We have long regarded gold as an essential asset class and recognize the benefits of including it in our dynamic, diversified core portfolios. Unlike stocks and bonds, gold is a real asset rather than a financial asset, and its distinct return drivers can provide meaningful diversification across a wide range of economic and market environments.

Our investment philosophy rests on the premise that markets are cyclical and that asset classes perform differently across each phase of the market cycle. Accordingly, we believe investors should look beyond traditional equity and fixed income allocations and incorporate real assets including gold and commodities when constructing portfolios intended to navigate full market cycles.

A valuable reason to hold gold is that it has historically served as a portfolio shock absorber, cushioning portfolios during periods of market stress, geopolitical uncertainty, and diminished confidence in traditional financial assets. At times, gold extends beyond its defensive role and contributes meaningfully to portfolio returns. From August 31, 2023 through August 31, 2026, gold gained 31.8%, compared with 21% for the S&P 500 Total Return Index (annualized), while over the past 25 years gold has delivered an annualized return of 11.8% versus 10.0% for the S&P 500 Total Return Index.
 

Chart: Growth of $100 in Gold vs S&P 500
Source: Bloomberg | Data as of 8/31/2026


For these reasons, 3EDGE views gold not only as a tactical position, but as an important strategic component of our multi-asset investment process. By maintaining exposure to a broader opportunity set that includes real assets such as gold, we seek to improve diversification, manage downside risk, and generate attractive risk-adjusted returns over full market cycles.

Looking ahead, there are a number of potential factors that could influence the price of gold either positively or negatively.
 

Potential Headwinds

  • The Federal Reserve’s recent increase in short-term interest rates may mark the beginning of a more restrictive policy environment. Historically, higher interest rates have pressured gold prices by raising the opportunity cost of holding a non-income-producing asset.
  • A sustained rise in real (inflation-adjusted) interest rates could reduce the relative attractiveness of gold, which generates no income and therefore competes with real yield-bearing investments.
  • Continued strength in the U.S. dollar could also weigh on gold prices, as the two assets have often exhibited an inverse relationship.


Potential Tailwinds

  • Central banks worldwide continue to reassess reserve policies amid rising geopolitical tensions and growing concerns regarding sanctions risk. This trend may support ongoing demand for gold as a reserve asset.
  • With U.S. national debt now exceeding $40 trillion, policymakers face increasing difficulty balancing economic growth, inflation management, and debt-servicing costs. History suggests that periods of elevated debt can shape monetary and fiscal policy in ways that may support real assets, including gold.
  • Efforts to hold interest rates below the rate of inflation, including policies known as financial repression and fiscal dominance, could increase the attractiveness of real assets as investors seek to preserve purchasing power.


Investment Implications

Our primary objective is to construct portfolios that can adapt to a wide range of potential outcomes. Gold is one of several tools we employ in pursuit of greater diversification and portfolio resilience while also seeking to be additive to returns.  As with any investments in the global capital markets, gold will inevitably experience periods of both strong and weak performance. However, we believe its distinct characteristics continue to support its role within our dynamic, globally diversified investment solutions.

In summation, in the current uncertain market environment we believe our gold allocations across our core strategies are appropriate. Meanwhile, we will continue to evaluate gold alongside the broader opportunity set of major asset class groups within our investment universe.

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DISCLOSURES

This blog is sponsored by 3EDGE Asset Management. Orion Advisor Solutions, Inc. (“Orion”) or its affiliates and subsidiaries received compensation from 3EDGE Asset Management for the placement of this advertisement content. 3EDGE Asset Management and Orion are not affiliated companies, and the advertisement is not a recommendation or endorsement by Orion for any of the services referenced or provided.

This material does not constitute any representation as to the suitability or opportunities of any security, financial product or instrument. There is no guarantee that investment in any program or strategy discussed herein will be profitable or will not incur loss. This information is prepared for general information only. Individual client accounts may vary. It does not have regard to specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report (information). Investors should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed and should understand that statements regarding future prospects may not be realized. Investors should note that security values may fluctuate, and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not a guide to future performance. Investing in any security involves certain non-diversifiable risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any specific, or diversifiable, risk associated with particular investment styles or strategies.

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An index is an unmanaged group of assets considered to be representative of a select segment or segments of the market in general, as determined by the index manager for the purposes of managing a specific index. You cannot invest directly in an index.

The S&P 500 Index is an unmanaged composite of 500-large capitalization companies. This index is widely used by professional investors as a performance benchmark for large-cap stocks.