Chantal Marx | Head | Investment Research | FNB Wealth and Investments Solutions | mail me |
Sebastian Pillay | Head | Share Investing | FNB Wealth and Investments Solutions | mail me |
Gold has always held a unique place in the global financial system. It doesn’t generate income or pay dividends. However, when inflation spikes, markets turn volatile or currencies weaken, gold often bucks the trend and rises to the occasion.
In 2025, we’ve seen this pattern repeat itself. Gold has climbed to near-record highs. It recently traded above US$3,000 per ounce, which marks a 38% increase from a year ago. In Rand terms, the gains have been even stronger. These returns reflect not only global price moves but also a weaker local currency.
As South African investors holding gold, we’ve seen the dual benefit play out beautifully. We’ve derived significant value from gold’s ability to perform under pressure. Truly, gold is worth its weight.
If you look at recent developments, the drivers are all too familiar. The global economic growth outlook remains uncertain. Central banks are signalling caution following recent interest rate cuts. In addition, policy uncertainty and geopolitical tensions continue to unsettle markets.
Both equity and bond markets have experienced heightened volatility. Unsurprisingly, in this environment, investor demand for gold has surged.
Gold is worth its weight in portfolio resilience.
Gold’s value isn’t measured only by returns. It’s also about how it behaves relative to the rest of a portfolio. Over the long term, gold has shown a low, and often negative, correlation to major equity markets.
Our research shows the five-year rolling correlation between gold and the JSE All Share Index has averaged close to zero. It has remained negative for most periods since 2009. Even gold’s relationship with offshore equities, like the S&P 500, remains weak. For South African investors, the correlation stands at around 0.3.
During major market downturns, this defensive quality becomes especially important. In 2008, while global stocks plunged, gold prices surged. The pattern repeated itself in early 2020 during the COVID-19 crash. Investors who held gold during these events weren’t just protected. They were rewarded and better positioned to recover. Our analysis shows that portfolios with a 5% gold allocation during these periods experienced smaller drawdowns. They also achieved better long-term outcomes.
Gold has consistently maintained its reputation as a safe haven during periods of global uncertainty. For investors focused on risk management, it offers a practical way to strengthen portfolio resilience. Again, gold is worth its weight.
Different paths to an asset where gold is worth its weight
However, not all gold investments are the same. Investors must consider how they access gold. Physical gold and gold mining stocks offer very different risk profiles.
Gold mining equities are businesses. While they benefit from rising gold prices, they also carry corporate risks. These include management quality, cost control, debt levels, labour disruptions, and operational challenges. These shares may outperform when markets are strong. However, they are often quite volatile and can fall sharply when sentiment towards bullion declines.
Physical gold, by contrast, provides ‘pure’ exposure to the asset itself. It doesn’t depend on management execution or quarterly earnings. It holds intrinsic value, is globally liquid, and doesn’t carry credit risk. An ounce of gold remains an ounce of gold, regardless of market conditions.
In South Africa, physical exposure to gold most often happens through the Krugerrand. First minted in 1967, this iconic coin is legal tender. It is also exempt from VAT, which offers a significant advantage for local investors. While it tracks global gold prices, it is priced locally in Rand. This allows South Africans to benefit from both international price movements and currency depreciation.
In conclusion
We recognise all these benefits. That’s why we’ve made it simple for South Africans to invest directly in Krugerrands. Through our Share Investing platform, investors can buy coins online or via our banking app, just as they would purchase a share or ETF.
Coins are securely stored. We also offer a guaranteed buy-back option at prevailing market rates for coins held in custody with us. That means clients can invest, store and sell their gold with confidence.
Gold is not about chasing returns. It’s about protecting what you’ve built. And in today’s world, that kind of stability proves once again that gold is worth its weight.
