Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
Bank of America strategists make a case for gold supplanting bonds in the classic 60/40 portfolio setup. In light of a multi-year commodities rally and a weak bond market, analysts point to the merits of holding 40% gold instead of US Treasuries.
Once a world-renowned inflation hedge, the American bond market has suffered a serious confidence crisis as the dollar depreciates, countries actively detether from the USD, and gold rises as a more stable alternative.
Gold Overtakes Bonds in Traditional Portfolio Split
BofA is encouraging investors to consider swapping out bonds for gold in a traditional portfolio spread. In this structure, 60% of a person’s investments are placed in stock indices, while the other 40% is put towards physical gold assets such as bars or coins, instead of Treasuries.
“Commodities are a better ’40’ than bonds in the 2020s,” according to Jared Woodard, the bank’s Investment Strategist.
As he points out, commodities as a whole surged by 116% between 2021 and 2024. In the same period, 30-year Treasury bonds plummeted by 39%. This trend is repeating in 2025, with gold up over 33% from peak to trough while the US Aggregate Bond Index struggled to eke out 5%.
If you zoom out further, these disparate returns remain starkly apparent. Over the past 25 years, gold’s gains have dwarfed those of the stock market, soaring by 900% compared to 400%. This divergent performance makes sense when you consider how the US dollar, which undergirds the bond and stock market, has lost 99% of its value against gold since 1930.
Gold Replaces Bonds as Safe-Haven Asset?
Gold’s consistent outperformance of bonds has begun to reshape the traditional view of safe-haven assets, driving investors to consider gold where bonds once dominated. In a recent note, BofA Commodity Strategist Michael Widmer stated that “the yellow metal may become the ultimate perceived safe haven asset.”
At the same time, Deutsche Bank has warned that the dollar is losing its safe-haven status as the world reserve currency weakens against other currencies and even more so against commodities. Adding weight to this shift, gold was recently reclassified as a Tier 1 asset in the global banking system, granting it preferred status among the most trusted and stable stores of value.
Some of the biggest pressures on bond markets today include the exploding national debt, the dollar’s weakening trajectory, and mounting doubts over the US’s reputation as a dependable hub of global commerce.
Experts expect these headwinds to persist, or even intensify, in the years ahead, further destabilizing bonds and reinforcing gold’s role as the superior safe-haven asset.