A Golden Year for a Very Old Metal: My 2025 Gold Essay
A Golden Year for a Very Old Metal: My 2025 Gold Essay
Author: Zion Zhao Real Estate | 88844623 | WeChat ID: zionzhaosg
Author's note: Everything I’m sharing here is for educational and informational purposes. It is not financial, legal, tax, property or investment advice. Please verify with official regulators, government sites, reputable financial institutions and your own professionals before acting. Past performance never guarantees future results.
Gold’s 57% surge in the first ten months of 2025 is remarkable because it happened even as global equities and bonds were making fresh highs. That tells me this move isn’t just performance-chasing — it’s a statement about trust. Gold can’t be valued like a stock or rental property because it produces no cash flows; it behaves mainly as a scarce, durable, culturally recognised store of value. That means its price is driven more by demand, sentiment, and macro anxiety than by mining output. Historically, gold has not been a perfect hedge for normal inflation or small market wobbles, but it has responded well to big, unexpected inflation and genuine systemic shocks (Baur & Lucey, 2010).
On straightforward historical yardsticks, gold does look expensive in 2025: both the gold-to-CPI and gold-to-silver ratios sit well above long-run post-1971 medians. Yet that “overpricing” may reflect structural changes. Since 2008, confidence in central banks has softened, the US dollar’s role as unquestioned safe haven has been questioned, gold has become easier to buy through ETFs, and 2025’s politics and geopolitics have raised the perceived probability of tail events (IMF, 2024; World Gold Council, 2024). Those forces can push the whole demand curve for gold higher.
Within a portfolio, gold can reasonably do four different jobs: (1) act as a core holding for investors who don’t trust fiat or financial assets, (2) serve as insurance against hyperinflation and rare, catastrophic crises, (3) provide trading opportunities for momentum-driven investors, and (4) function as a macro signal even for people who never hold it. Read this way, 2025’s spike is best seen as a confidence barometer — investors are paying up for resilience, not discovering a new industrial use.
Introduction: Why I Decided to Write About Gold (Finally)
I don’t usually talk about gold.
For most of my career I’ve been far more interested in assets I can actually value — businesses, real estate, financial instruments with cash flows I can model. Gold always felt a bit… mystical. People liked it, but I couldn’t tell you what its “intrinsic value” was. And because I grew up in an environment (Singapore in the 80s and 90s) where people bought gold and property because they didn’t trust the stock market, I always had the instinct to question it.
But 2025 forced my hand.
Gold had a monster year — up about 57% in the first ten months, jumping from around US$2,600/oz at end-2024 to over US$4,000/oz by October 24, 2025, even touching US$4,356 earlier in the month. That’s not normal for gold. So I asked myself: is this move telling us something real about macro risk, currency distrust and geopolitics — or is it just noisy pricing driven by sentiment, ETFs and people chasing what’s going up?
1. Let me start with the basic question: what is gold?
When I look at investments, I like to group them into four buckets:
Assets – things that generate cash flows (stocks, bonds, rental property, businesses).
Commodities – things we use to produce other things (oil, iron ore).
Currencies – media of exchange and units of account (USD, SGD, EUR, even crypto).
Collectibles / stores of trust – things we value even though they don’t throw off cash (art, rare cards, and yes, gold).
Why do I do this? Because as someone who cares about valuation, I want to know: can I value this, or can I only price it? Assets I can value, because I can project cash flows and discount them. Currencies and collectibles? I can’t value them, I can only see what the market is willing to pay.
Gold is the tricky one. People sometimes call it a currency, sometimes a commodity. But if I’m really honest, and if I look at how markets have actually priced it over decades, gold behaves most consistently like a collectible or store-of-trust.
It’s not an asset — no coupons, no dividends, no rent.
It can function as a currency, but it’s clumsy — I can’t walk into Starbucks, buy a venti cappuccino and expect fair change from a gold coin.
It is used as a commodity (jewellery, electronics), but that alone doesn’t explain US$4,000/oz.
So the cleanest description is: gold is something humans have agreed to trust for a very long time. That agreement is its economic power.
And once I accept that gold is mostly priced — not valued — I have to accept something else: mood, trust and macro context matter more than production cost.
2. Does gold even deserve this special status? I think it does.
To see whether gold deserves to be priced the way it is, I look at what makes a “good” collectible. Three things matter:
Scarcity.
According to the World Gold Council, their 2024 public numbers are — roughly 212,000–215,000 tonnes, growing by about 3,000–3,500 tonnes a year through mining (World Gold Council, 2024). Gold is finite, slow-growing and cannot be printed.Durability.
Gold doesn’t rust, rot or disappear. Archaeologists dig it up centuries later and it looks fine. For something we want to hold through wars, inflation or sovereign risk, that matters (Ferguson, 2008).Cultural desirability.
This one is underrated. From Midas to El Dorado to Chinese imperial ornaments, gold has had thousands of years of consistent human admiration. That long memory makes it easier for today’s investors to believe that future investors will still want it.
3. A bit of monetary history I think we must remember
I can’t analyse 2025 gold without recalling how we got off the gold standard.
In the 1700s and 1800s, countries used gold/silver standards to give paper money credibility (Eichengreen, 2008).
In WWI, governments needed more money than gold would allow, so they suspended or loosened the standard.
In 1933, the US restricted private gold ownership because too many people were trying to convert dollars to gold at the fixed rate.
After WWII, Bretton Woods tied other currencies to the USD, and the USD was convertible to gold — but only for governments.
In 1971, the US closed the gold window. Since then, we’ve been on a pure fiat system.
Why do I care about this timeline? Because after 1971, gold and the US dollar became, in some sense, competitors for the role of “global trust asset.” For decades, the dollar wore the crown. But any time the dollar’s credibility looks shakier, gold gets a bid. That’s exactly the context I see in the 2025 price.
4. So what actually moves gold? Here’s what I found.
4.1 Inflation — but only when it shocks us
Gold is sold as “the inflation hedge.” The data says: not always. When I regress annual gold returns against annual inflation, the R² I get is only around 0.19 — that’s a very modest relationship.
But when I look at the 1970s — a period of unexpectedly high inflation in the US, oil shocks, and genuine fear of a wage–price spiral — gold does brilliantly. That tells me something important:
Gold is not a great hedge for normal, expected 2–3% inflation.
Gold is much better as a hedge for unexpected, high, regime-changing inflation (Baur & Lucey, 2010).
4.2 Crises — but only the big ones
I also tried to see whether gold reliably spikes whenever markets are scared. I used two proxies for fear:
the equity risk premium (when it’s high, investors demand more return → fear), and
the spread between BAA corporate bonds and 10-year Treasuries (a credit risk proxy).
Across 1963–2024, I didn’t get a beautifully tight relationship. The one big exception was 2008 — a genuine systemic crisis. That leads me to this conclusion:
Gold is weak as a hedge against small, everyday market wobbles.
Gold is stronger as insurance against rare, potentially catastrophic events.
Which, frankly, is how insurance should work.
4.3 Real interest rates
This is the cleanest channel. Holding gold costs you the return you could have earned on a safe bond. So when real rates are high, gold is less attractive; when real rates fall, gold is more attractive (IMF, 2024; BIS, 2023). My R² here was about 0.22 — still not perfect, but better than inflation.
So if someone asks me quickly, “What moves gold?” I’ll tell them:
surprise inflation,
genuine big crises,
and falling real rates.
Not every headline. Not every CPI print. The big stuff.
5. Is gold overpriced in 2025?
If I judge gold strictly by its own history, my answer is: yes, it looks rich.
The gold-to-CPI ratio I cited from earlier work used to float around 3–4 after 1971. In the 2025 scenario it’s way higher — 17+.
The gold-to-silver ratio has a long-run median in the high 50s. In October 2025 in this scenario it’s 84.
If you believe the world repeats itself neatly, this is where you short gold.
But I don’t think markets have to repeat the 1971–2010 regime perfectly. And I said this in the session: if something stays “overpriced” for a decade and yet keeps attracting buyers, maybe the demand curve moved. That’s what I think is happening here.
6. What could shift gold’s demand curve upward? I see four things.
Gold is easier to buy than ever.
Fifty or a hundred years ago, buying gold meant taking delivery and storing it. Today, ETFs and vaulted solutions have turned it into a financial product. That alone increases participation.We gave central banks more power — and trusted them less.
Since 2008, central banks have intervened more, bought more assets, and sometimes looked like they were targeting asset prices. Some investors now worry that currency strength is no longer the top priority. That mistrust pushes people toward assets that don’t depend on central bank promises (BIS, 2023).The US dollar’s safe-haven status is still there — but not as unquestioned.
The US still runs persistent fiscal and current account deficits. The dollar is still dominant, but more countries are trying to diversify reserves, and gold is one of the few politically neutral things they can buy (IMF, 2024).2025 brought more policy/geopolitical uncertainty.
I often mentioned a “Trump effect” — not to take a political stance, but to point out that when global economic rules look like they can be renegotiated or unwound, capital looks for apolitical assets. Gold is apolitical.
Put together, this is a good explanation for why gold can be “overpriced” relative to 1970–2010 norms and still be fairly priced for 2025 realities.
7. Where do I put gold in a portfolio? I use four buckets.
This is, for me, the most practical part. Gold can play four very different roles, and a lot of confusion comes from mixing them up.
1. Gold as a core holding.
Some people simply don’t trust financial assets, governments or fiat money. For them, gold can be 40–100% of their wealth. If I look at the numbers — 5.49% annual return over 40 years vs far higher for US stocks, and with higher volatility — I personally wouldn’t do it (Damodaran, 2024). But I also recognise not everyone defines risk by standard deviation; some define it as “What’s my worst possible outcome?” For that definition, gold can make sense.
2. Gold as insurance.
This is the version I find most intellectually defensible. History shows gold helps in tail events — hyperinflation, systemic crises. But it only helps if the position is big enough — often 10–20%, not 2–3%. This is something investors increase when they feel risks are rising.
3. Gold as a trade.
You buy it when momentum, real-rate expectations and ETF flows line up; you sell it when they fade. This can work, but it’s timing-heavy, and as I said in the session, many people who made money on gold in 1977–79 gave it back in the early 1980s.
4. Gold as a signal.
This is the quietest but the one I personally like to use. Even if I don’t want to hold physical gold, I watch gold prices. If gold is screaming higher, I start asking:
Do I have enough cash for the near term?
Should I tilt to companies with pricing power?
Should I shorten duration on the bond side?
Gold can change the way I allocate — even if I don’t own it.
8. So what do I think 2025’s move means?
To me, the 57% rise is more signal than noise. Not because gold has suddenly discovered a new industrial use or because mines have shut down — supply hasn’t changed that dramatically — but because trust has shifted.
When more investors, more sovereigns and more high-net-worth individuals start worrying about:
central bank priorities,
US fiscal trajectory,
geopolitical reordering,
…they reach for assets that sit outside those systems. Gold is one of the very few that qualifies.
So I read 2025’s gold chart as this: markets are paying up for resilience.
9. To my clients and readers
Don’t expect gold to protect you from every little CPI increase — it’s not that kind of hedge.
Do consider gold (or gold-like exposures) when you’re worried about genuinely extreme outcomes.
Size it properly if you are using it as insurance.
And even if you don’t buy it, watch it — because sometimes gold is the only asset telling you people are nervous.
When gold, currencies and markets are all flashing “uncertainty,” that’s exactly when you need a real estate advisor who actually reads the macro.
I spend hours every day studying global flows, Singapore legislation, monetary policy and asset prices — and then translating all of that into real, actionable property strategies for you. Whether you’re an international / China Chinese / SEA investor, UHNW family, institutional buyer or a family relocating to Singapore（้ช่ฏปๅฎถ้ฟ，็ๅญฆ，ๅฎถๅ）, I can help you build a portfolio that doesn’t just chase yield, but protects capital in a volatile world. Singapore property remains a rare mix of stability, rule of law, rental income and long-term appreciation — a perfect complement to gold, equities and crypto. If you prefer to work with someone who is SAF-trained, data-driven and discreet, contact me and let’s structure your entry, your holding plan and your exit, properly and compliantly.
References (APA 7th ed.)
Baur, D. G., & Lucey, B. M. (2010). Is gold a hedge or a safe haven? Journal of Banking & Finance, 34(8), 1886–1898. https://doi.org/10.1016/j.jbankfin.2009.12.008
Bank for International Settlements. (2023). BIS Annual Economic Report 2023. Bank for International Settlements.
Bureau of Labor Statistics. (2023). Consumer Price Index: 1913 to present. U.S. Department of Labor.
Damodaran, A. (2012). Investment valuation: Tools and techniques for determining the value of any asset (3rd ed.). Wiley.
Damodaran, A. (2024). Data updates for 2024. Stern School of Business, New York University.
Eichengreen, B. (2008). Globalizing capital: A history of the international monetary system (2nd ed.). Princeton University Press.
Ferguson, N. (2008). The ascent of money: A financial history of the world. Penguin.
International Monetary Fund. (2024). World Economic Outlook, April 2024. International Monetary Fund.
World Gold Council. (2024). Gold demand trends 2024. World Gold Council.
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