Gold has historically been treated as a portfolio hedge rather than a return-generating investment, and the distinction matters for how investors should think about sizing and expectations.

In the current environment — elevated geopolitical risk, rising inflation expectations, a Federal Reserve constrained from cutting rates and a dollar facing structural pressure from fiscal deficits — the conditions that have historically supported gold prices are present. Understanding why, and what vehicle best expresses that view, is more useful than simply buying based on current sentiment.

The Mechanism Behind Gold’s Moves

Gold's investment case operates through a specific mechanism: real interest rates. When the real interest rate — the nominal rate minus inflation expectations — is negative, the opportunity cost of holding gold declines. Gold pays no yield, so it competes directly with yield-bearing assets.

When real yields are positive, gold's lack of income is a meaningful disadvantage. When real yields turn negative, that disadvantage disappears and gold's store-of-value characteristics become relatively more attractive. If the Federal Reserve holds rates........

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