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Jamie Dimon’s own bank thinks gold is going a lot higher. J.P. Morgan’s research team just pegged gold at an average of $5,243 an ounce this year, and as much as $6,000 by the fourth quarter. (1)
Gold’s already had a wild run. It hit a record $5,597 back in January, cooled off, and at last check sat around $4,390 — up almost 8% in a single week. (2)
Let me be straight with you. I’m not a gold bug. Over the decades, I’ve made a few million in the stock market. I traded through Black Monday in 1987, the dot-com bust, 2008 and the 2020 crash. Stocks are where I built most of my wealth.
But I’ve always kept some gold. And right now, three things have my attention.
Central banks are buying at a record pace — roughly double what they bought a decade ago, led by China. (1)(3) Dimon himself keeps warning that risks are building “like tectonic plates,” with a financial “earthquake” possible if they collide. (4) And Wall Street’s biggest bank is telling clients to expect higher prices, not lower.
None of that means bet the farm. It means own a little insurance. Here are five reasons I keep some gold — and the honest case for not overdoing it.
1. It doesn’t move in lockstep with your stocks
When the market cracks, everything you own can fall together — stocks, funds, even bonds. I watched it happen in 2008 and again in early 2020. Gold often zigs when stocks zag, which is the whole point of owning a little.
That’s not a promise it’ll rise. It’s ballast. When one side of the boat dips, you want weight on the other.
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2. The smartest money in the world is buying
Central banks aren’t day-traders chasing a hot tip. They’re the most conservative buyers on earth — and they’ve been loading up on gold at a record clip, roughly double their pace from a decade ago, with China leading. (1)(3)
When the institutions that hold the world’s reserves quietly move this much into one asset, it’s worth asking why.
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3. It’s protection against the risk Dimon keeps naming
You don’t have to believe the world’s ending to want a hedge. Dimon — no gold cheerleader — has spent months warning that market risks are stacking up “like tectonic plates,” with an “earthquake” possible if they hit at once. (4)
Gold has been humanity’s “when things go wrong” asset for thousands of years. You buy it hoping you never need it — same as any insurance.
4. But don’t overdo it — size it like insurance
Here’s where my skeptic side kicks in. Gold pays no dividend and earns no interest. A slice of your portfolio makes sense; a pile of it doesn’t. And if the Fed starts hiking again, gold can struggle — JPMorgan lists that as the biggest risk to its own forecast. (1)
If you’re not sure what “a slice” should be, that’s a good question for a pro. And this is a great time to talk to one, about lots of things, including gold.
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5. Gold isn’t the only ballast — keep dry powder too
Gold is one kind of insurance. Cash is another. The crashes I’ve traded through rewarded the people who had money ready to buy when everyone else was panic-selling. That’s how I’ve made most of my money in stocks: buying when everybody’s selling, then holding on for long periods of time.
That’s why I keep a cash cushion in a high-yield account, ready to go. When the next dip comes — and it always does — that’s the money you pounce with, while everyone else is frozen.
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The bottom line
I’ll leave you where I started. I’m a stock guy. Gold has never been my go-to investment — it’s how I hedge against things I can’t predict.
JPMorgan might be right about $6,000, or it might be wrong. I don’t own gold for the forecast. I own it because across every crash I’ve traded through since 1987, the people who came out fine were the ones who never bet everything on a single outcome.
A little gold, a little cash, a lot of good businesses. That’s not exciting. It’s just how you stay standing.
Sources: J.P. Morgan Research (1); Forbes Advisor (2); World Gold Council (3); Yahoo Finance (4).
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