Cassiar Gold Corp. (TSXV: GLDC, OTCQX: CGLCF)
Revitalizing the Cassiar Gold District in British Columbia, Canada
In 2024, gold prices (denominated in U.S. dollars) surged by 25.5%, slightly outpacing the S&P 500’s 25% total return (including dividends). In January 2025, gold climbed another 6.4%, reaching a record high, while the total return of the S&P 500 over the same period was just 2.8%. This prompts a key question for investors: Why is gold continuing to outperform U.S. stocks? And what role should gold play in a diversified portfolio?
If you’re considering investing in gold in 2025, what are the options? Is a gold ETF (exchange-traded fund) a better choice?
Unlike stocks, gold’s pricing is primarily driven by the forces of supply, demand, and market sentiment. It doesn’t generate income or pay dividends, so investors cannot rely on it for consistent returns. However, for those looking to diversify risks, gold is often viewed as a hedge and is particularly attractive in times of global uncertainty.
In 2025, soaring inflation pressures led the Federal Reserve to hold interest rates steady. Typically, lower interest rates reduce borrowing costs, pushing gold prices higher. However, geopolitical uncertainty has been an even bigger driver for gold prices.
On February 1, the Trump administration imposed tariffs on three of the U.S.’s top trading partners—Canada, Mexico, and China. These tariffs increased market concerns about the global economic outlook. If the trade measures lead to higher inflation or slower economic growth, more investors are likely to flock to gold as a safe-haven asset.
Another key factor has been the surge in gold purchases by central banks. The People’s Bank of China (PBOC) was the largest official buyer of gold in both 2023 and 2024, a trend that could continue in 2025 amidst ongoing macroeconomic uncertainties. Additionally, in a high-interest-rate environment, mining companies may reduce capital expenditure on gold production, potentially tightening supply, which could further support gold prices.
Many analysts believe that gold prices will likely continue their upward trajectory in 2025. For retail investors, however, frequently buying and selling gold to chase short-term price movements may not be the best strategy. Instead, a more prudent approach might involve allocating gold as a small part of your portfolio, tailored to your risk tolerance and investment objectives, and holding it long term via investment tools like gold ETFs.
The resilience of gold as a store of value during market turbulence makes it a valuable component of a diversified portfolio. However, holding physical gold comes with challenges like storage, insurance, and transportation, which can deter many investors. Gold ETFs offer a more convenient and liquid alternative with a lower investment threshold, making them a particularly attractive option.
Here are some popular gold ETF options for investors:
For equity-focused investors, there are also ETFs that hold shares of publicly traded companies involved in gold-related businesses. Popular examples include:
It’s important to note that gold mining stock ETFs are influenced by additional factors like corporate performance and operational costs. While they may offer greater returns than gold itself due to the leverage gold miners experience when prices rise, they also carry additional risks.
In conclusion, gold’s strong performance in recent years and its potential for further gains in 2025 underscore its value as a hedge in uncertain economic times. For most investors, allocating a small portion of their portfolio to gold, particularly through ETFs, may be a sound long-term strategy to ride out market turbulence.
