Why Don't Investors Respect Gold and Commodities?

For most of recorded history gold was the asset everything else was measured against. Within one working lifetime it became an afterthought in professional portfolios. The reasons say more about how the advice industry earns its living than about gold's properties. They also explain a great deal about how Bitcoin is treated today.

The yield obsession that sidelined gold

Modern portfolio management grew up around the discounted cash flow model. Project an asset's future income, discount it back to today and the number that falls out is the value. Equities produce earnings. Bonds pay coupons. Property collects rent.

Gold produces nothing. It sits in a vault being scarce, which is the entire point.

The model has no cell for that.

So a generation of analysts faced an awkward choice. An asset that has held purchasing power for three thousand years does not fit the spreadsheet, which means either the spreadsheet is incomplete or the asset is irrelevant. Most of the industry picked the answer that kept the spreadsheet.

Commodities got the same treatment. Maize, platinum and diesel move the real economy and their prices carry real information. But commodity exposure pays no income and it complicates reporting, so it was bred out of model portfolios in favour of better behaved assets.

Economists have long had a name for what the spreadsheet cannot see. Carl Menger, writing on the origins of money in 1892, described how a monetary good carries value above and beyond its utility or consumption value. That extra value is the monetary premium and the premium is the whole point. A discounted cash flow model prices everything about an asset except the reason people hold money.

What 1971 actually changed

Until August 1971 gold had a formal job. Bretton Woods pegged the major currencies to the US dollar and the dollar was redeemable in gold at $35 an ounce, so every rand in circulation stood at a fixed, if indirect, distance from metal in a vault. Then Nixon closed the gold window in a Sunday night television address that famously pre-empted an episode of Bonanza. From that evening central banks could expand money without reference to anything physical. The institutions managing the new paper system needed a story for their clients and the story wrote itself: gold's monetary era was over and the future belonged to equities and bonds. It was a remarkably convenient story for the people selling equities and bonds.

The story stuck.

The metal did not cooperate with it. Within nine years of the window closing, gold had run from $35 to more than $800 an ounce. The people who declared its monetary era finished watched it make a twenty-times move against the currency they managed.

What followed the anchor's removal was anything but stability. Between 1975 and 2007 the world recorded 201 distinct currency crises, better than five a year, according to research from the Federal Reserve Bank of San Francisco. South Africans did not read about those in textbooks. The rand was worth $1.40 when it was introduced in 1961. The decades since the anchor came off gave us the debt standstill of 1985, the long slide of the nineties, R14 to the dollar in 2019 becoming R18.70 by 2024. Hayek saw the shape of it early. By 1984 he was telling audiences the world would never have good money again until it was taken out of the hands of government. It could not be taken violently, he said. It would have to arrive by some sly, roundabout way that government could not stop. Twenty five years later a pseudonymous programmer mined the first Bitcoin block and stamped a newspaper headline about bank bailouts into it, which is about as sly and roundabout as monetary history gets.

The country that dug the world's gold

No reader has more skin in this story than a South African. In 1970 our mines produced just over 1,000 tonnes of gold, roughly two thirds of everything pulled out of the ground on earth that year. The Krugerrand, launched in 1967, invented the modern bullion coin and at its peak held around 90% of the world market for gold coins. Johannesburg exists because of the metal. So does the JSE, which spent its first century largely as a machine for financing shafts. China only overtook South Africa as the largest producer in 2007, ending a run of more than a hundred years at number one.

Today production is roughly a tenth of the peak.

The state still sits on the metal though. As at October 2025 the Reserve Bank held about R281 billion in gold, around a fifth of its balance sheet, held as custodian because the gold legally belongs to government. And the national accounts carry a quiet confession about the rand. The GFECRA, the account that records revaluation gains on the country's gold and foreign reserves, stood at minus R28 billion in 2003. By 2024 it had swollen past R500 billion and Treasury arranged to draw R150 billion of it to support the budget. That half a trillion rand was not earned by clever trading. It is what two decades of rand depreciation looks like when it lands on the government's own balance sheet.

There is a sanctions-era footnote worth keeping. Washington banned Krugerrand imports in 1985 as pressure on apartheid tightened, a reminder that a bearer asset is only as portable as politics allows. That lesson has a Bitcoin-shaped answer.

Even in decline the old reflex works: net gold exports jumped 29.5% in the fourth quarter of 2025 on higher prices and safe-haven demand. Gold built this country and the metal has kept score of the rand ever since. That is worth remembering when someone tells you scarce assets with no yield are irrelevant.

Why advisers never bring gold up

There is a structural reason gold vanished from mainstream advice and it is not a conspiracy. It earns the adviser almost nothing. Equities and fixed income can be wrapped in layer after layer of product, each one generating revenue for someone. Gold just sits there.

Model portfolios are assembled from building blocks the platform can custody, report on and bill against. A unit trust fits. A structured note fits. A bar of gold in a home safe fits nowhere in that stack, so the conversation never starts and the option never reaches the screen in front of the adviser. The adviser is not lying to you. The menu did the lying before anyone spoke.

Lyn Alden has documented this pattern as well as anyone. Scarce monetary assets attract capital without paying yield, provided the market recognises the monetary premium. Most institutional research never reaches that question. The framework filtered the asset out first.

Is gold still a good investment? An honest reading

To give credit where it is due, gold has been anything but dead money lately. Fidelity's digital assets research notes that gold's returns over the past decade were strong enough that its risk-adjusted measures beat equities. Central banks, after a generation of treating the metal as a museum piece, have been buying steadily. Some have gone further and repatriated bars from London and New York to home vaults, where the metal promptly becomes illiquid. When the people who run the system start pulling their gold out of it, that is its own kind of signal. When war broke out in the Middle East in February 2026 and the rand sold off with every other emerging market currency, gold did what it has done in every crisis since before the Romans.

So the argument here is not that gold failed. The argument is that the institutions which dismissed it for fifty years were wrong about the asset and honest only about their own incentives. That should make you curious about what the same incentive structure is filtering out right now.

The same Fidelity work makes a quieter point I find more useful in practice. Bitcoin and gold show low correlation over long horizons and tend to take turns outperforming over rolling 90 day periods. They are not rivals in a portfolio so much as different tools. I set out how the pieces fit together in Bitcoin's place in a diversified portfolio.

The same objections, now aimed at Bitcoin

Bitcoin faces the identical charge sheet. No yield, no cash flows, nothing to model.

Every item on it is true and every item describes the limits of the model rather than the merits of the asset, exactly as it did with gold for fifty years. Applying the same objection to a stronger version of the asset tells you the objection was never about the asset.

Consider what Bitcoin actually fixes. Physical gold needs vaults and assayers and armoured trucks. Moving a serious position across a border takes weeks. Bitcoin settles anywhere on earth in under an hour and divides to eight decimal places. You can verify your own holdings without anybody's permission. For an institution the gap is starker. Holding gold means trusting custodians, inventory reports and delivery systems, layer upon layer of counterparty promises. Bitcoin holdings can be audited on-chain in real time and custodied in-house with hardware and multi-signature setups, no counterparty in sight. I covered the monetary side of that comparison in Bitcoin as sound money.

Scarcity is where the comparison stops being close. Gold's above-ground supply grows about 1.7% a year and that rate is elastic, because when the price runs miners dig deeper and reopen marginal shafts. High prices summon new supply. Anyone who has watched the West Rand through a bull market knows the pattern. Bitcoin's supply answers to nobody. There will only ever be 21 million coins and issuance halves every four years on a schedule enforced by code. On the stock-to-flow measure analysts use for monetary scarcity, the halvings push Bitcoin past gold to become the scarcest monetary asset yet measured. Menger's premium finally has a vessel that a drill bit cannot dilute.

South Africans feel the stakes more than most. The rand has lost roughly 70% against the dollar in twenty years, a slow leak I set out properly in what rand weakness means for Bitcoin. Your grandfather's answer was Krugerrands in the ceiling. The instinct was sound and the instrument has since improved.

The people closest to the metal have noticed. In 2024 I sat down with a gold and diamond dealer in Cape Town who was selling his business ahead of retirement. Asked about Bitcoin, he did not give me the sceptical answer I expected. His gold clients had spent the past three or four years quietly liquidating coins and bars to buy Bitcoin. He had watched the flow long enough to follow it himself and he was retiring to his childhood village in Italy a wealthy man. He was not making an ideological point. He was reading his own order flow.

My view is on record. Some portion of wealth belongs outside the domestic monetary system, in a scarce asset you can hold yourself and move without permission. Gold did that job for previous generations and it still suits people who want zero technology risk; I say so when it fits. For everyone else the trade-offs have moved on. Held in proper self-custody, Bitcoin is the old instinct in an instrument built for this century, without the dealer spread or the safe deposit box.

And if the metal instinct runs in your family, keep the coins. Just be clear about the job they can still do and the job they cannot. For the second job, the tools have changed.