Article written by Jason Choy, InvestNow, Senior Portfolio Manager – March 2026

For thousands of years, gold has been a trusted store of value through wars, inflation, and financial panics. That reputation hasn’t dimmed in modern markets – if anything, it’s been reinforced over the last 12 months. With geopolitical tensions elevated – investors are increasingly interested in the precious metal and its role as a potential “safe haven” when uncertainty spikes.

In this article, we’ll look at how gold works, where it might fit in a Kiwi portfolio, and the practical ways to get exposure – so you can decide, strategically, if it deserves a place alongside your other investments.

Gold as a safe haven in tough times

History shows gold often behaves differently from shares and bonds when stress hits. Across the major shocks over the last three decades – spanning the Dot‑com bust, the Global Financial Crisis, Brexit, COVID-19 and more – gold has often held value or even outperformed traditional assets, which supports its safe‑haven status.

Further support of gold’s defensive nature is found in reserve holdings, where central banks treat gold as strategic ‘insurance’. Globally, total central bank gold holdings amount to over 36,000 tonnes – or around 20% of all gold humans have ever mined. By stocking up on gold, central banks are aiming to diversify away from any one currency (like the U.S. dollar) to protect themselves against the inflation and geopolitical risks of any one country, Plus, because gold isn’t tied to any single government or bank, it carries no default risk.

The safety of gold is certainly not a guarantee however, and the extent of any resiliency can vary by episode, particularly in the short term. The current Iran crisis is a good example of this – while elevated geopolitical risk and policy uncertainty initially pushed gold to hover near all-time highs in early March, sentiment shifted sharply later in the month. Gold fell by around 15% in US dollar terms as broader risk-off pressures – led by moves in oil prices – weighed across most major markets.

Gold performance: more than just an inflation hedge?

Gold’s long‑term role is often reduced to “it keeps up with inflation.” The modern‑era record suggests it has done a lot more than that – with gold averaging an annual return (in USD terms) of over 10% per year since the turn of the millennium– which better tracks global nominal GDP growth rather than inflation alone.

Recent returns have been even more stellar, with gold rising ~26% in 2024 and ~55% in 2025 amid elevated policy and geopolitical risk, and an insatiable demand from central banks and increasingly everyday investors.

But while gold has enjoyed a great run in the past couple of years, at InvestNow, we don’t believe in chasing returns or the “next hot stock/asset.” Gold can be volatile – up and down – especially around macro headlines, and no one has a reliable crystal ball on gold’s next move. Instead, gold’s role – if it has one in your portfolio – should be strategic, not opportunistic.

The role gold can play in a diversified portfolio

Diversification 101: Understanding Correlation

Diversification works best when you hold things that aren’t highly correlated – or in other words, assets that don’t all move together. Gold has historically shown low – and often near zero – correlation to shares and bonds. Crucially, correlations tend to fall during periods of market stress, when diversification matters most.

That’s why a small allocation to gold in an already diversified portfolio has often helped portfolios reduce drawdowns when markets wobble.

This has felt especially relevant in recent years. When share–bond correlations rise (as they have during bouts of persistent inflation), the classic balanced portfolio mix (60% stocks and 40% bonds) can feel less defensive – raising the case for diversifiers like gold to help restore balance.

How much gold to hold in your portfolio?

There’s no one‑size‑fits‑all answer. A rule‑of‑thumb range you’ll commonly see in the literature is ~5–10% of a diversified portfolio (some extend to ~5–15% in higher uncertainty regimes). Treat this as a starting frame, not a prescription – an appropriate allocation for you depends on your goals, time horizon, other holdings, and tolerance for volatility.

Remember that gold doesn’t produce income and is typically characterised as more defensive in nature. This means an overallocation to gold could potentially come at the expense of more traditional growth assets like shares and property; while too little may reduce diversification benefits. With that perspective, some investors could treat gold as portfolio insurance and consider allocations that scale with life stage and risk appetite. For example:

• Younger, growth focused investors could consider holding lower gold allocations so they don’t crowd out more traditional growth assets.
• Pre retirees/retirees seeking more defensive assets could consider holding more, to help smooth drawdowns and sequence of returns risk.

Either way, we encourage discipline over speculating. Avoid performance chasing – again it’s important to emphasise that if gold does play a role for you, then it should be size strategically, aligned with your investment goals, time horizon and risk tolerance, and reviewed periodically to ensure it remains appropriate for your changing life circumstances.

Ways to get gold exposure

1) Physical gold bullion (bars/coins)

The classic approach of buying physical gold offers the advantages of direct ownership and being globally recognised (and comes with the added benefit of feeling like a pirate if you store it in a treasure chest!).

Things to be mindful of with physical gold however include the need to verify authenticity and deal with reputable dealers, the risk of being exposed to high spreads/premiums versus the prevailing spot price in the market, and the storage, security and insurance costs of maintaining physical holdings.

2) Investment Funds

Modern investment funds offer convenient, low‑friction access to gold’s price moves without having to arrange a safety deposit box for your bars. One local route now available on the InvestNow Platform is the Smart Gold ETF (GLD) – a New Zealand‑listed fund that invests in the iShares Gold Trust: a large, physically‑backed gold vehicle managed by BlackRock, the world’s largest asset manager. This provides investors with:

• Exposure to the price of movements of gold, backed by allocated physical gold bullion, meaning you don’t have to arrange storage, insurance, or shipping.
• Ease of access as you can buy and sell in NZD online each business day, and manage it alongside your other portfolio holdings.
• Simple fee and tax structure: the Smart Gold ETF’s current management fee is 0.55% p.a.; and being a Listed PIE fund, all tax is handled for you at a 28% tax rate, offering tax efficiencies for those on higher marginal tax rates.

Whether you choose bullion or an ETF comes down to preference around convenience, costs, and custody. Gold bullion offers direct possession but adds logistics; ETFs simplify trading and portfolio admin (and PIE tax treatment in NZ), but you own units in a fund rather than bars in your safe.

Final thoughts

Gold has a strong reputation as a ‘safe haven’ asset – and while it’s not guaranteed to solve every investment problem that confronts markets, as a strategic diversifier with a long history of resilience in tough markets, it has earned a place on many investors’ shortlists due to its low correlation to traditional assets.

The last 50‑plus years have delivered strong returns above inflation, and near-term gold performance has been even stronger. While geopolitical risks look poised to linger, it’s important to remember that gold itself doesn’t generate any cash flows or income, so the future price of gold is inherently uncertain. Avoid speculation and align any allocation to your goals, time horizon, and risk tolerance.

Whether you prefer the tangibility of physical bullion or the convenience of an investment fund like the Smart Gold ETF, it’s never been easier for Kiwis to add gold exposure to their investment portfolios.

Disclaimer:

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