Gold Breaks $4,000 Barrier: Smart Ways to Invest in the Precious Metal
Gold has reached an all-time high of $4,000 per ounce, marking a new milestone in a year defined by economic uncertainty and shifting monetary policy. As investors contend with inflation, rising debt levels, and renewed geopolitical tensions, the precious metal’s appeal as a store of value has once again come to the forefront.
Gold has reached $4,000 an ounce for the first time, extending a run of record highs through 2025. The price first moved beyond $3,000 six months ago following US President Donald Trump’s announcement of new ‘Liberation Day’ tariffs, and the subsequent US government shutdown has since pushed the precious metal to fresh peaks.
Even before the latest tariff turbulence, sustained central bank buying and heightened geopolitical tensions had already been supporting gold’s rise. Persistent inflation and growing concern over elevated government debt levels on both sides of the Atlantic are also prompting investors to seek the relative safety of gold as a store of value.
This appears to mark the third major bull market in gold since President Richard Nixon ended the US dollar’s link to the gold standard on 15 August 1971.
The first surge came during the 1970s, after Nixon’s policy shift freed the US government to expand spending, notably on the Vietnam War. Two oil price shocks — in 1973 and 1979 — then fuelled inflation, prompting investors to abandon paper assets such as government bonds in favour of tangible ‘real’ assets whose supply grew only slowly.
The second bull run began in the early 2000s, as central banks adopted increasingly loose monetary policies in response to a series of crises: the collapse of Long-Term Capital Management in 1998, the millennium IT bug, the bursting of the technology, media and telecoms bubble, and later the Global Financial Crisis and European Debt Crisis. The era of record-low interest rates and quantitative easing that followed led some investors to believe that policymakers had again lost control — much as they had appeared to in the 1970s.
The third and current rally has its roots in the past decade, as central banks maintained ultra-low interest rates and continued large-scale quantitative easing with little restraint. The Covid-19 pandemic then exposed already stretched government balance sheets, forcing a new wave of borrowing — particularly in the US and UK. In America, the federal debt has since ballooned to record levels, with annual interest payments now exceeding $1.2 trillion, or more than one-fifth of total tax revenues — a trajectory that looks increasingly unsustainable.
The Trump administration is attempting to confront this through tariffs and efforts to revive domestic manufacturing. However, investors may be anticipating another structural shift in global monetary policy — and in the way the system is managed — especially as inflation remains stubbornly above central bank targets.
Whatever the precise drivers, each of gold’s great bull markets has shared one common feature: they have all been powerful and dramatic in scale.
Gold enthusiasts argue that the current rally may still have further to run, as the gains in this third bull phase remain modest compared with the previous two.
They also point out that gold has comfortably outperformed the S&P 500 since 2000 — despite investors’ enduring appetite for equities. This comes even as major US indices, including the S&P 500, Dow Jones Industrial Average, and Nasdaq, continue to trade at record highs following their strong post-Covid rebound.
Sceptics, meanwhile, will note that the previous two gold bull markets each lasted around a decade — and that this current cycle is approaching the same milestone if the December 2015 low is taken as its starting point.
They may also echo Warren Buffett’s long-held view that gold’s intrinsic value is limited to its cost of production, given its inert chemical nature, relatively narrow industrial applications, and inability to generate income or yield.
For these reasons, gold is not suitable for every investor. Those who view it as a useful diversifier within a balanced portfolio must still consider how best to gain exposure.
If gold aligns with an investor’s broader strategy, time horizon, return objectives, and tolerance for risk, there are several routes to consider — from holding the metal directly to investing in individual mining companies or diversified funds, whether actively or passively managed. Each carries a distinct risk-return profile that should be weighed carefully before committing capital to the precious metal.
Four Ways to Invest in Gold
1. Shares in Gold Mining Companies
Some investors may prefer to gain exposure through gold mining shares. Successful miners can generate healthy cash flow and pay dividends, providing an income stream in addition to potential capital growth. Their earnings and cash generation — and therefore their dividend potential — are typically highly sensitive to movements in the gold price.
However, London-listed options have become more limited following a wave of industry consolidation. The FTSE 100 currently includes two major gold producers: Endeavour Mining and Fresnillo, the latter also producing significant quantities of silver. Resolute Mining maintains dual listings in London and Australia, while the AIM market hosts around twenty smaller miners, ranging from early-stage licence holders and explorers to established producers.
Globally, the largest gold mining companies by market capitalisation are based in the United States. As with any specialist sector, not all miners are created equal. Investors should carry out detailed due diligence, considering whether a company is already in production, where its operations are located, its cost of extraction, management expertise, and financial strength.
2. Physical Gold Tracker Funds
For those seeking a simpler way to follow gold’s price movements, a physical gold tracker may be an appealing alternative. Exchange-traded commodities (ETCs) — or gold tracker funds — allow investors to mirror the metal’s performance without the challenges of storing or insuring physical bars and coins.
These funds typically track the gold price in either US dollars or sterling and may do so through direct physical holdings or via futures-based exposure, depending on the investor’s preference. Such instruments offer a practical and liquid route to participate in gold’s price movements within a broader investment portfolio.
3. Gold miners’ tracker fund
For those who believe gold miners are cheap relative to gold – and who are prepared to take on the additional risk posed by miners’ operational gearing to the metal’s price – there is the option of a gold-related tracker fund. Such funds are designed to deliver the return generated by a basket of miners, minus the instrument’s own running costs.
4. Actively Managed Gold Funds
Investors can also access gold exposure through actively managed funds that hold a diversified portfolio of gold mining companies. These funds are managed by professional stock pickers who aim to identify the strongest producers and explorers — though management fees are typically higher than those of passive alternatives.
A number of investment trusts listed on the UK market specialise in precious-metal miners, including those focused on gold, silver, platinum, and palladium. In addition, some multi-asset funds maintain a significant allocation to gold bullion as part of a broader mandate to preserve and grow investors’ capital over the long term.
If you would like guidance on the most suitable way to invest in gold and how it could fit within your broader financial strategy, please get in touch and we will be pleased to assist.
Will is an Independent Financial Adviser with over a decade of experience helping expats make the most of their international status.