Is Now the Time to Add Gold or Silver to Your Portfolio?

Gold and Silver Ripping Higher: What It Means for You

October 2024

Inflation hasn’t vanished, interest rates remain a moving target, and global debt is pushing new records. In moments like these, investors often turn back to something timeless, gold and silver.

Whether you’re new to investing or already building a portfolio, understanding how precious metals behave and why they matter, can help you make more confident, long-term decisions. They’re not about chasing quick returns, but about preserving value when the financial system feels stretched.

Let’s explore what’s driving their latest surge, how they fit into a modern portfolio, and whether now might be the right time to take another look.

Gold and silver have both been on the move this year, breaking new highs and reigniting interest among investors. If you’re wondering whether it’s still a good time to add them to your portfolio, you’re not alone. Precious metals often capture attention when markets turn uncertain, but deciding when and how to hold them can feel complicated. Let’s unpack what’s driving their rise, the role they can play in a balanced portfolio, and how you might consider gaining exposure.

Why gold keeps breaking records, and why silver is shining too

Gold’s resilience has surprised many. Even with interest rates staying high in 2024 and for much of 2025, gold has continued to climb. Its strength stems from a blend of global and economic factors: ongoing geopolitical tensions, concerns over large western government deficits, and steady central bank buying. For investors still wary of talk around slow growth and some entrenched inflationary pressures, gold has become a good place to shelter some capital, an anchor up in uncertain waters.

Silver, meanwhile, has caught its own wave of momentum. It typically trails gold, but this year has seen renewed enthusiasm. The silver market has been in deficit for several years, meaning demand has consistently outstripped supply. That demand is increasingly driven by its industrial uses: from medical devices to the fast-growing green energy sector, where it’s vital for solar panels and electric vehicles.

While silver’s dual role as both a precious and industrial metal makes it more volatile, it also creates opportunity. Silver often rises alongside gold, though it can swing more sharply in either direction, particularly during periods of market stress. The industrial link means that when supply tightens, as it has recently, industries competing for it can push prices higher.

The bigger picture: Debt, inflation, and the search for stability

The sharp rise in global debt over the past 25 years has become worrisome to some. Before the Global Financial Crisis of 2008, global debt stood at around $80–$100 trillion. By 2024, it had soared to a record $318 trillion, equivalent to roughly 328% of global GDP. In other words, the world now owes more than three times what it produces each year.

This imbalance creates significant vulnerabilities across governments, markets, and households. High debt levels limit a country’s ability to respond effectively to future financial crises. Rising interest rates make it harder for governments to fund essential services and investments, as more spending is diverted toward servicing debt. As a result, economic growth becomes increasingly reliant on borrowing, leaving far less room for error or resilience in times of crisis.

Inflation, often viewed as a tool to help manage debt burdens, can also erode purchasing power and strain consumers. We’ve all felt the rise in everyday costs since the Covid pandemic, with inflationary pressures in 2022 and 2023 reaching levels not seen since the early 1990s. Over the long term, precious metals, particularly gold, have tended to move in line with inflation, offering investors a potential safeguard against the gradual loss of real value in their money. While gold’s effectiveness as a short-term inflation hedge can vary, it often maintains or even strengthens its value when major currencies weaken under inflationary pressure.

The role of precious metals in a portfolio

At their best, gold and silver serve as portfolio diversifiers. They don’t tend to move in lockstep with stocks or bonds, which means they can offer balance when markets are unsettled. Of the two, gold has historically been the stronger diversifier. Its value is driven less by industrial demand and more by its reputation as a store of wealth. Silver, while offering diversification too, can behave more like a cyclical asset due to its industrial exposure.

Investors often turn to precious metals during times of uncertainty because they represent something tangible. Gold and silver have also proven to be reliable hedges against U.S. dollar weakness, like we're living though today due to their inverse relationship, albeit gold did rise through 2024 against the backdrop of a strengthening U.S dollar. Those characteristics make them useful building blocks in a resilient portfolio, but not without trade-offs.

Neither gold nor silver pays income, and both can be volatile. Their value depends heavily on scarcity and sentiment, so price swings are inevitable. For that reason, most professionals suggest keeping precious metals to a modest portion of your portfolio, typically between 5% and 15%. This balance allows you to benefit from their defensive properties without taking on excessive risk or sacrificing too much potential income or growth from other assets.

What could drive prices next

The outlook for gold and silver remains constructive, at least for now. Prices could continue to rise if global tensions in Eastern Europe and the Middle East persist, and as the U.S. and other regions focus on cutting interest rates. Strong central bank demand, notably from China, but also from India and Turkey and others continues to provide a firm underpinning.

Moreover, the sheer scale of global debt poses an additional tailwind. High debt levels can constrain nations’ ability to invest and grow, and as the problem becomes more acute, the risk of a broader debt crisis increases.

However, it’s worth remembering that markets rarely move in straight lines. A cooling of geopolitical risks or a change in monetary policy (central banks start raising interest rates once more) could lead to a period of consolidation. For long-term investors, such pullbacks can present opportunities rather than reasons to retreat.

Ways to access gold and silver

You don’t have to buy bars or coins to gain exposure to precious metals, though that remains an option. There are several accessible ways to participate, each with different trade-offs:

Physical metals – Buying gold or silver directly through a bullion dealer gives you full ownership. For UK investors, Sovereign and Britannia gold coins are exempt from Capital Gains Tax (CGT), making them especially attractive. However, storage and insurance add extra considerations.

Exchange Traded Commodities (ETCs) – These track the price of gold or silver and can be bought and sold like shares. ETCs give you exposure to the metal’s price without the need to handle or store it yourself.

Precious metal funds – These funds tend to provide investors with exposure to precious mental miners (equities). Some funds combine exposure to both physical metals and mining companies. These can be particularly attractive as a one stop shop allowing the fund manager to adjust their holdings depending on whether they have a bullish or cautious outlook, balancing between gold and silver or between miners and physical bullion.

Mining equities – Investing in companies that mine gold or silver offers higher potential upside, but also higher risk. Their performance depends not only on metal prices but also on operational and market factors. Mining shares (equities) tend to be more volatile than owning the metals themselves.

Each route has its place, and what suits you best depends on your comfort with volatility, your time horizon, and how actively you want to manage your portfolio.

Bringing it all together

Gold and silver, particularly gold, can play a steadying role in a diversified portfolio, helping to smooth out volatility and provide reassurance in unpredictable times. Yet, they work best as part of a broader mix, not as a standalone solution.

Think of them as tools for confident decision-making rather than quick wins. By keeping your exposure balanced and your expectations grounded, you can use precious metals not as speculation, but as a quiet source of strength when markets feel uncertain.

Disclaimer: This article is for information and educational purposes only. It expresses my personal views and frameworks for thinking about markets and investing. It does not constitute investment advice or a financial promotion, nor is it a personal recommendation to buy or sell any investment. Everyone’s situation is different, so if you are unsure about a decision, it’s important to seek guidance from a qualified financial professional.

The views, forecasts, and figures included reflect analysis at the time of writing, unless otherwise stated. sources used are believed to be reliable, but markets and circumstances can change quickly, which means our views may also evolve over time.