Own Gold and Hope it Doesn’t Go Up (But Maybe Rebalance)
There’s an old saying on Wall Street: “put 10% of your wealth in gold and hope it doesn’t go up”. And in the first quarter of 2025, that insurance policy paid off. The chart shows the percentage returns of different investments from the start of this year through the end of March. The SPDR® Gold Shares ETF (GLD) – which tracks the gold price – gained 19%.
Q1 2025 was all about playing defence
The yellow metal tends to perform well when investors get nervous — especially about inflation, recession, or geopolitical risk. And in Q1 2025, there was plenty of that to go around.
Meanwhile, so called “riskier” investments like stocks and bitcoin trended lower. The SPDR® S&P 500 Trust ETF (SPY) holds shares in the 500 biggest companies on the US stock market. The exchange-traded fund (ETF) dropped 4.55% in the first quarter. And the Invesco QQQ trust ETF (QQQ), which tracks the tech-stock heavy Nasdaq, lost 8.28%. Last but not least, bitcoin (BLX) fell 11.63%.
Bonds did ok, though – as a typically more defensive investment. The iShares 20+Year Treasury ETF (TLT) rose 4.24% in the first quarter. The ETF fell down over the past few years (as stocks climbed higher), but now seems to be finding its feet.
Unlike gold, TLT tends to rise when investors expect interest rates to fall. And in early 2025, markets started betting that the US Federal Reserve would begin cutting rates later in the year. That gave long-term bonds a boost – since falling rates push bond prices higher (they move opposite).
Own gold, but rebalance some of it?
Some investors rebalance their portfolios every quarter to stay on track. If Bob started the year with 10% in gold, he’d now have more than that – because gold beat everything else. So Bob would sell a bit of gold to bring it back down to 10%. He’d probably do the same with TLT. Then he’d buy more SPY, QQQ, and bitcoin to top up the losers and get back to his original mix.
Of course, not everyone likes the rebalancing playbook. Some investors prefer momentum – keeping more money in what’s working and trimming what’s not. Either way, Q1 was a reminder that gold has a role to play in every portfolio. Even if you hope it doesn’t go up.
As usual, none of this is investment advice. If you liked this piece, check out my free newsletter for how-to guides and investment insights across crypto, stocks, metals, and more.
