Should you buy gold at all-time highs? How much to allocate and why de-dollarisation matters
For much of 2025, recent events reinforced that narrative. After the US Federal Reserve lowered interest rates for the third straight time in December, following similar cuts in September and October, gold continued trading near its peak globally. Domestically, too, prices remain elevated, even as demand softens with jewellery sales falling in recent months — a predictable response when prices rise this far, this fast.
The start of 2026 has only added to this unease. The recent US strike on Venezuela marked another flashpoint in an already fragile geopolitical landscape. While such global events lead to a short-term flight to safety, i.e. capital moving away from risk assets and flowing into traditional safe havens like gold, it is essential not to over-interpret them.
Focusing only on recent price movements and geopolitical events risks missing the bigger picture. Gold’s current position is not the result of a single policy decision or a short-term macro trigger, but of forces building quietly over years.
Taking gold seriously
Around 2018-19, the rationale behind investing in gold was straightforward: aggressive monetary expansion by global central banks was increasing the risk of inflation and currency debasement.
That concern intensified after COVID-19, when the US printed dollars in massive amounts over a very short span. Over time, excess liquidity erodes purchasing power and weakens trust in fiat currencies. Historically, gold has served as a hedge precisely in such environments, because it preserves value when paper money does not.
What’s different now
Today’s gold narrative is no longer just about inflation or rate cycles. Riding on economic strength, fiscal discipline, and political stability, the US dollar dominated as the world’s reserve currency for decades. Over time, however, rising debt, frequent monetary interventions, and geopolitical tensions have posed questions over its dominance.
When Russia’s dollar reserves were recently frozen, it sent a clear message to many nations: reserve assets can be weaponised. Since then, several central banks have been actively diversified away from the dollar, and allocating more to gold. This ‘de-dollarisation’ is not a sudden event, but a gradual realignment of the global monetary order.
Gold benefits from this shift as it carries no sovereign risk, no political allegiance, and no counterparty exposure. In a fragmented, multipolar world, this neutrality has value.
Add to this a backdrop of geopolitical tensions, uneven growth, and policy uncertainty, and gold’s relevance becomes easier to understand. These forces don’t guarantee uninterrupted price gains, but they explain why the precious metal features prominently in portfolios.
Reality check
It is also important to stay grounded as gold has had long periods of stagnation in the past. There have been decades when it delivered negligible real returns, even as other asset classes compounded steadily. Gold surged in the 1970s, went quiet for years afterward, corrected sharply in 2022, and then found its footing again. This reinforces a simple truth: gold is not an asset that generates income. Its role is defensive, not aspirational.
Various estimates suggest that if US debt were to be backed by gold— as was the case pre-1971 when then US President Richard Nixon abolished the Bretton Woods treaty that linked gold with the dollar—then the metal’s current price would be 3-8 times higher than what it is now. That brings us to the real question: how much gold should one hold?
Road ahead
If you currently have little or no exposure to gold, building a position gradually still makes sense. Gold plays a distinct role in long-term asset allocation, acting as insurance against macro uncertainty rather than a source of aggressive returns.
Conservative and moderate investors should typically allocate around 15% to gold; for aggressive profiles seeking stronger hedging against higher equity exposure, it should be slightly higher. Rising prices alone aren’t a reason to hike exposure. Gold does best when held long-term, not chased erratically. If you find yourself overweight, trim off excess exposure and re-deploy into underrepresented asset classes.
How to hold gold
From an efficiency standpoint, financial gold makes more sense for most investors today. Gold ETFs, funds, and similar instruments offer liquidity, transparency, and ease of rebalancing. Physical gold continues to hold cultural significance but it comes with its own friction, such as making charges, storage, and liquidity constraints.
Reliable, not exciting
Gold’s rise may sustain over the next few years, reflecting deeper structural shifts rather than short-term excitement. The latest rate cuts may have influenced sentiment at the margin, but they are not the foundation of gold’s relevance. In such times, the right question is not whether gold will hit a higher number next month, but whether it serve’s your purpose. For most investors, the answer lies not in leaning in aggressively or pumping the brakes, but in staying disciplined, diversified, and patient.
The Author is Ceo, Co-founder Truemind Capital
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