This is how to invest in gold, which is still in its bull market

With rising inflation and public debt, gold has a lot of room to grow

These are the top strategies for gold investments.

When dividends are taken into account, the price of gold has increased more than fifteenfold since the year 2000, whereas the SandP 500 has only increased by 8.5 times. I know you're crying, but it's still true: selective dates. Who would have thought? In 2000, US stocks were in a generational technology bubble, much like they are now, and gold was in ruins following a two-decade bear market. Even in the depths of despair in 2015, after a 45 percent correction in the price of gold, equities have never been stronger than gold this century.

Because of its beauty, durability, and timeless appeal, gold is a popular material for jewelry, but its scarcity and liquidity appeal to financiers. Because it is limited, governments are unable to print more of it, which makes it a useful store of value. Because gold is liquid, it can be exchanged for billions of dollars at any time, regardless of how the world economy is doing. The financial system's safety net is provided by gold.

It is well known that our governments have taken on excessive debt, which they will never repay. However, they will act as though they are printing more money in the traditional manner. This will cause the currency to lose value, which will ultimately result in a decline in the purchasing power of money. In addition to making up for the declining value of the pound in your pocket, the rising price of gold will provide you with additional benefits as the asset gains global demand.

Why gold is a universal medium of exchange.

Gold has always been valued by central banks. Imagine attempting to transfer substantial amounts of money across borders prior to the development of contemporary payment systems. From here to Timbuktu, an ounce of gold was valued and is still valued today. A large portion of central banks' reserves are kept in gold, both to guard against inflation and to cover obligations to other countries when needed.

Watch the entire video here: Central banks normally kept 60% of their reserves in gold prior to Nixon removing the US dollar from the gold standard in 1971. After significant inflation in the 1970s, the price skyrocketed in 1979, causing the figure to spike. Then, in 1980, the "Volcker Moment" occurred. Paul Volcker, the US Federal Reserve's then-chair, raised interest rates to an unprecedented 20 percent in order to combat inflation, which subsequently started a four-decade decline until Covid.

Richard Nixon, a former US president, in the White House.

By removing the US from the gold standard, Richard Nixon cleared the path for increased inflation.

The central banks lost interest in gold during the 1980s and 1990s when growth was strong and inflation was low. Up until 2008, when the world financial crisis struck, their proportion of reserves decreased. After that, gold reserves leveled off at ten percent. They began to rise for the first time since the 1970s after the invasion of Ukraine. Russia's reserve holdings of US Treasury bonds were frozen by the US and Europe in response to the ongoing conflict in Ukraine in 2022. Central bankers paid attention, particularly in Asia and the Middle East. They could confiscate their reserves if Russia's could. China spearheaded the increase in gold diversification at the expense of US Treasuries.

Gold now makes up almost thirty percent of reserves. The central banks have added an astounding 4,500 tons, valued at £20 billion, to their holdings, though part of that can be attributed to price increases. Gold has been able to withstand the effects of rising interest rates due to its high demand.

Gold and real yields are related.

Gold has historically moved inversely to bond yields because it doesn't pay interest. In terms of opportunity cost, holding gold is more costly at 10 percent interest rates than at 1 percent. Inflation also matters: the real yield is zero if yields are 10% and inflation is 10%. According to some, gold is an inflation hedge that keeps its purchasing power throughout time. In this regard, the real yield has consistently influenced the price of gold more than the yield itself.

Imagine a pound sign on a stack of coins to illustrate the high inflation concept.

However, there are various kinds of inflation. The cost of living, which many consider to be underestimated, is reflected in consumer prices (CPI). The money supply, also known as monetary inflation, has increased over the past three decades at an average rate of 7.5%. For the majority of gold watchers, this is the most significant figure. Gold will gain value and serve as a buffer if the amount of money rises.

It turns out that over time, monetary inflation is followed by an increase in the value of the gold supply above ground. In fact, the expected return framework for gold developed by the World Gold Council is based on this. They contend that in the long run, the price of gold should equal nominal GDP growth. That is the sum of inflation and real growth. Gold follows the money supply because nominal GDP and the money supply typically coincide, which makes perfect sense.

Over time, it turns out that it does, but in cycles. When demand from investors and central banks is strong, as it is now, gold prices rise more quickly than new money is created. Additionally, during periods like the 1980s and 1990s, when growth is strong and inflation is under control, gold loses ground.

This year, the price of gold reached £5,595 in January. From its low of £1,064 in late 2015, that represented a gain of 434%. With a 65 percent increase, 2025 was gold's second-best year in modern records; it was last surpassed in 1979 with a 126 percent increase. There's no denying that gold got ahead of itselfthat was too much, too soon. A healthy 29 percent correction has occurred since then. I believe that the worst is over and that a slow recovery is in progress.

In August, US Treasury Secretary Scott Bessent announced an intervention in the Japanese yen. Two weeks later, he increased purchases of long-dated Treasury bonds, which was the recent boost. The signaling was explosive, but the sums of money involved were modest. The growing cost of borrowing worries governments, who are willing to step in. Everyone is aware that printing more money will result from whatever they say, and there will be much more.

Scott Bessent, the US Treasury Secretary.

Scott Bessent is failing to control the cost of borrowing in the United States.

By 2030, gold will be worth £7,000.

I wrote a paper for the London Bullion Market Association (LBMA), the global gold trade association, in 2020 titled The Rational Case For £7,000 Gold By 2030. The price of gold was £1,700 an ounce at the time, and many people thought my piece was unattainable. However, the idea was straightforward: long-term inflation expectations would change from 2 to 4 percent.

Expectations are rising, but the shift has been mild thus far, according to official data. Although public debt is a major concern, the bond market, as measured by Treasury Inflation-Protected Securities (TIPS, inflation-linked US government paper), is not yet pricing in significantly higher consumer-price inflation. Although concerns about inflation have not yet been raised, it is inevitable given the rising costs of energy and food as well as the expense of debt servicing. The bond markets are headed in the wrong direction, as gold is indicating.

With £5,595 earned this year, my 2030 goal of £7,000 seems doable. I have faith that it will be accomplished, and considering what lies ahead, I wouldn't mind raising that goal. Despite their financial difficulties, many Western governments still engage in wasteful spending. More investors will turn to gold as the situation worsens in order to shield themselves from the devastation brought on by rising interest rates.

I'll examine the bear case for the sake of balance. That could have disastrous effects on the price of gold under certain conditions, similar to what happened in the 1980s and 1990s. What, however, would have to occur?

The US budget deficit is 6.1 percent of GDP. In actuality, this means that they will spend £7.4 trillion in 2026 compared to £5.6 trillion in tax revenues. That amounts to a £1.8 trillion yearly deficit. Then take into account that their debt has recently surpassed £40 trillion and continues to rise. Germany's deficit is 2.8 percent, China's is 4.5 percent, the UK's is 5 percent, and France's is 5.7 percent.

Austerity would entail budget balancing, which the UK last accomplished in 2001. With a balanced budget, the debt to GDP ratio quickly drops as the economy expands and inflates. After about ten years, debt servicing becomes a small expense. Consider Ireland, whose debt skyrocketed to 120% of GDP following the 2008 financial crisis. It has now fallen to 33% as a result of an imposed austerity program. Portugal's percentage was 140%; it is currently 91% and declining. Despite being "progressive," the debt-to-GDP ratios of Sweden, Denmark, and the Netherlands are all low. The price of gold would decrease if the major industrialized countries balanced their budgets or even indicated that they intended to do so. However, given the continued bad behavior of the US, UK, Japan, China, Germany, France, Italy, and others, we are neither there nor, to be honest, even close.

A straight line is formed by the gold bars. In the background is a digital chart featuring price indicators.

Until the political winds shift, which will happen eventually, gold is a good investment. We were all taken aback when Argentina's electorate selected President Javier Milei with his chainsaw. People chose austerity over chaos because they were tired of an overly indebted and failing state. The youth's supportthey gave him 70% of the votewas the true surprise.

The basic truth is that the debt of today is the issue of tomorrow. When governments take out loans to cover their expenses, they transfer the debt to the following generation. There comes a point at which austerity is seen as the only option rather than just an immoral one. When that occurs, it will be time to cut back on your gold holdings and return to bonds, which may have very favorable interest rates.

Invest in gold right now.

There are several ways to invest in gold.

British investors who want to touch their gold should hold Britannias or Sovereigns, which are free of capital gains tax. They can do this through a reputable dealer such as Sharps Pixley or The Pure Gold Company. But if you do buy physical gold, please keep it in a vault. And if you insist on keeping it at home, then the best security is not to tell anyone!

For the adventurous, add a little Bitcoin into the mix. I created the BOLD index, which combines bitcoin and gold on a risk-weighted basis. Bitcoin is often considered digital gold since the supply is constrained and it is a store of value. Rather than have a 50/50 split, I weight according to volatility.

That means more gold than bitcoin, since it is less volatile. That manages the risk and since the assets have low correlation and act independently, BOLD rebalances the portfolio each month. BOLD reduces the stronger asset, adding to the weaker asset, in a top-secret investment strategy known as "buy low, sell high". The result is a strategy that has similar volatility to gold, but with higher historical returns. BOLD is available as an ETF, the 21Shares Bitcoin Gold ETP (LSE: BOLD).
My clients at ByteTree hold the gold exchange-traded fund (ETF) known as the iShares Physical Gold ETC (LSE: SGLN). They also hold the Silver ETF, iShares Physical Silver ETC (LSE: SSLN) and gold miners through the VanEck Gold Miners ETF (LSE: GDGB). Silver and the miners tend to do much better than gold in a rising market, but fare worse should the gold price fall.