The sustained rise in gold prices is primarily due to strategic, long-term buying by central banks, not short-term speculation. Goldman Sachs sees significant further upside potential, which is not yet priced in, from large private institutions like pension funds and sovereign wealth funds eventually adding gold as a strategic asset.

In an economy where currency is being systematically devalued through money printing, holding cash is a losing strategy. The only way to preserve wealth is to own a diverse basket of 12-15 uncorrelated assets (e.g. stocks, commodities, real estate) that are subject to different economic pressures.

The 60/40 portfolio is obsolete because bonds, laden with credit risk, no longer offer safety. A resilient modern portfolio requires a broader mix of uncorrelated assets: cash, gold, currencies, commodities like oil and food, and short-term government debt, while actively avoiding corporate credit.

Facing unprecedented government debt, a cycle of money printing and currency devaluation is likely. Investors should follow the lead of central banks, which are buying gold at record rates while holding fewer Treasury bonds, signaling a clear institutional strategy to own hard assets.

Metals are uniquely positioned to perform across multiple economic regimes. They serve as a hedge against national debt and central bank irresponsibility, benefit from potential rate cuts and sticky inflation, and face a massive supply-demand shock from the AI and energy infrastructure build-out.

Unlike Bitcoin, which sells off during liquidity crunches, gold is being bid up by sovereign nations. This divergence reflects a strategic shift by central banks away from US Treasuries following the sanctioning of Russia's reserves, viewing gold as the only true safe haven asset.

Contrary to popular belief, Vanguard's chief economist suggests that in a high-debt, low-growth future, overweighting fixed income is superior to holding gold. This assumes the Fed will maintain high real interest rates to fight inflation, making bond yields more attractive than equities, which would face a lost decade.

The strategic value of commodities in a modern portfolio has shifted from generating returns to providing a crucial hedge against two growing threats. These are unsustainable fiscal policies that weaken currencies ('debasement risk') and the increasing use of commodities as geopolitical weapons that cause supply disruptions.

To navigate an era of government debt overwhelming monetary policy, investor Lynn Alden proposes a specific three-pillar portfolio. It allocates 50% to profitable equities, 20% to cash for optionality, and a significant 30% to inflation-hedging hard assets like commodities, precious metals, and Bitcoin.