Core Viewpoint - Gold prices have been steadily increasing, recently surpassing $4,000 per troy ounce, driven by economic turmoil and geopolitical instability, with a notable shift in investment strategies towards gold allocation [1][2][3]. Gold Market Dynamics - There has been a significant inflow of $38 billion into physical gold exchange-traded products this year, indicating a growing acceptance of gold as a mainstream investment [4]. - Prominent economists are suggesting a shift in portfolio allocation from a traditional 60/40 model to a 60/20/20 model, with 20% allocated to gold [5]. - Gold typically shows low to moderate correlations with major asset classes and an inverse correlation to the US dollar, making it an attractive hedge for investors [6]. Geopolitical and Economic Factors - Ongoing geopolitical risks, including tensions in the Middle East and potential trade restrictions from China, are contributing to the upward pressure on gold prices [7][8]. - Central banks have been actively buying gold, averaging about 1,000 tons per year over the last three years, which supports higher prices and allows for dollarization of assets [8][9]. Investment Strategies - Investors are generally underallocated to gold, with many holding less than the recommended 5% allocation in their portfolios [12]. - Gold mining equities have outperformed physical gold, with top-performing ETFs primarily consisting of gold and silver miners, returning 120-130% this year [13][14]. - The allocation strategy for gold and silver should consider the different risk profiles, with gold serving as a stable component and silver offering growth potential due to its industrial uses [22][23]. Silver Market Insights - Silver is increasingly recognized for its dual role as both a precious and industrial metal, with about 60% of its demand coming from industrial applications [22]. - There has been a notable inflow into silver miners, contrasting with outflows from gold miners, indicating a shift in investor preference [24]. - Silver's performance tends to be more volatile compared to gold, influenced by economic conditions and industrial demand [28].