Key Takeaways:
- Gold’s value lies in its dual nature as both a safe-haven and consumer good. This dual nature supports gold’s price during both upturns and downturns of the economy.
- In part because of its dual nature, gold has historically matched or outperformed major asset classes and indexes consistently, including over long periods of time.
- The World Gold Council suggests treating gold as a strategic portfolio asset that offers potential benefits for long-term investors — especially through tax-advantaged gold IRAs.
Many investors have looked to gold’s value for it’s role as a kind of insurance policy—something to purchase when markets and economic conditions look worrisome. In that sense, gold is often treated purely as a tactical asset: a hedge that may help offset risk when the financial system turns turbulent.
However, recently, the World Gold Council (WGC) made a compelling argument that gold may deserve an even more central role in portfolios.[1]
Rather than owning gold solely in response to a crisis, the WGC suggests strong reasons to view it as a strategic asset—one that can add value across a variety of economic conditions, whether growth is strong or the economy and markets are in retreat.
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Gold Value: Both Tactical and Strategic
When investors buy an asset in anticipation of a short-term move — hoping it will rise quickly or counteract a sudden downturn in the markets — they’re using a tactical approach.
Precious metals, including gold and silver, certainly fit this description for many investors.
- Through history, there are many examples of gold surging when major market indexes faltered, such as during the 2007–2009 financial crisis.
- While the S&P 500 and Dow Jones Industrial Average both dropped around 37% from 2007 to 2009, gold appreciated by nearly 18%.
- In early 2020, as the global health crisis caused unprecedented economic lockdowns and drove unemployment to levels not seen since the Great Depression, gold once again did well. [1][2]
These patterns have earned gold a reputation as a go-to hedge.
But the question is whether it has utility beyond moments of crisis. If gold could also add value in economic expansions — during “fair weather” — then it might deserve a place in portfolios on a more permanent basis.
That approach frames gold as a strategic asset, one that belongs in an investor’s core holdings rather than just in the short-term as a “rainy day” fallback.
Reasons for Gold’s Strategic Value from the World Gold Council
The WGC cites a number of reasons gold’s value lies not only in its role as a hedge but also in its use as a long-term strategic investment. The reasons include:
- Gold's track record over multiple periods in time. According to a recent WGC report, gold has not only performed well in crisis periods but has often outpaced various mainstream assets in longer stretches of time as well.[3]
- Since 1971, gold’s annualized price growth in U.S. dollars has been roughly 8% — a figure the WGC finds comparable to equities and higher than bonds over that same time period.[3]
- Gold's performance doesn’t just rely on particular convenient intervals. The WGC highlights that gold has outperformed many major asset classes and indexes over 1-, 3-, 5-, 10-, and even 20-year spans.[3]
(See more detail and explanation in the original Augusta Precious Metals article—get link at the bottom of this page.)
Such consistency suggests gold’s value isn’t purely dependent on market downturns. Instead, it may have drivers that support its price even when economies and markets are expanding.
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Why Consumer Demand Matters in Assessing Gold’s Value
Part of gold’s broader resilience can be attributed to the fact that it isn’t exclusively a “safe-haven” metal. Around 40% of its overall demand, per the WGC, comes from jewelry and technology uses.[3]
In simpler terms, according to the WGC report, a sizable chunk of gold buying is linked to consumer behavior rather than outright fear in financial markets. During strong economic times, consumers worldwide — particularly in regions where gold jewelry is part of cultural tradition — tend to spend more on luxury items.
In addition, the report points out that electronics manufacturers use gold because it’s soft and easy to shape, and resistant to corrosion, making it an excellent choice for specialized wiring, connectors, and other components. Though not as renowned an industrial metal as silver, gold still sees meaningful demand across the tech industry.
This consumer-oriented side can boost the metal’s price during periods of growth, adding another layer to gold’s overall strength.
Gold’s “Dual Nature”
Both silver and gold have been viewed as a store of value and reliable medium of exchange for thousands of years.[4] And they are common choices for investors seeking safe-haven protection from economic, fiscal and geopolitical uncertainty.[5] (More details in original article. Get link at bottom of this page.)
Investors often hear about silver’s “dual nature” — the fact that silver plays significant roles as both an industrial metal and a monetary metal. The World Gold Council points out that gold, too, has a kind of duality.
On one side, it serves as a hedge: an asset to buy when markets turn volatile and when central banks diversify away from the U.S. dollar. On the other side, it’s a popular consumer good, embedded in cultural and technological demand.
Thanks to these dual sources of demand, gold can benefit from a phenomenon called the “wealth effect,” a phenomenon that causes consumers to feel more financially secure in robust economies, so they purchase more jewelry and electronics containing gold.
According to the WGC, this can increase gold’s correlation to equities during expansionary times, simply because both stocks and gold may rise when disposable incomes grow.[2]
On the other hand, if those same markets stumble, gold can disconnect from them and behave as a safe haven.[2]
Gold’s Strategic Strength Across Cycles
This dynamic highlights why the WGC believes gold may be better viewed as a core, long-term asset. If it were only beneficial during recessions, gold’s long-term performance would likely suffer. However, data going back several decades shows that gold has managed to hold its own or even outperform — even in stretches when economies were booming.[3]
Such resilience means that while gold can shine in a crisis, it also has the potential to remain relevant when growth is robust.
Investors who limit gold ownership to purely tactical buys might miss out on that broader aspect of the metal’s behavior. By positioning gold as a permanent fixture in some portfolios — adjusting position sizes in response to evolving market conditions but keeping a baseline ownership—investors can use it to try to capture both the hedge benefits and any potential upside that arises from consumer-driven demand.
The Role of Gold IRAs
For investors specifically interested in holding physical gold within a tax-advantaged vehicle, a gold IRA can be helpful. Under the rules that govern these specialized accounts, certain types of gold bars and coins may be acquired for the IRA, offering potential diversification benefits along with possible tax advantages (consult with a qualified professional for more details).
By holding gold in an IRA, long-term investors can embrace the strategic view of gold more effectively, because these accounts are inherently designed for extended holding periods.
Insights on Gold for Precious Metals Investors
Ultimately, the WGC says, gold’s performance over multiple economic cycles is what underscores its attractiveness as a strategic asset.
The World Gold Council’s emphasis on gold’s long-term potential beyond periodic volatility is a reminder that the metal doesn’t only matter when things get bad. It also can maintain value — or even grow — when consumers are spending, central banks are diversifying, and the tech sector is innovating.
For those already comfortable with gold as a hedge, incorporating it as a strategic asset may simply mean scaling up allocation or holding it steadily over a longer time. For newcomers, learning about gold’s dual sources of demand can illustrate why the metal’s value proposition goes beyond short-term defensive plays.
In any case, the conversation around gold’s role is evolving, suggesting that a deeper understanding of its capacity to perform across market conditions can be beneficial when constructing a well-rounded precious metals portfolio.
A New Perspective on Gold’s Value in a Portfolio
It may be tempting to purchase gold only during times of crisis, banking on its track record as a safe haven. But the World Gold Council’s data, alongside various historical examples, reinforces the idea that gold can also thrive when markets look good. This is partly thanks to consumer demand for it and partly due to central banks continuing to buy it to diversify reserves.
By acknowledging gold’s resilience and its historical willingness to move in sync with a growing economy, precious metals investors could discover that gold is a more versatile asset than they expected. (See more on this in original article — link at the bottom of this page.)
Gold’s strategic potential is supported by its “dual nature,” which merges safe-haven status with consumer-driven demand. While not a guarantee of future performance, this combination can help stabilize gold’s price throughout evolving economic dynamics. And for those who wish to take advantage of gold’s various benefits in a tax-advantaged way, opening or maintaining a gold IRA might provide a structured means to hold the metal for the long term.
In the end, whether gold’s value for investors is primarily as a hedge or whether they place it at the core of their portfolios, the choice should be backed by a broader understanding of what gold can do beyond economic downturns. The World Gold Council report confirms that investors might reasonably choose gold for the protection it has offered during trying times, but its surprising performance during positive cycles also gives it potential strategic value through the economic spectrum—maybe making it an asset worth more than just a tactical glance.
For more insight into gold's potential as a strategic asset, read the full article.
[1] StockCharts (accessed 1/30/25).
[2] Lee Ying Shan, CNBC.com, “Silver set for a ‘terrific year’ and could outperform gold to hit a 10-year high” (February 6, 2024, accessed 1/30/25).
[3] World Gold Council, “Gold as a strategic asset: 2025 edition” (January 23, 2025, accessed 1/30/25).
[4] Steve Goldstein, MarketWatch, “Gold is setting records dating back over 5,000 years — against silver” (March 17, 2020, accessed 1/30/25).
[5] Stefan Gleason, Investing.com, “Silver Shines in Uncertainty: Why It’s a Key Safe Haven Asset” (November 22, 2024, accessed 1/30/25).
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