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#prp - Permanent Risk Parity (how I invest)

Is Gold a Safe Haven?

2025-10-07

My answer — Yes, maybe sometimes, but a diversified portfolio (composed of multiple assets) is an even better safe haven.

Gold has been in the headlines, and the price broke above $4000 USD for the first time ever. Several prominent business personalities have commented on gold and the overall American situation.

In case you’re interested, here are links to some recent talks by two prominent figures. Each talk is quite long:

Although I generally don’t care what billionaires say, some of their comments were interesting. Griffin thinks that the US is on a “sugar high” from stimulus and loose monetary policy. Dalio repeats his usual speech about the dangerous debt situation, and risk of major currency devaluation. Both men say that gold looks like a more attractive asset than the US Dollar, and that gold benefits from conditions which stoke inflation in asset prices.

Safe haven?

This “safe haven” term seems to come up a lot when gold is being discussed. There seems to be a suggestion that gold is some kind of unique safe haven. You might ask, a haven from what? And the answer is… from whatever you might fear: poor economic times, global chaos, currency devaluation, inflation. How convenient!

I don’t really believe that story, myself. There is no single, magical, asset which can act like a true safe haven under all circumstances. I don’t think that Griffin or Dalio were making this point, anyway.

Both men talked about multiple asset classes, and I think that if anyone pressed them on this, would agree that stocks, and several other assets, are desirable alternatives to the USD. Gold just happens to be one of those assets.

We want a real return

Some media headlines are focusing on gold, but I think it’s more important to focus on the core message coming from these two men. I believe it’s this:

The dollar might lose purchasing power, and keeping wealth in cash / t-bills is a bad idea. With current US government finances and monetary policy, holding cash might be incredibly risky.

That’s not really a novel point at all. It’s the main reason to invest! We want a real return; want to preserve purchasing power.

I hold some gold in my own portfolio, and agree that it has the potential to preserve purchasing power, but I think it’s more useful to think about the portfolio as a whole.

The combination of assets (stocks, gold, and the corporate bonds inside the bond index) have a good chance of providing a real return. The total portfolio is probably going to do better than cash.

And the same is true for other portfolio structures, such as 100% stocks, 70/30, and 60/40 balanced funds.

— Jem Berkes