Gold has long been viewed as a hedge against inflation. When governments print more currency, the value of existing money falls, meaning more dollars are needed to buy the same goods and services.

As fiat currencies lose purchasing power, investors often turn to gold, which cannot be printed or devalued in the same way.

History shows this clearly—in the late 1970s and early 1980s, during periods of high inflation, gold prices surged. In today’s environment of aggressive money printing and rising costs, gold continues to assert itself as a safe haven, with prices expected to climb as inflation erodes the value of paper currency.

Geopolitical events often have a significant impact on gold prices. During times of conflict, political instability, or global uncertainty, investors typically turn to gold as a safe haven, which drives demand and lifts its price.

Wars and similar events frequently lead governments to print more currency to fund spending, which in turn fuels inflation. A country that remains in prolonged conflict almost always develops high inflation as its currency weakens.

While there can sometimes be a delay, gold prices eventually adjust. Over time, the increase in inflation caused by geopolitical turmoil is reflected in higher gold prices, as investors seek to protect their wealth from depreciating fiat currencies.

Interest rates can influence how investors view gold. Conventional thinking suggests that when interest rates rise, yield-bearing assets like bonds or savings accounts become more attractive compared to gold, which does not pay interest or dividends. This is often said to reduce demand for gold.

However, history tells a different story. Over the last 5 years, gold has risen around 90%—an average of 18% per year using simple interest—and over the last 20 years, it has averaged a 40% gain per year. Despite not producing a yield, gold has consistently delivered strong long-term returns.

The key difference is risk. Yield-bearing assets are tied to institutions, policies, or counterparties, while gold carries no default risk. This makes it a unique asset that not only preserves wealth but also performs strongly when inflation and economic uncertainty undermine other investments.

Gold mining shares often provide leveraged exposure to movements in the gold price. When gold prices rise, mining companies can see higher profitability, which may result in stock prices increasing at a faster rate than gold itself.

However, it’s important to remember that mining companies are businesses. Their performance depends not only on the gold price but also on operational efficiency, management quality, costs, and geopolitical factors in the regions where they operate.

If you are successful in selecting a well-managed and efficiently run mining company, the potential rewards can be multiples of the gold price. On the other hand, poorly run companies may underperform regardless of gold’s strength, making careful research essential.

Silver tends to be more volatile than gold, largely because it is viewed today as an industrial metal as well as a store of value. This dual role leads to greater price swings, offering the potential for higher returns but also higher risks. Historically, however, silver has been used more frequently as money than gold—and history often has a way of repeating itself.

Platinum, meanwhile, is rarer than gold and heavily tied to industrial demand, particularly in the automotive sector for catalytic converters. This reliance on industry can make its price highly sensitive to economic cycles, with periods where platinum has even traded above gold.

For investors, holding a mix of both gold and silver—often suggested as a 50/50 balance—can help smooth out volatility. Most importantly, owning physical bullion rather than paper contracts gives you greater security and control over your portfolio.