Gold Doesn’t Need a Black Swan to Work

Ask ten gold investors why they own gold, and you’ll likely get ten different answers. 

Some see gold as insurance against disaster—financial crisis, currency collapse, geopolitical instability.  

Others point to more structural forces: the persistent risk of monetary debasement, rising debt levels, or long-term inflation.  

And for still others, gold is simply a tool for portfolio diversification, an asset that tends to behave differently than stocks and bonds.  

But increasingly a new class of investors is turning to gold for a different reason altogether: to generate passive income, denominated in ounces, and to compound their wealth in an asset that’s endured for millennia. 

What’s notable is that gold has delivered across all of these use cases—without needing a financial catastrophe to validate its value.  

Since 1971, when gold was unlinked from its official peg to the dollar, its performance has kept pace and, in many cases, outperformed equities and bonds, despite the noteworthy absence of hyperinflation, sovereign defaults, or major systemic breakdowns (the Great Financial Crisis of 2008 was close…). 

In other words, gold doesn’t need a black swan event to prove its worth. 

Gold has proven useful not just as a hedge against extreme outcomes, but as a reliable contributor to long-term portfolio performance and as a steady source of passive income through gold leases and gold bonds. 

That’s why gold often remains a strategic allocation for individual investors, institutional allocators, and central banks alike. 

Why gold broke through the binary 

This complicates the typical narrative around gold. Owning gold is often framed as a binary bet: either the world falls apart, and gold soars—or it doesn’t, and gold languishes. But the historical record and empirical data suggest something much more nuanced.  

While gold is often known for performing in times of financial stress, gold has provided positive real returns even during periods of relative market stability, low inflation, dollar strength, and high-interest rate environments. 

Why? 

Gold occupies a unique role in the global financial system. It is a globally recognized asset class, maintains deep and liquid trading markets, and does not rely on the credit or management of any government or financial institution.  

That independence makes it valuable not only in crisis, but as a counterbalance in portfolios concentrated in traditional financial assets. 

One of the longstanding critiques of gold is that it doesn’t produce income—unlike stocks or bonds, which may continue to generate returns even when prices are flat. But this critique is no longer valid, thanks to Monetary Metals. Gold owners can earn a yield on gold, paid in gold, through both gold leasing and gold bond offerings. 

In short, gold’s role as a strategic asset remains relevant today as ever, if not more so. 

Nassim Taleb on gold as a reserve currency 

This perspective is also gaining traction at the institutional level. In a recent Bloomberg interview, author and risk expert Nassim Taleb—who popularized the term “black swan” to describe rare, unpredictable events—remarked that central banks appear to be increasing their gold holdings relative to their U.S. dollar reserves.  

His view is that gold is increasingly becoming the world’s reserve currency. The key reason?  

Gold remains a neutral asset—outside the reach of political influence, sanctions, or currency manipulation.  

That neutrality is part of what makes gold appealing not just to investors, but to sovereign entities navigating an increasingly fragmented global economy. 

For private investors, the rationale is similar. Whether the risk is monetary, geopolitical, or systemic, gold offers a form of financial insurance that doesn’t rely on someone else’s promise to pay.  

Will gold continue to perform in times of calm? 

Today’s markets are plagued by a constant stream of potentially volatile threats, which no doubt contributed to gold’s recent performance. What happens if the next crisis never arrives—if markets remain liquid, inflation low, currencies stable, and trade uninterrupted? The reality is that gold can remain a valuable part of a long-term portfolio construction. It can perform in times of chaos and in times of calm.   

Gold doesn’t require turmoil to be relevant. 

With its ability to maintain stability through multiple macroeconomic backdrops, utility as a diversification tool, and a source of income, the reasons to own gold today are as varied as the investors who hold it. 

In that sense, gold’s appeal shines brighter than ever. 

Investors shouldn’t limit gold’s value to protection against extreme tail risk. It’s an asset that has proven to work for investors whether or not the black swan ever shows up. 

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