Gold investors are advised to allocate between 5% and 10% of their portfolios to the precious metal as a hedge against economic uncertainty, while also considering silver’s dual role as both an investment and industrial metal, according to insights from Rick Kanda, Managing Director of The Gold Bullion Company.
In light of recent market developments, Kanda emphasised in an interview with Invezz, the importance of gold as a safe-haven asset, especially as prices surged to a record $3,600/oz recently.
He attributed this rise to factors such as central bank diversification away from the US dollar and ongoing geopolitical instability.
With strong demand from Asian central banks, Kanda noted that forecasts from institutions like J.P. Morgan suggest gold could potentially reach $4,000/oz in 2026.
He also discussed the complexities surrounding silver, highlighting how tariff disputes can create uncertainty for industrial demand while simultaneously driving safe-haven interest.
Cultural factors, such as India’s wedding season and China’s Lunar New Year, continue to influence gold consumption patterns, even amid tariff and rate uncertainties.
To navigate these market dynamics effectively, Kanda’s recommendation for a balanced portfolio underscores the need for investors to enhance risk-adjusted returns while safeguarding against potential economic downturns.
Edited excerpts:
What’s driving the gold rush?
Invezz: What’s driving this bull run in gold prices, and can we expect prices to hit $4,000/oz by mid-2026 as some forecasts suggest?
Gold prices hit a record $3,500 per ounce in April 2025 due to a combination of factors, including central bank diversification away from the US dollar, sustained geopolitical instability, and increasing concerns about rising US deficits and potential inflation.
These drivers, coupled with strong demand from Asian central banks that have accelerated their purchases of gold, are creating a bullish trend. Many forecasts, including those from J.P. Morgan, suggest gold could reach $4,000/oz by mid-2026.
Invezz: With the Fed holding rates at 4.25–4.5% and signaling only two cuts in 2025, how will this impact gold and silver prices, given their sensitivity to interest rates?
While it isn’t always certain, gold and silver prices go up when interest rates go down. This is something we could see if there is another cut coming later this month.
The reason this happens is that rising interest rates make investments such as stocks and bonds more attractive for investors. When interest rates come down, investors will see less return through these methods and shift to investing in gold, stocks and shares.
This increased demand can then raise the price of gold globally.
Invezz: Silver prices are volatile due to its dual role as an investment and industrial metal. How are US tariffs, like those on Chinese solar panels, affecting silver demand?
The US tariffs on Chinese solar panels may diminish demand for silver in a small way if China cuts production in the face of reduced demand from the US.
Whilst the increased tariffs have made it more expensive for the US to buy products, it hasn’t made it more expensive for China to produce them, only if we see a demand reduction, which puts pressure on manufacturers.
However, over the longer term, they could sustain or even boost silver use, especially with the US recently promoting silver from a mere asset to a ‘Critical Mineral’ – a drive that could increase investment and industrial demand.
Central bank demand
Invezz: Global central banks are forecasted to buy 900 tonnes of gold in 2025. How does this shift, especially in Asia, influence long-term gold price stability?
The projected 900 tonnes of central bank gold purchases in 2025, particularly from Asian nations, will likely contribute to long-term price stability by creating a stable floor of demand, diversifying reserves away from the US dollar, and acting as a “flight-to-safety” asset amidst geopolitical and economic uncertainty.
This robust demand from central banks has helped push gold prices to record highs and is seen as a structural rather than cyclical factor supporting a potentially higher and longer price environment.
Invezz: US tariffs are raising inflation concerns, with potential consumer price hikes. How will this stagflationary environment affect gold and silver as hedges?
Despite US tariffs raising concerns for many sectors and potentially increasing consumer prices, gold and silver are likely to perform well as they traditionally do against economic uncertainty, increasing demand for safe-haven assets.
Tariffs contribute to higher prices, which can weaken consumer purchasing power and prompt central banks to cut rates, further boosting gold’s appeal.
Silver’s complex nature
Invezz: Why does silver exhibit more complex price movements than gold during tariff disputes, and what opportunities does this create for investors?
Silver exhibits more complex price movements than gold during economic uncertainty, especially tariffs, as it’s both a precious metal (like gold) and a crucial industrial commodity. This makes its price sensitive to both safe-haven demand and industrial economic conditions.
Tariff disputes create uncertainty for the industrial demand for silver (used in electronics, solar panels, and electric vehicles) and simultaneously drive safe-haven demand.
Due to the dual influence of silver used in both industries and investments, the demand can fluctuate, which can influence investors unsure whether to focus on its industrial use or as an asset, like gold.
Investors can seize opportunities by monitoring both trade-related news affecting silver’s industrial uses and macroeconomic trends to identify potential shifts in its biggest value at the time.
Asian demand
Invezz: With India’s wedding season and China’s Lunar New Year boosting gold demand, how will these cultural factors interact with tariff and rate uncertainties in 2025?
The wedding season in India, which typically runs from November to May, is a huge driver of gold consumption. While mid-December to mid-January may be quieter, the rest of the wedding season maintains steady demand.
In Asia, the Chinese New Year and festivals like Diwali in India are key times when gold is traditionally traded, often as a lucky charm or to celebrate important events like weddings.
Regardless of tariff rate and uncertainty, we are always likely to see patterns of buying linked to these seasonalities in different regions.
Early this year, we faced a huge period of uncertainty with Trump’s tariffs and yet China’s holiday gold still continued – prices were just higher for buyers.
Portfolio management
Invezz: Finally, you have spoken about gold’s value as a long-term investment. What kind of percentage is ideal for investors to hold in their portfolios? Also, how much silver should one possess?
Whilst there isn’t a single percentage that is ideal, for long-term investors whose main aim is to hedge gold as a safe asset amid economic uncertainty, a common recommendation is between 5% and 10%.
This allocation provides a safety net, enhancing risk-adjusted returns and offering a hedge against economic downturns.
It also improves the balance between risk and reward, without putting too much money into one type of investment that might do badly.
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