Few people realize that gold has actually outpaced the S&P 500 total return index over the past 25 years! The annual compound rate of growth in the price of gold over the past 25 years and 3 months is 9.87%. (Gold traded at $290 on January 1, 2000, and closed at $3,124 on March 31, 2025). The S&P 500 over the past 25 years generated an annual compound rate of growth of 7.76%! What can we learn from this comparison? It teaches us that the last 25 years, which have been characterized by excessive financialization, money printing, massive debt accumulation and repressive interest rate polices haven’t created as much wealth. In fact, most of the gains are nothing more than asset price inflation. Gold acting as a sleuth was not fooled by all these shenanigans.
But what about the next 25 years? Should investors invest in gold today? At ROCKLINC we believe that gold remains a timeless asset that offers stability, security, and a hedge against many systemic risks. With rising global debt, the decreasing purchasing power of fiat currencies, geopolitical uncertainty, tariffs, de-globalization, and the declining use of the U.S. dollar in global trade, investors face unprecedented challenges. Allocating a portion of an investment portfolio to gold is a prudent strategy to mitigate these risks. Let’s look at each of these risks and how gold can play an important part in your portfolio.
Global debt has reached unprecedented levels, surpassing $330 trillion in 2025, up from $125 trillion in 2007 and $200 trillion in 2017, according to estimates from the International Monetary Fund. This includes government, corporate, and household debt, but does not include hundreds of trillions in unfunded liabilities. High debt levels increase the risk of defaults, credit crises, and economic recessions. During times of economic weakness central banks will often printing money to service the debt and “stimulate” the economy which will inevitably lead to currency devaluation and inflation.
Gold serves as a hedge against these risks. Unlike fiat currencies, gold is not tied to any government or central bank and cannot be printed or manipulated at will. Its finite supply ensures its value remains relatively stable over time. During periods of excessive debt and monetary expansion, gold has historically preserved wealth and protected investors.
Fiat currencies, which are not backed by physical assets like gold, consistently lose purchasing power due to persistent inflation, bad monetary policies and excessive government spending.
Gold, often referred to as “sound money,” retains its intrinsic value. Unlike fiat currencies, its supply is limited, and it has been a store of value for thousands of years. During inflationary periods, gold prices tend to rise, preserving purchasing power.
In Canadian dollar terms, the value of real estate has increased significantly, and most Canadians view their home as their best investment. But is that true? Let’s apply the gold test. The price of the median home in Canada in 1975 was $39,500 and the price of gold on December 31, 1975, closed at $142.70 CDN. That means it took 273 ounces to buy the average Canadian home in 1975. Fast forward to 2024. The average home price across the country was $700,000 and gold closed the year at $3,774 Canadian per ounce. That means you only needed 185 ounces of gold to buy the average home in Canada in 2024. Think about this for a moment. The price of the median home in Canadian dollars went up by 1,672% ($39,500 to $700,000) and yet the amount of gold you needed in ounces decreased by 32%! How can this be? It’s because the value of our money continues to fall when measured against the standard of gold.
This is one reason why we invest in businesses operating in the precious metals sector. It’s all about trying to maintain and grow our purchasing power when we are governed by an increasingly totalitarian State that is destroying our economy and depreciating the value of our money through reckless fiscal and monetary policies.
Geopolitical tensions are on the rise, with conflicts, trade disputes, and political instability creating uncertainty in global markets. Events such as U.S.- China trade tensions, the Russia – Ukraine war and conflicts in the Middle East underscore the fragility of the global economy. Such uncertainties can disrupt financial markets, supply chains, and economic growth, prompting investors to seek safe-haven assets. Gold has a proven track record as a safe-haven investment during geopolitical crises. It is a globally recognized asset that transcends national borders and political regimes. A modest allocation to gold can provide a buffer against market volatility sparked by unpredictable global events.
The trend toward deglobalization, characterized by rising tariffs, trade barriers, and protectionist policies, is reshaping the global economy. Countries are prioritizing domestic industries and reducing reliance on international trade. These policies disrupt supply chains, increase costs, and contribute to inflation, which can destabilize financial markets for periods of time. Deglobalization is changing the global financial system and putting more pressure on fiat currencies. By holding gold, investors can mitigate the risks associated with a fragmenting global economy.
The U.S. dollar has long been the world’s reserve currency, dominating global trade and finance. However, its dominance is waning as countries like China, Russia, and India increasingly use alternative currencies for trade. For instance, China has promoted the yuan in bilateral trade agreements, while Russia and others have settled oil transactions in non-dollar currencies. The BRICS nations (Brazil, Russia, India, China, South Africa) are actively exploring alternatives to the dollar, including digital currencies and gold-backed systems.
A declining dollar reduces its appeal as a store of value, increasing the risk of currency depreciation. As central banks diversify their reserves away from dollar-denominated assets, many are increasing their gold holdings. According to the World Gold Council, central banks purchased over 1,000 tonnes of gold annually in 2022 and 2023, a trend that continues in 2025. This shift reflects gold’s growing role as a neutral, reliable asset in a multipolar world.
Gold’s unique properties make it an ideal hedge against the challenges outlined above. It is a tangible asset with intrinsic value, unaffected by government policies or corporate defaults. Its low correlation with stocks and bonds enhances portfolio diversification, reducing overall risk.
At ROCKLINC we have maintained a weighting of 15-20% in gold and silver investments since 2010 when the ROCKLINC was formed. Our largest positions are in gold and silver royalty companies such as Franco-Nevada, Wheaton Precious Metal, Royal Gold, Sandstorm Gold and Osisko Royalties.
We prefer investing in a royalty company over a mining business because royalty companies face lower operational risks, as they finance miners in exchange for a share of production or revenue without managing mines directly. They typically have diversified portfolios, spreading risk across multiple projects, unlike mining companies that may depend on a single mine’s performance. Royalty companies also enjoy higher profit margins and stable cash flows, as they avoid the high costs and volatility of mining operations. However, mining businesses might offer higher potential returns if a specific project succeeds, but they come with greater financial and operational uncertainties.
In a world grappling with soaring global debt, eroding fiat currency value, geopolitical instability, deglobalization, and a declining U.S. dollar, gold stands out as a reliable safe-haven asset. Its ability to preserve wealth, hedge against inflation, and maintain value during crises makes it an essential component of a diversified portfolio.
If you want more information or you would like to have a consultation, please contact us at info@rocklinc.com or call us at (905) 631-5462 (LINC).
Contact Information
ROCKLINC INVESTMENT PARTNERS INC.
4200 South Service Road, Suite 102
Burlington, Ontario
L7L 4X5
Tel: 905-631-LINC (5462)
www.rocklinc.com