In a recent episode of America’s Gold Authority Podcast®, we discussed how clients could be converting stock market gains into physical gold. Since then, I've had a chance to refine and extend my thoughts outside the time constraints of our podcast.
Here are three reasons to rebalance your portfolio at least once per year:
1) Your gains and losses are likely to have shifted the weights of the asset classes and risk exposure of your portfolio.
2) Your investment goals and timelines might have changed since your last review.
3) Your assessment of the investment climate might have changed since your last review.
Reason number 3 is especially important because the consensus assessment of the 2025/26 economy has grown more pessimistic.
For example, Moody Analytics warns that the United States is “on the precipice of recession;” Apollo puts the chances of a recession at 90%; and JP Morgan, Goldman Sachs, EY, and the New York Fed make the odds of a recession between 30% and 40%.
In the past, investors would have protected themselves from rising recession risks by shifting money into a safe haven, such as U.S. treasuries or gold. However, times have changed.
Interest rate volatility has weakened the safe-haven appeal of treasuries, while the historic rally in gold prices has strengthened gold's appeal.
Here's a thought experiment: Let’s say that a friend and I did our annual portfolio rebalancing last December 31 after making good gains in our stock holdings in 2024. While he was optimistic about stocks in 2025, I was more pessimistic. So, while he doubled down on stocks, I took the gains I earned in 2024 and bought gold. How have we done so far in 2025?
The economy has stayed pretty strong, and his stocks are up 9.8% through mid-August. A good outcome for my friend.
What about my more cautious approach of converting 2024 stock gains into gold? My gold is up 28% through mid-August.
That's right, my conservative “risk-off” approach earned almost three times the return as my friend's stock-heavy “risk-on” approach.
Is this a rare occurrence, gold beating stocks in a good economy?
No. Last year was a great year for stocks. Up 25%, including dividends. But gold still beat stocks, ending the year up 27%. In fact, gold has beaten stocks in 5 out of the last 10 years, and in total, over the last 25 years.
So, if you're smart, you don't have to give up high returns to protect yourself from a market correction or a recession. When you buy gold, you're buying wealth protection and appreciation.
