MW 'I'm spooked': Do gold and silver belong in my retirement portfolio after their dramatic fall in value?
By Quentin Fottrell
'Before you ask, there is nothing extreme about 5% of my "alternative" assets'
"Should I handle it differently?" (Photo subject is a model.)
Dear Quentin,
I'm spooked, perhaps understandably. When looking at my asset diversification I treat gold and silver as separate categories from my U.S. and foreign assets, and an unusual part of my retirement plan. Should I handle it differently? Do they belong in my portfolio? And before you ask, no, there is nothing extreme about 5% of my "alternative" assets.
Retail Investor
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.
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The rise in gold prices has been stunning to watch and, as such, more people piled in.
Dear Investor,
You are correct to treat them very differently than stocks.
Do not rely on gold and silver for your retirement. They are typically regarded as a "safe haven" and a hedge against volatility in times of economic and geopolitical uncertainty, sure, but they don't give the kind of returns you would expect to earn in the S&P 500.
These commodities took a beating last Friday. Fears eased about the stability of U.S. monetary policy after President Trump nominated Kevin Warsh, seen as favorable to more interest-rate cuts, to be the next Federal Reserve chair. But that seems like too easy an explanation.
Gold prices are now, after all, down nearly $1,000 to $4,824 from their recent highs. A more likely explanation: (1.) Millions of investors raced to invest in a "safe haven." People were buying out of fear, seeking higher ground in a time of geopolitical turmoil.
(2.) The rise in gold prices has been stunning to watch and, with a surge of excitement, even more people piled in. That added to a quasi "gold rush" among investors who understandably hungered for a piece of the action. Is that the kind of asset you would rely on in retirement?
Gold and silver, in a large quantity, are not for retirees.
Bottom line: Gold and silver are not growth assets. They provide a long-term hedge - not a bet - against the stock market. They don't compound earnings, and they have historically lagged stock-market returns by a wide margin. In large quantities, they are poor choices for retirees.
Commodities provide psychological safety during times of high interest rates, inflation worries, currency concerns and/or geopolitical unrest, providing diversification and acting as a psychological safe place for some investors during volatile periods. Not long-term returns.
That works both ways. As Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions, told MarketWatch this week, the rush to buy gold led to a "crowded" or "extreme" momentum trade that turned "parabolic over the past few weeks."
Take a look at this chart, comparing the movements of gold, silver, the S&P 500 SPX and Dow Jones Industrial Average DJIA. As the researchers note, sometimes stocks and gold move together, sometimes they don't - and this can change even during recessions.
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At times, the price of gold even barely changed. Investors spread assets across different investment classes to manage risk. When investments don't move together, the researchers say, a drop in one can be softened by gains in another. That doesn't necessarily happen here.
Price volatility aside, gold and silver remain solid long-term bets. J.P. Morgan analysts wrote in a note to clients that they believe gold still has upside. "We remain firmly bullishly convicted in gold over the medium term..." They said demand still remains strong.
In fact, they forecast enough demand from central banks and investors this year to push gold prices to $6,300 per ounce by the end of 2026. "We are not yet close to a place where the structural rally in gold is at risk of collapsing under its own weight," they added.
Gold and silver are sometimes talked about together, but they are different asset classes. They don't perform in the same way; gold, for starters, is seen as a countercyclical asset. Central banks overwhelmingly purchase more gold (GC00) for their reserves instead of silver.
Central banks overwhelmingly purchase gold over silver.
They have experienced sharp drawdowns in the past week. Safe havens don't always equate to stable prices, especially during a resetting of the postwar Western alliance. That's why they work best as small, long-term investments designed to spread risk.
As Naeem Aslam, chief investment officer at Zaye Capital Markets in London, wrote on MarketWatch: "This was not a shift in sentiment alone. It was a sudden contraction in global liquidity - one that spilled directly into assets widely regarded as physical stores of value."
"This was not a fundamental shock," he added. "Inflation data did not suddenly change. Policy expectations did not reverse overnight. What failed was the assumption that assets widely viewed as defensive would remain liquid under stress."
A 5% allocation to alternatives, including gold and silver (SI00), is not so cruel or unusual; they belong in small quantities. It's not extreme or speculative. Adjust your expectations accordingly. They will experience surges and they will suffer the same falls as any other asset class.
So, yes, they are complementary to your portfolio.
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-Quentin Fottrell
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February 03, 2026 11:18 ET (16:18 GMT)
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