One of the best ways to safeguard wealth and mitigate risk is portfolio diversification, which involves spreading money across various assets and asset classes. Among these assets, gold has long held a unique position as a safe haven against factors like inflation, economic volatility, and geopolitical uncertainty. According to U.S. Money Reserve President Philip N. Diehl, the precious metal has a 2,500-year track record of consistently providing value.
“Gold has this long tradition, and it’s not just a long history; it’s a global history,” says Diehl, who served as the 35th Director of the U.S. Mint before joining U.S. Money Reserve, a leading distributor of government-issued gold, silver, platinum, and palladium products. The company also helps clients select high-quality precious metals for their retirement portfolios.
“Gold is one of the few assets that has not only held value, but has also been a medium of exchange that facilitates commerce. This has been repeated over and over again over the past half-century. When stocks, bonds, and other assets are falling, gold tends to hold its own or rally,” says Diehl.
Unlike stocks and bonds, gold is a tangible commodity with intrinsic value. These characteristics help make it a potentially powerful tool for protecting wealth against economic downturns, inflation, and currency fluctuations. As market volatility and global uncertainties persist, understanding gold’s role in portfolio diversification is increasingly crucial.
Gold as a Hedge Against Economic Instability
Gold’s enduring appeal stems from its historical resilience and low correlation with traditional financial markets. During times of economic instability, gold has consistently demonstrated its value as a hedge against inflation and market downturns. Its limited supply and universal value contribute to its status as a sought-after asset in both bullish and bearish market conditions.
“Gold often performs well during periods of strong economies,” says Diehl, “but it’s a standout asset in hard times, during recessions and periods of political instability. For that reason, gold is often used as wealth insurance to offset losses in other parts of a portfolio.”
Beyond gold’s role as a hedge against economic turmoil, gold offers several other compelling benefits. Its inherent value and limited supply contribute to its potential for long-term appreciation, enabling gold to act as a store of wealth that can outpace inflation over time. Unlike fiat currencies, gold is not subject to the devaluation risks associated with government monetary policy. This makes it a potentially attractive asset for preserving purchasing power across generations.
In addition to financial advantages, gold can hold cultural and historical significance. For some, owning gold represents a connection to tradition and a tangible link to the past. Gold can be passed down through families as an heirloom, carrying both monetary and sentimental value. Gold’s beauty and rarity have made it a coveted material for jewelry and decorative objects throughout history, adding an aesthetic dimension to its appeal.
Gold’s Strong Historical Performance
Gold’s historical performance underscores its potential for long-term wealth accumulation. For example, an ounce of gold cost $263.80 in 2000. In 2025, the price has reached nearly $3,000 per ounce, an increase of more than 1,000%.
Gold’s low correlation with traditional asset classes also enhances its appeal for diversification. Including gold in a portfolio can potentially reduce overall volatility and improve risk-adjusted returns, mitigating the impact of market-specific downturns.
Gold can provide “security in times of crisis at home and abroad,” as explained in a U.S. Money Reserve video on the company’s YouTube channel.
The video also notes the privacy benefits of gold, describing the asset as “an alternative savings vehicle held outside the traditional banking system.”
The 2025 Gold Rush
A recent media report calls the increased interest in purchasing the precious metal “the new gold rush.” The report says while the uber-wealthy and some central banks have been buying gold, so have individuals looking for some security during turbulent times. Because of “increasing geopolitical instability, the world feels ever more uncertain. As we’ve done for millennia, many are turning to gold in search of safety and security,” the report states.
Gold’s high liquidity is another attractive feature. It is universally recognized and easily bought or sold in global markets. Whether in the form of coins or bars, gold can be quickly converted to cash if needed. Additionally, as a physical asset, gold doesn’t rely on a third party’s solvency, offering a layer of security that financial instruments like stocks and bonds lack.
“For hundreds, if not several thousand years, gold has ensured that a person’s assets and wealth are protected, come what may,” Diehl says.
Despite gold’s liquidity, Diehl also notes that physical gold is traditionally a “buy-and-hold” asset. “Individuals like you and I are not trying to profit from short-term price movements as we might do with stocks or other commodities,” Diehl says. “Gold tends to be ballast in a portfolio; it provides an anchoring, stabilizing influence.”
