Your Grandfather Was Right About Gold. But Maybe Not for the Reasons He Thought.
Gold at $5,389. Up 34% in 12 months. Every boomer in America is feeling vindicated. Every crypto bro is feeling confused. And Goldman Sachs just raised their target to $5,800.
Who''s right? Probably everyone, for different reasons.
Why Gold Is Ripping
- Central bank buying: China, India, and Turkey bought 1,100 tonnes in 2025 — a record. They''re de-dollarizing, and gold is the alternative.
- Iran war premium: Every military escalation adds $50-100 to gold. The Strait of Hormuz risk alone justifies $200 of the current price.
- Real rates: With inflation at 3.5% and the Fed at 5.25%, real rates are positive but falling. Gold thrives in rate-cut environments.
- Dollar weakness: DXY at 104 and trending lower. Gold is priced in dollars — weaker dollar = higher gold.
The Bear Case (Yes, There Is One)
Gold doesn''t generate cash flow. At $5,400, you''re paying a massive premium for "safety" that could evaporate if the Iran situation resolves quickly. The biggest gold corrections in history came after geopolitical fear premiums evaporated.
How to Play It
Physical gold: For the doomsday preppers and the "I don''t trust the system" crowd. American Gold Eagles at your local dealer. 3-5% premium over spot.
GLD/IAU: ETFs that track gold price. Most liquid way to trade it. No storage hassles.
Gold miners (GDX): Leveraged play on gold price. Miners are still cheap relative to gold — GDX/GLD ratio near 10-year lows. If gold stays above $5,000, miners print money.
My position: 5% portfolio allocation in GLD as portfolio insurance. Not a conviction trade — an insurance policy. Like NordVPN for your portfolio.
