Gold: the case for physical ownership

The investment case for Gold

Gold keeps getting described as if its appeal begins and ends with the latest rally. The more useful question is whether monetary demand, diversification and the price paid make a convincing case for holding it. A strong run makes that question more important, without settling the answer.

Back in April 2024, plenty of investors were still treating gold like a side story - something you owned only if you were waiting for inflation to explode or civilization to wobble. That was always too narrow. Gold tends to do best when people lose confidence in the neat old assumptions around interest rates, government debt, currency stability, and market leadership. Those are useful forces to watch, alongside the possibility that confidence, yields or currency trends move the other way.

The price action since then has been hard to ignore. The LBMA PM gold price went on to set 53 new all-time highs in 2025 - not the sort of move you get from a sleepy asset class tagging along for the ride. The average price in Q4 2025 reached $4,135 per ounce, up 55% from a year earlier, while the full-year average came in at $3,431 - the highest annual average ever recorded.

The Demand Picture

What caught our attention was not just the headline price - it was the breadth of demand behind it. Total gold demand in 2025, including over-the-counter buying, pushed past 5,000 tonnes for the first time, worth about $555 billion. That is a market size large enough that you cannot dismiss it as a niche panic trade anymore.

Global gold ETF holdings grew by about 801 tonnes during 2025, the second-strongest annual increase reported in the World Gold Council's full-year review. That helps explain why the demand story extended beyond retail bar and coin purchases.

A lot of people still talk about gold as though it rises only when retail investors get dramatic. The actual picture has been much broader than that.

The Case Going Forward

Government debt, real interest rates, currencies and geopolitical risk remain important to the gold debate. Monetary uncertainty can support demand, but a stronger dollar, higher yields or a change in investor positioning can also push against it. The direction of those forces matters more than a single alarming headline.

For an investor considering monetary diversification, gold provides a different exposure from an interest-paying asset. That can be useful to investigate, but describing gold as portfolio insurance should not be mistaken for protection against every loss or a guaranteed payout during a crisis.

To be fair, gold will not move in a straight line. It can be volatile, it produces no income, and if you buy after a big rally you should expect periods where it looks stuck or overpriced. That is normal. The point is not that gold rises every month. The point is that the underlying reasons to own it have not gone away just because the chart already looks impressive.

Strong ETF demand and record total demand support a serious investment discussion. The next question is how durable those flows will be and how much of that demand is already reflected in the price. The case is stronger when it can explain both the reasons to own gold and the conditions that could disappoint.