OP-ED: The case for investing in gold in a debt-drenched world
Jonatahn M. Wellum writes, "In a world besieged by debt, currency debasement, instability, deglobalization, and dollar decline, gold shines as a safe haven."
By Jonathan M. Wellum
Few people realize that gold has outpaced the S&P 500 total return index over the past 25 years. The annual compound growth rate for gold over the past 25 years and 6 months is 10.01%—rising from $290 on January 1, 2000, to $3,303 on June 30, 2025. In contrast, the S&P 500 delivered just 7.71% annually. This comparison reveals a stark truth: the last quarter-century, marked by excessive financialization, money printing, massive debt accumulation, and repressive interest rates, hasn't generated true wealth. Much of the apparent gains stem from asset price inflation. Gold, acting as an unflinching barometer, wasn't deceived by these manipulations.
Looking ahead, should investors buy gold today? At ROCKLINC, we affirm that gold remains a timeless asset, providing stability, security, and a hedge against systemic risks. Amid soaring global debt, eroding fiat currency value, geopolitical turmoil, tariffs, deglobalization, and the U.S. dollar's waning dominance, allocating part of your portfolio to gold is prudent. Let's examine these risks and gold's protective role.
Global debt has ballooned to over $330 trillion in 2025, up from $125 trillion in 2007 and $200 trillion in 2017, per International Monetary Fund estimates. This excludes hundreds of trillions in unfunded liabilities across governments, corporations, and households. Such levels heighten risks of defaults, credit crises, and recessions. In response, central banks often print money to service debt and stimulate economies, fueling currency devaluation and inflation. Gold counters these threats effectively. Untethered to any government or central bank, it can't be printed or manipulated arbitrarily. Its finite supply maintains relative stability. Historically, during debt-fueled monetary expansions, gold has preserved wealth and shielded investors from erosion.
Fiat currencies, unbacked by physical assets, steadily lose value through inflation, poor monetary policies, and reckless spending. Gold, dubbed "sound money," holds intrinsic worth due to its limited supply and millennia-long status as a store of value. In inflationary times, gold prices rise, safeguarding purchasing power. Consider Canadian real estate, often hailed as the best investment. In 1975, the median home cost $39,500, while gold closed at $142.70 CDN per ounce—requiring 273 ounces to buy a home. By 2024, the average home hit $700,000, but gold reached $3,774 CDN per ounce, needing only 185 ounces. Home prices surged 1,672% in dollars, yet the gold equivalent dropped 32%. The Canadian dollar's value has plummeted when compared against gold as the ultimate monetary standard. This underscores why we at ROCKLINC invest in precious metals businesses: to preserve and grow purchasing power in the midst of government sanctioned fiscal and monetary recklessness.
Rising tensions—from U.S.-China trade wars to the Russia-Ukraine conflict and Middle East strife—breed market instability, disrupting supply chains and growth. Investors flock to safe havens in such chaos. Gold excels here, as a borderless, regime-agnostic asset with a crisis-proven track record. A modest gold allocation buffers against volatility from unpredictable events.
Deglobalization, driven by tariffs, trade barriers, and protectionism, is upending economies. Nations prioritize domestic industries, hiking costs, inflating prices, and straining fiat currencies. This fragmentation destabilizes markets. Gold mitigates these disruptions, offering a hedge in a splintering world by preserving value independent of trade policies.
The dollar's reserve status is slowly fading as China, Russia, and India pivot to alternatives. China pushes the yuan in deals; Russia settles oil in non-dollars. BRICS nations explore digital currencies and gold-backed systems. This erosion diminishes the dollar's appeal, risking depreciation. Central banks are responding by stockpiling gold—over 1,000 tonnes annually in 2022 and 2023, per the World Gold Council, with the trend persisting in 2025. Gold emerges as a neutral, reliable reserve in this multipolar shift. Why Gold, and How Much? Gold's attributes—tangible, intrinsically valuable, immune to policies or defaults—make it an unmatched hedge. Its low correlation with stocks and bonds boosts diversification and cuts risk.
Since ROCKLINC's inception in 2010, we've held 15-20% in gold and silver, favoring royalty companies like Franco-Nevada, Wheaton Precious Metals, Royal Gold, Sandstorm Gold, and Osisko Royalties. Royalties consistently outperform mining businesses by avoiding operational risks: they finance miners for a piece of the production without having to run the mines. They also allow us to diversify across many projects, and enjoy stable cash flows with higher margins. Miners may yield bigger wins on successes but carry greater uncertainties.
In a world besieged by debt, currency debasement, instability, deglobalization, and dollar decline, gold shines as a safe haven. It preserves wealth, combats inflation, and endures crises—making it indispensable for diversified portfolios.
Jonathan M. Wellum, CFA, is President and CEO of ROCKLINC Investment Partners Inc.
This idea works fine for the big investors. But not for the regular working crowd. They need every cent they got to survive. Gold has no value to us down here in the real world.