Silver Rises Over 120% YTD 
Gold has been making headlines lately as prices continue to reach new highs. But beneath the rally lies a surprising reality: most investors still have very little exposure to gold in their portfolios.
That disconnect raises an interesting question. If gold is already performing well with such limited ownership, what might happen if allocations begin to move back toward historical norms?
In a recent video, Alan Hibbard explores just how under-owned gold really is—and what that could mean for the next phase of the bull market.
Gold’s Surprisingly Small Role in Modern Portfolios
Despite gold’s reputation as a cornerstone of wealth preservation, the metal occupies only a tiny slice of most investment portfolios today. According to available data, the average portfolio manager allocates roughly 1.9% of assets to gold.
That figure stands in stark contrast to what many prominent investors and institutions have suggested over the years. Hedge fund manager Ray Dalio, for example, has recommended that investors hold between 5% and 15% of their portfolios in gold as part of a diversified strategy. Other frameworks have suggested allocations closer to 20% under certain conditions.
Regardless of the exact number, the gap is striking. If the average investor currently holds around 2% in gold while many strategies suggest significantly higher levels, it implies that gold remains structurally under-owned across the investment landscape.
Importantly, this doesn’t necessarily mean investors will suddenly increase allocations tenfold. But even a gradual shift toward higher allocations could have meaningful consequences for the gold market.
Where Could the Capital Come From?
If investors were to increase their gold exposure, the natural question becomes: where would the capital come from?
One potential answer lies in the extraordinary concentration of wealth currently held in equities. U.S. households now hold roughly 45% to 49% of their financial assets in stocks, a level that exceeds even the peak seen during the dot-com bubble in 1999.
High equity allocations often reflect strong confidence in stock markets, but they can also create conditions where portfolios become heavily tilted toward a single asset class. When that happens, even modest rebalancing can have a noticeable impact on other markets.
In practical terms, shifting just a small portion of capital out of equities and into gold would represent a significant inflow relative to the size of the gold market. The gold market is far smaller than global equity markets, so even relatively small portfolio adjustments can move prices disproportionately.
What the Models Suggest About Gold’s Potential
Some analysts have attempted to estimate how gold prices might respond to changes in investor allocation. One scenario modeled by JPMorgan looked at what would happen if household gold allocations increased from around 3% of assets under management to roughly 4.6%.
Even that relatively modest shift—just 1.6 percentage points—could potentially push gold prices into the range of $8,000 to $8,500 per ounce, according to the bank’s model.
However, Alan notes an important caveat. Asset prices rarely move in perfectly linear relationships with demand. Historically, when investment demand for gold accelerates, prices often move in a nonlinear or parabolic fashion.
That means even modest increases in portfolio allocations could result in price movements larger than traditional models anticipate. In other words, small changes in capital flows can sometimes produce surprisingly large moves in the gold market.
The Long-Term Rotation Between Stocks and Gold
Another way to understand gold’s potential is to look at long-term capital cycles. Over the past century, investors have repeatedly rotated between equities and gold depending on the broader economic environment.
During periods characterized by strong economic growth and financial stability, stocks tend to dominate investor portfolios. But during periods of inflation, rising debt, geopolitical uncertainty, or financial instability, gold often becomes more attractive as a store of value.
Historical data shows these rotations occurring multiple times since the early 1900s. Notable periods include the inflationary decade of the 1970s, when gold dramatically outperformed equities as investors sought protection against currency debasement and rising prices.
Today, the relative size of the gold market compared to equities sits roughly around its long-term average. That suggests we may not yet have reached the kind of extreme conditions that historically marked the later stages of major gold bull markets.
Why Some Investors Believe the Cycle Is Still Early
Several structural trends are now reinforcing the long-term case for gold.
Global debt levels continue to climb, while fiscal deficits remain elevated across many major economies. At the same time, central banks face increasing pressure to maintain accommodative monetary policies, particularly during periods of economic stress.
Other factors are also contributing to the shift in sentiment toward hard assets:
- Persistent geopolitical tensions and sanctions
- Increasing fragmentation of the global economy
- Concerns about the long-term sustainability of government debt
- Flat global gold production and limited new discoveries
Meanwhile, many investors are questioning whether the traditional 60/40 portfolio of stocks and bonds still provides the diversification it once did. With bonds no longer offering the same protection against market volatility, investors are increasingly exploring alternative assets.
Gold remains one of the most historically proven options in that category.
The Bottom Line
Gold’s recent price strength has drawn attention, but the more significant story may be how little exposure most investors still have to the metal.
With average allocations hovering around 2%, even modest shifts toward higher exposure could represent a meaningful change in global capital flows.
If history is any guide, these kinds of portfolio rotations tend to unfold gradually—and often become most visible only in hindsight.
For investors watching the broader macro landscape, the question may not simply be whether gold continues rising. It may be how portfolios evolve if confidence in traditional asset allocations begins to change.
People Also Ask
Why do most investors own so little gold?
Despite gold’s long history as a store of value, most portfolios hold very small allocations—around 2% on average. Many institutional investors prioritize equities and bonds, leaving gold underrepresented in modern portfolios. For a deeper explanation of why gold remains under-owned, watch Alan Hibbard’s full breakdown on the GoldSilver YouTube channel.
What percentage of a portfolio should be in gold?
Recommendations vary, but many experts suggest 5% to 15% of a portfolio in gold as part of a diversified strategy. Some institutional frameworks propose even higher allocations during periods of inflation or financial instability.
Could a small increase in gold allocations push prices higher?
Yes. Because the gold market is relatively small compared to global equity markets, even small shifts in portfolio allocations can have a large impact on price. Some models suggest that modest increases in investor exposure could significantly raise gold prices over time.
Where would new demand for gold come from?
Much of the potential demand could come from rebalancing out of equities, which currently make up a historically large share of household financial assets. If investors move even a small percentage of their portfolios into gold, it could represent a substantial inflow into the gold market.
Is the current gold bull market just getting started?
Some analysts believe it may be early in the cycle. Rising global debt, persistent inflation risks, geopolitical tensions, and limited new gold supply are all factors that could support long-term demand. To see the charts and historical cycles behind this analysis, watch the full video on GoldSilver.
