This old-school investment just hit record highs. Is it still worth adding to your portfolio?
Friday, 17 October 2025
If you were to melt down all the gold that had ever been mined in the history of the world and create a single cube, it would only be enough to fill approximately three and a half Olympic-sized swimming pools.
That relatively small amount of a single precious metal, which is tracked annually by the World Gold Council and the International Monetary Fund, holds an approximate value of US$29 trillion (NZ$50 trillion), showing how the finite nature of gold remains intrinsically linked to its value.
Recently, the price of gold per ounce rose to its highest-ever point, surpassing US$4000 (NZ$7000) for the first time in history (it had reached US$4200 at time of writing).
'Gold is having a generational year,” says Vedran Babic, the chief executive of NZ Mint, the country’s oldest bullion trading business.
“It's been quite staggering to see the price more than double since late 2022.”
Interest in gold has been driven by both retail and institutional investors, but we’ve also seen central banks around the world stockpile the precious metal in response to the level of chaos we’re seeing in global politics.
Babic tells me gold is often seen as a safe-haven asset, used most often when the political situation seems uncertain or unstable.
“It's often seen as a fear gauge, a hedge against risk and panic, that fluctuates based on economic confidence,” he says.
“We've seen this over time, whenever there's been plenty of uncertainty, economic storms or geopolitical risks, gold's price has rallied.'
Looking at the Middle East, Ukraine, Taiwan, global trade wars and political instability around the globe, it’s little surprise that gold is delivering such strong results at the moment.
History doesn’t lie
Investors may see the reference to gold as a safe haven as shorthand for a safe investment, but there’s simply no such thing. Every investment carries risk, and gold is no different, with the price fluctuating over decades and largely contingent on the geopolitical pulls of the time.
History is instructive. Looking at gold on a decade-to-decade basis shows evidence of an investment capable of rising and falling like any stock.
During the depression-hit 1930s, gold jumped from US$20 to US$35. On the flip side, we had the 1980s when the price of gold dropped from a peak of US$711 per ounce in 1980 to US$304 by 1982.
As recently as the 2000s, we saw a sharp reaction from gold as investors ran to it for shelter from the impact of the Global Financial Crisis.
The point here is that while gold might be a good investment during periods of instability, it has never been a foolproof bet.
Nigel Grant, the head of wealth products at ASB, tells Stuff the oft-repeated rule still applies to gold: past performance is not indicative of future performance for any investment.
“You need to make sure you’re not putting all your eggs in one basket,” says Grant.
“The approach that our team takes is that gold is a good component in a diverse portfolio.”
The price of gold, says Grant, is often closely tied to inflation, with investors using it as a means to protect against a weak currency.
It's tough to get inflation under control because the effort is being slowed down by ongoing trade wars and America's huge national debt.
With the war in Ukraine still raging and new tariffs being put in place, the world feels shaky. This general uncertainty has many investors worried about the long-term strength of the US dollar, making gold look like a safe bet to protect their wealth.
But here's the strange paradox: at the very same time, the US stock market is soaring, even though people are whispering about an 'AI bubble' that could burst and wipe out billions in value.
As things stand, it appears the market is split between those who believe in the promise of AI and technology and the cynics who are going old-school and sticking with gold amid uncertain times.
It’s anyone’s guess who’ll be proven right. Ultimately, as has always been the case, economic shifts and geopolitics will likely have the final say on where the price of gold lands.
Beware the allure of FOMO – or should you take a punt?
The recent growth and US$4200 price point might make gold look like a hot investment right now, but caution is always advised.
Tulip mania in the Netherlands in the 1600s, the dotcom bubble in the late 1990s and the cryptocurrency boom in recent years all offer warnings about rushing into something because others are doing it.
Perhaps one of the most analogous examples to gold would be the “Nifty Fifty” saga that played out during the 1970s.
The Nifty 50 were a group of large companies – including Coca-Cola and IBM – considered “bulletproof,” the common recommendation being that you should buy them at any price. This led to the value of these companies quickly expanding and more investors pouring in. As is often the case, there was a significant market decline, leading to heavy losses for the latecomers.
This story has gone down in the annals of investing lore as a warning of what happens when investors put their faith in shared sentiment rather than market fundamentals. Just because a large number of people are calling something a safe investment doesn’t mean it really is one.
Katie Wesney, a financial adviser at Enable Me, warns against being pulled in by the mood of the crowd.
“FOMO [the fear of missing out] is one of the most expensive emotions in investing,” Wesney tells me.
“It turns long-term plans into short-term punts. It's the voice that whispers, ‘everyone else is doing it – what if you miss out?’ But ‘everyone else’ is usually late to the party.”
The question you should be asking yourself isn’t whether you capitalise on this golden run, but rather what role the shiny metal could play in your overall wealth accumulation plan.
“No single investment should dominate your strategy just because it's trending,” says Wesney.
“True wealth isn't built on FOMO. It's built on consistency, patience and resisting the urge to follow the crowd.”