To determine why it is not too late to buy gold, we must consider why many people might be inclined to think it is too late.
First, gold has experienced an explosive bull run, as can be seen in the chart below. After remaining virtually flat for the first three and a half years of the 2020s, with strong resistance at $2,000/oz, it rocketed to higher ground and has not stopped rising since. In March 2023, the gold price hovered around $1,900 per troy ounce. By March 2025, it had risen to around $3,038, representing a 60% increase. It is even higher ($3,125). Gold far outperformed both the S&P 500 (+41 %) and the NASDAQ (+49 %) over that same two-year period.
And it has been making higher and higher highs. Anyone would think that the bull must be on the verge of exhaustion by now.
But not so fast...
When looking at the appreciation of gold (or any other asset), what is always observed is the gain in nominal terms. However, the correct way to view it is in inflation-adjusted terms. Let me illustrate: what is the current purchasing power of the asset - in U.S. dollars, assuming it is your currency - compared to what it was when you acquired it? This is the true measure of the value of something. Because inflation is a currency killer.
We have not had zero annual inflation since the 19th century, and the last 50 years have been particularly brutal. The dollar has fallen 88% since 1971 (not coincidentally, the year President Nixon ended dollar convertibility into gold).
Now let's look at gold - also known as real money - from this perspective. In the early 1980s, its price peaked at $850 per ounce. While it has far exceeded that benchmark in the interim, it has never done so adjusted for inflation. What $850 could buy in 1980 would today require an outlay of a whopping $3291.50.
In other words, despite its rise, gold is still cheaper than it was 45 years ago! If you had kept dollar bills under your mattress in 1980, each one would now be worth about 12 cents. But the gold coins you would have kept would not have lost any purchasing power. None at all.
Gold is, and always has been, the best protection against inflation. Currencies devalue and often lose their value. Gold never has.
Listed below are five factors driving the current demand for gold and, therefore, its price:
Geopolitical drama: Wars, political changes and global instability. Chaos is the love language of gold.
2. Dollar weakness/inflation: As noted, the two are intertwined. Challenges also loom for the U.S. dollar's position as a global reserve currency.
3. Stagnant supply: In 2023, around 3100 metric tons of gold were mined worldwide, a figure that remains unchanged since 2014. It is generally accepted that most of the huge deposits have already been discovered, and major new discoveries are rare. As economic extraction of the metal becomes increasingly difficult, gold is becoming scarcer.
4. Money printing: The world's central banks continue to create new monetary units as if they were M&Ms.
5. Central banks are buying.
This last point is key and worth elaborating on, as central bank demand has been the main driver of gold's rapid rise in recent years. This represents a radical change from 30 years ago.
Between 1995 and 2009, central banks were net sellers of gold, which reduced their reserves. We can infer that they believed gold was no longer relevant. In 2010, they became moderate net buyers, with average annual purchases of 473 tons (i.e., metric tons) until 2021. Then, for some reason, they experienced a significant change in attitude and moved into large-scale buying.
In 2022, according to the World Gold Council, central banks made record net purchases of 1,082 tonnes, more than double the average of the previous decade. In 2023, the figure was 1,037 tonnes, and last year it was 1,045 tonnes, the third consecutive year above 1,000 tonnes.
One metric ton = 32,150 troy ounces, so we are talking a LOT of gold.
Moreover, the published figures could be an underestimate, due to the opacity of the Chinese market. The People's Bank of China (PBoC) officially reported buying just 44 tons of gold during 2024, despite a six-month pause between May and October. However, China is the world's largest mining producer, accounting for approximately 10% of global production. This represented production of about 370 tonnes over the year, and all of that amount stayed somewhere in the country. The amount absorbed by the PBoC remains a mystery.
The curious reality is that while central banks have been pushing the price of gold higher, there has not yet been much participation in the market by institutions and the general public. Jewelry sales have slowed. Individual investors seem to be largely in a state of FOJI (fear of joining in), afraid of being late to the party.
That will change, and when it does, FOMO (fear of missing out) will replace FOJI (fear of joining social networks or digital groups for fear of not knowing what to post or not receiving the expected validation in the form of likes and comments) and the bulls will likely stampede.
That said, it is unwise to treat gold as a speculative investment. It is something to buy and hold, your insurance policy against the devaluation of electronic ledger entries that now represent dollars. Is it too late to add gold to your assets? No. It never is.
As a footnote, let me add that you should not panic about the recent tariff-induced price drop. Historically, this always happens when there is a stock market crash. Traders who get short their positions need to get cash quickly to cover their losses. This is normal. And gold has always recovered faster than stocks. If the drop looks big to you right now, check the 2-year chart to see that it's just a small detail. You can wait for the situation to calm down if you want, but the pullbacks are an invitation.
And if you're also looking for profitable investments in the gold market, consider the companies that mine gold. Most have yet to join the metal's uptrend, and many are dirt cheap, as Jeff has pointed out. Historically, shares of mining companies always lag behind physical gold, but over time, they always peak. When they do, their returns are usually many multiples of further gold price appreciation.
Jeff Clark, Money Metals