Gold outperformed every major U.S. stock index in 2025, as investors used it to hedge against economic uncertainty.
The precious metal has been a widely recognized store of value for thousands of years, which could support further upside.
The SPDR Gold Trust is an ETF that directly tracks the performance of gold, giving investors a simple way to own the yellow metal.
Gold is a shiny yellow metal that sells for a whopping $4,400 per ounce, but it isn’t very useful, with very few industrial applications outside the jewelry industry. Instead, most of gold’s demand comes from investors who buy it because of its status as one of history’s oldest stores of value, which dates back thousands of years.
The SPDR Gold Trust (NYSEMKT: GLD) is an exchange-traded fund (ETF) that directly tracks the performance of gold, and it rocketed higher by 64% during 2025, outperforming every major U.S. stock market index. Political turmoil, economic uncertainty, and soaring government debt were making investors nervous, so they flocked to the safety of the shiny yellow metal.
All of those issues are still present in 2026, which leaves the door open for further upside. History suggests annual returns of over 60% certainly aren’t normal, so here’s what is likely to happen this year instead.
Gold earned its status as a store of value partly because of its scarcity, with just 216,265 tons extracted from the ground throughout all of human history. For some perspective, roughly 1.7 million tons of silver have been mined, along with billions of tons of other commodities like iron ore and coal.
While gold appreciates in value because of demand from investors, it also benefits from the depreciation of paper currencies. The U.S. used the gold standard up until 1971, which meant the government could only print paper currency if it had an equal amount of physical gold reserves to match. This prevented an unchecked increase in money supply, which kept a lid on inflation.
After abandoning the gold standard in 1971, money supply exploded, causing the U.S. dollar to lose around 90% of its purchasing power. The below chart shows how the price of an ounce of gold typically tracks the increase in money supply (and the debasement of the U.S. dollar).
The U.S. government ran a $1.8 trillion budget deficit in fiscal 2025 (ended Sept. 30), catapulting the national debt to a record $38.5 trillion. Another trillion-dollar deficit is likely in fiscal 2026, so investors are increasingly worried that devaluing the U.S. dollar even further by increasing money supply is the only way the government can manage its growing debt pile. As a result, they are flocking to gold as a hedge.
Source: finance.yahoo.com
