recovering to finish the year up around 5.5%. US government bonds returned nearly 14% in that same year. Even in its best crisis performance, gold was outperformed by a boring bond.
On inflation hedging: one of the most rigorous academic analyses of gold, The Golden Dilemma, examined this directly. It found essentially no reliable correlation between gold prices and short-term inflation shocks. Gold is a globally priced asset. It doesn’t rise because inflation is high in your country. It responds to global sentiment and global demand. Between 2011 and 2024, the price of cornflakes rose faster than the price of gold.
The deeper problem
All three myths trace back to one structural issue. Gold doesn’t do anything.
It produces no income, no dividends, no earnings. It doesn’t hire people, develop products, or serve customers. Its entire value rests on one thing: the belief of the next buyer.
Warren Buffett illustrated this in his 2012 Berkshire Hathaway letter. He took the total value of all the gold on earth at the time, roughly $9.6 trillion, and asked what else you could buy with it. The answer was every acre of cropland in the United States, 16 companies the size of ExxonMobil, and $1 trillion in cash to spare. Those assets would produce income, feed people, and compound in value. The gold, a century later, would be exactly the same. Same weight. Same volume. Entirely incapable of producing anything.
That’s not a sentimental point. It’s a structural one. And it explains why gold goes through 19-year bear markets, why it’s so sensitive to narrative and sentiment, and why the long-term numbers look the way they do.
What to tell your clients
Gold has had a remarkable run. Some clients have made serious money from it. Acknowledging that honestly is part of a credible conversation.
But a good run and a sound long-term investment are different things. The question to put to any client considering a meaningful allocation is a simple one: what does this asset actually do? What’s the mechanism by which it grows?
If they can’t answer that, they’re not investing. They’re speculating on what someone else will pay next.
Watch the full analysis here: https://youtu.be/xo7oKqz0g2A?si=rhE0NJgWR-THyE3P
AES International | gold | investing | portfolio strategy | wealth management
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Sam Instone is CEO of AES International, the only CEFEX-certified fiduciary firm across the Middle East, Asia, and Africa.
Capital at risk. Any examples used are for illustrative purposes only, and you may get less back than the figures shown. Any financial promotions are intended for information purposes only and do not constitute an offer to invest or provide personal financial advice or tax advice. We do not take any responsibility for third-party websites and content linked to from this channel. Issued on behalf of AES Middle East Insurance Broker LLC, registered with the Ministry of the Economy, licence 571368, commercial registration 75162, regulated by the UAE Central Bank, licence no. 189. This material is intended for Retail Clients within the UAE.
