When Stocks and Gold Both Rally: What It Means for U.S. Portfolios

Every investor learns the same rule early: when stocks run, gold rests. They’re supposed to move like a seesaw. Risk and refuge rarely rise together. And yet, here we are in late 2025 — watching both climb.

The S&P 500 and Nasdaq are testing record highs. Gold, meanwhile, has burst past USD 3,900 an ounce, up roughly 47 percent from a year ago. It’s an unusual sight, and an important one. When safety and optimism rally at the same time, it usually means investors are hopeful but also just a little afraid.

The Year Everyone’s Hedging

Markets are forward-looking, but right now, they’re also second-guessing.
The Federal Reserve has inflation largely under control, though not comfortably so. U.S. inflation is hovering near 2.9 percent as of August 2025, down sharply from its 2022 peak but still above the Fed’s 2 percent goal. Rate cuts are expected, then doubted, then priced back in. Every press conference is read like scripture. When investors aren’t sure what to believe, they do the only logical thing, they hedge their hope.

That’s how you end up with this two-track rally: money flowing into high-growth stocks and into gold bars sitting in vaults thousands of miles away.

The dollar’s weakness adds another layer. The U.S. Dollar Index has slipped roughly 9.55 percent year-to-date, making gold cheaper for overseas buyers. Demand from central banks and ETFs has stayed strong through the year, reinforcing prices even as equities gain momentum.

Add in the constant hum of geopolitical tension — trade friction, state-level elections, energy uncertainty — and gold’s rise starts to make perfect sense. It isn’t panic buying; it’s quiet insurance.

History Has Seen This Before, But Not Often

There are precedents. In the late 1970s, both U.S. equities and gold advanced when inflation and growth rose together. More recently, brief overlaps appeared during the post-2008 recovery and again in 2020 when central banks flooded markets with liquidity.

But 2025 feels broader. It isn’t just a few defensive sectors moving with bullion. The entire equity complex, from tech to industrials, is humming, while gold’s momentum shows no sign of cooling. That mix tells you the market isn’t sure if this is the start of a new expansion or the last lap before a slowdown.

The New Gold Standard, ETFs Doing the Heavy Lifting

Physical gold has charm, but it’s the U.S.-listed gold ETFs that have done most of the heavy lifting this year.

• iShares Gold Trust Micro (IAUM) sits at the top of the cost-efficiency league. Its annual fee is just 0.09 percent, and its one-year return mirrors gold’s run at about 46.08 percent.
• Goldman Sachs Physical Gold ETF (AAAU) charges roughly 0.18 percent and has delivered similar gains.
• SPDR Gold MiniShares (GLDM) keeps costs near 0.10 percent, making it a favourite for long-term holders.
• SPDR Gold Shares (GLD), the veteran in this space, remains the most liquid despite its higher 0.40 percent fee.

Across the board, these ETFs have attracted strong inflows as investors look for dollar-denominated safety without giving up liquidity. Lower fees matter because gold isn’t meant to dazzle every quarter; it’s meant to anchor a portfolio over time.

Silver, too, has caught a tailwind, up more than 48 percent this year thanks to industrial demand and the clean-energy boom. The iShares Silver Trust (SLV) has tracked that rally, though its volatility still keeps it a smaller side bet rather than a core holding.

What It Means for Portfolios

A year like this blurs the old lines. The textbook “60-40” split between stocks and bonds never imagined a world where gold could outpace both.

For U.S. investors, holding some gold isn’t about abandoning conviction in equities; it’s about giving yourself a buffer when policy or currency winds shift. Portfolios that carried even a modest 10 percent allocation to gold ETFs generally saw steadier returns and lower drawdowns through the Fed’s mid-year wobbles.

For Indian investors holding U.S. assets, there’s an added twist: currency. When the rupee weakens against the dollar — as it has for much of 2025 — gold priced in dollars delivers an extra lift. That currency cushion often turns a hedge into a genuine profit centre.

Expense ratios, meanwhile, deserve attention. A fund charging 0.40 percent instead of 0.10 percent may sound like a rounding error, but over several years, that difference quietly eats away at the protection gold is meant to provide.

The Balanced Framework

A sound framework keeps investors exposed to growth while protecting against shocks. The idea is simple:

• Keep a core allocation to U.S. equities for growth.
• Add gold and a touch of silver ETFs as hedges, not bets.
• Use dynamic triggers instead of calendar rebalancing — trim gold when it runs too hot, add when complacency returns.
• Favor low-cost, high-liquidity ETFs so your hedge doesn’t become an expense.

This isn’t about guessing when the next correction will come. It’s about being positioned so you don’t need to.

What Could Go Wrong

Every rally carries risk, even one built on balance.

• If the Fed turns unexpectedly hawkish, both stocks and gold could retrace.
• A sharp rebound in the dollar would take some shine off bullion.
• ETF tracking errors, especially in leveraged or derivative versions, can distort returns during volatility spikes.
• And correlations can flip fast — the same hedge that worked beautifully one quarter can dull your gains the next.

The lesson: enjoy the protection, but keep your exits mapped.

Appreciate’s Advantage

Appreciate’s investing philosophy has always been about balance, not prediction. The platform helps investors diversify across U.S. equities, ETFs, and commodities seamlessly, combining data-driven insights with simple tools for allocation and rebalancing.

In a year when both fear and greed are performing well, Appreciate enables investors to hold confidence and caution in the same portfolio — intelligently, automatically, and without panic.

The Takeaway

If 2025 has taught investors anything, it’s that market logic isn’t static. Growth and caution can coexist. The smartest portfolios this year weren’t built on bold bets but on quiet balance — a little equity optimism, a little golden insurance.

For U.S. investors, gold has proved that safety doesn’t have to come at the cost of returns. For Indian investors with overseas exposure, it has reinforced why holding assets in multiple currencies is worth the effort.

You don’t need to choose between stocks and gold; you just need to know how to hold both. Because when the wind changes — and it always does — it helps to have a parachute as well as a sail.

To know more about investing in US stocks, ETFs, and Mutual Funds, click here.

Note to the Reader: This article has been produced on behalf of the brand by HT Brand Studio and does not have journalistic/editorial involvement of Mint.