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.
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For decades, mainstream financial institutions and advisors recommended that investors hold a modest amount of gold in their portfolios. Now, some of Wall Street’s most recognizable banks are revisiting that advice and advocating larger allocations to precious metals.
While the recommended percentages vary, the underlying macroeconomic, geopolitical, and fiscal concerns driving this shift are remarkably consistent. Understanding these broader changes can help investors look beyond allocation percentages and better assess gold’s role in their portfolios.
From 60/40 to a Larger Role for Gold
Diversification has long been a mainstay of investment strategy, but financial experts are increasingly rethinking the traditional mix of stocks and bonds. In the 1950s, Harry Markowitz, an American economist pioneered the 60/40 portfolio, which advocated 60% stocks and 40% bonds.
The idea is that the larger stock allocation offers greater growth potential with more risk, while lower-risk bonds, such as U.S. Treasury securities, act as a hedge against negative market pressure. For nearly 75 years, this framework has remained the standard portfolio split, but the consensus is starting to show some significant cracks.
In 2024, Morgan Stanley questioned the effectiveness of the traditional 60/40 portfolio, noting that bonds had become less reliable as a source of portfolio protection. Within a year, the investment bank proposed a 60/20/20 split. The 60% allocation to equities remains unchanged, but the traditional 40% bond allocation is divided equally between bonds and gold.
Around the same time, Bank of America challenged the traditional 60/40 split, recommending that investors expand their exposure to gold. Analysts described gold and other commodities as “a better ’40’ than bonds in the 2020s,” arguing that bonds had lost their effectiveness as a bulwark against market instability.
What’s Driving Larger Gold Allocations?
While much of the discussion surrounding these high-profile allocation changes focuses on specific percentages, the arguably more important story lies in the macroeconomic, fiscal, and geopolitical forces driving experts to make more room for gold.
Bonds Are Providing Less Reliable Diversification
The long-standing 60/40 portfolio relies heavily on the tendency for bonds to rise as stocks fall. Yet, recent research demonstrates that this historical relationship is weakening, with the two assets increasingly moving in the same direction.
According to BlackRock, bonds posted negative returns in 17 of the 19 months since 2020 when stocks fell by 2% or more. Meanwhile, State Street reports that the tendency of U.S. stocks and bonds to move together was near a 28-year high. Recently, long-term bond yields climbed to multi-decade highs, even as the stock market remained strong.
As bonds become less reliable at cushioning stock market losses, gold is gaining support as a more effective source of protection. As BlackRock explains, “Markets have changed, and the traditional 60/40 stock-bond portfolio may not work the way it did.”
Government Debt Is Changing the Risk Equation
Government financial uncertainty is another common thread among Wall Street bigwigs advocating for larger gold allocations. The U.S. national debt has surpassed $40 trillion, while publicly held debt has reached 100% of GDP for the first time since WWII.
At the same time, annual interest costs on the debt have climbed to roughly $1 trillion, fueling a debt spiral as the government borrows to cover the cost of servicing what it already owes. Additionally, Washington is in a debt tug-of-war with AI companies, competing for investor dollars.
While most traditional assets, including equities and bonds, are heavily influenced by government financial solvency, gold sits outside the traditional financial system. Amundi, Europe’s largest asset manager, notes that “the erosion of confidence in sovereign debt is driving investors to gold.”
Geopolitical Risks Have Increased the Appeal of Monetary Neutrality
Geopolitical tensions have long carried economic consequences, but recent developments have prompted central banks to give gold a larger role in their reserves. As PIMCO explains, “The 2022 seizure of Russian reserves helped catalyze gold accumulation as a politically neutral store of value.”
The increasing weaponization of the U.S. dollar has encouraged central banks, especially in emerging economies, to diversify away from the dollar and toward gold. Even some of the world’s largest economies have pushed for greater control by repatriating their gold reserves from the U.S. Recently, gold overtook the dollar and euro as a share of international reserves.
In response to these developments, financial institutions are recommending larger gold allocations to protect portfolios from geopolitical shocks and reduce dependence on any single government or currency.
Central Banks Are Giving Gold a Larger Strategic Role
Governments have consistently held strategic gold holdings to help stabilize fiat currencies and broader economies. However, over the past few years, central banks across the globe have sustained an unprecedented pace of gold purchases, with demand exceeding 1,000 tonnes in each year from 2022 through 2024, and reaching 863 tonnes in 2025.
The World Gold Council reports that a record 45% of central bank officials expect to increase their gold reserves over the next year. Meanwhile, 84% expect gold to represent a larger share of global reserves within five years.
According to J.P. Morgan, “Broad-based central bank purchases are expected to persist as emerging market central banks continue to increase allocations.” This sustained government buying provides a crucial source of demand, expanding the metal’s influence and supporting gold prices.
What This Means for Your Gold Allocation
Rising debt, geopolitical uncertainty, weaker bond diversification, and sustained central-bank demand are prompting financial experts to give gold a larger role in portfolios. These pressures help explain why many view gold as a long-term diversifier, but the right allocation depends on your goals, risk tolerance, time horizon, and existing investments.
If you’re wondering how much gold makes sense for your investment goals, the Scottsdale Bullion & Coin team can offer personalized advice. Contact us today by calling toll-free at 1-888-812-9892 or using our live chat function.