Gold is no longer a form of insurance but has become a reserve

Real interest rates remain high in several major economies, and gold is holding its ground. This apparent anomaly is prompting some portfolio managers to rethink their approach: gold is no longer seen as a tactical hedge, but rather as a strategic portfolio position.
 

For twenty years, gold has been analyzed using three variables: interest rates, inflation, and risk aversion. The current trend defies this model. “Despite real interest rates that remain relatively high in several major economies, the precious metal continues to trade at historically high levels,” notes Grégoire Kounowski, investment advisor at Norman K. In past cycles, such a scenario would have weighed on prices by increasing the opportunity cost of holding a non-income-generating asset.
 

The first factor explaining this trend lies in the behavior of central banks. For several years now, their gold purchases have reached levels rarely seen since the end of the Bretton Woods system, and they show no signs of slowing down despite rising prices. Global foreign exchange reserves, which for a long time were backed by the dollar and, to a lesser extent, the euro, are becoming more diversified.
 

Repatriating Gold: A Political Statement
This trend is accompanied by a more discreet shift. Several monetary authorities have initiated or are considering partial repatriation of their gold reserves, while others are distributing their holdings across multiple storage locations. Underlying these decisions are geopolitical risks, financial sanctions, and dependence on international financial infrastructure. Gold is regaining its role as a symbol of sovereignty.
 

Added to this is a longer-term perspective on public debt. Debt levels are reaching record highs in many developed economies, and deficits remain high despite several years of sustained nominal growth. Some economists believe that markets are beginning to price in a gradual erosion of currencies’ purchasing power. Gold is thus becoming less of a hedge against an imminent crisis and more of a hedge against the slow erosion of currency value. At Bank J. Safra Sarasin, currency strategist Claudio Wewel links the metal’s summer rally to fears of a depreciation of the dollar.
 

This new perspective is changing the role of gold in an investment portfolio. For a long time, it served as a tactical position—bought in anticipation of a period of uncertainty and then sold off afterward. A growing number of portfolio managers now treat it as a permanent diversification tool, precisely because stocks and bonds can be affected simultaneously by inflation, fiscal tensions, or a geopolitical shock. When the two traditional components of a portfolio are correlated, a third component—one that follows a different logic—regains value.
 

Fund Flows Follow the Narrative
European investors are voting with their subscriptions. According to an analysis of fund flows published by Amundi, gold-backed exchange-traded products (ETPs) raised 6.3 billion euros in August alone. Since the beginning of the year, the total has reached 8.1 billion euros, surpassing the 6.6 billion recorded for all of 2025. It took just eight months to exceed the total for the entire previous year.
 

However, the bullish scenario is by no means a foregone conclusion. A sustained rebound in the dollar, supported by a stronger-than-expected U.S. economy, would weigh on prices. The same would be true if the Federal Reserve were to maintain high real interest rates for an extended period. Grégoire Kounowski suggests reassessing the situation after the Fed’s next meeting, at which a 25-basis-point rate hike remains likely.
 

For French savers, the choice of container matters just as much as the choice of contents. Physical gold—coins and bars—is subject to the flat-rate tax on precious metals, levied on the sale price. A seller who has a purchase invoice in their name may prefer the capital gains tax regime for personal property, which includes a deduction for each year of ownership beyond the second year and a total exemption after twenty-two years. Exchange-traded products backed by the metal, on the other hand, are subject to the tax treatment of securities and are not eligible for a stock savings plan (PEA).
 

The question investors face has therefore changed in nature. It is no longer a matter of whether gold provides protection, but of deciding what portion of the portfolio should be allocated to it—and for how many years.