Not a commodities trader with a Bloomberg terminal humming next to three monitors, nor a hedge fund manager. Just a typical investor sitting at a kitchen table, phone in hand, watching a number tick. This could be a small business owner or someone who survived 2008 but never fully recovered emotionally. This may have become more widespread than anyone in the financial sector wants to acknowledge.
In late April 2025, gold broke the inflation-adjusted record of $3,500 per troy ounce, surpassing even the panic-driven peak of January 1980, when inflation was depleting American savings and the Soviet Union had just invaded Afghanistan. In contrast, that earlier crisis moment seems almost charming. Even though the concerns are more varied today—tariff uncertainty, concerns about the independence of the Federal Reserve, and geopolitical fragmentation—the emotional reaction is remarkably similar. Investors turn to something traditional when they are unable to make sense of the world. Something that has outlasted all money, empires, and financial instruments ever created. Gold does not guarantee profits. All it says is that it won’t go away.
Most people don’t realize how important that distinction is. Gold does not pay dividends, in contrast to shares. It produces no income, in contrast to bonds. Compared to copper or silver, it has comparatively few industrial uses. Because it cannot be printed or conjured, it provides independence from central bank policy. That’s a very alluring feature in a time when policy responses to every significant financial crisis have included rate cuts and balance sheet expansion. Gold is not the issue. The issue lies in the actions it causes in those who, despite all the portfolio jargon, are just afraid.
Over the past year, there has been a noticeable change in the atmosphere at the gold dealerships in London’s Hatton Garden on any weekday. The managing director of Hatton Garden Metals, Zoe Lyons, recently described it as a mixture of anxiety and excitement, with vendors and buyers standing in line in the street, motivated by both conviction and anxiety. “When you get those emotions,” she replied, “ultimately it creates quite big trades.” It’s not a compliment. Investors rarely look back on large emotional trades they made during times of extreme anxiety with satisfaction.
There’s a name for this psychology, and it’s not strategy. Recency bias, the cognitive propensity to believe that whatever has been happening recently will continue to happen indefinitely, reinforces herd mentality. In the last year, gold has increased by more than 40%. The pull of momentum, the fear of missing out, and the unspoken belief that this time is different are all felt by investors who look at that chart. Seldom is it. Gold’s fifteen-year gradual decline in value following its peak between 1980 and the mid-1990s is often overlooked in promotional materials.
In its current state as a mass-market phenomenon, gold seems to serve more as an emotional outlet than as an investment vehicle. Almost every day, markets send out contradictory signals. Purchasing power is still being eroded by inflation. The majority of reasonable assessments indicate that the levels of government debt are unsustainable. It is now more difficult to define geopolitical stability than it was ten years ago. Opening a gold price app in that setting gives the fleeting impression that you are taking action, staying informed, and staying ahead of the curve. However, keeping an eye on a price doesn’t shield you from anything. It may be worse to buy at the peak of a fear cycle and panic-sell at the first dip than to do nothing at all.
The behavioral research consistently demonstrates that gold works best as a portfolio hedge when it is part of a small, disciplined allocation, usually less than five percent, that is maintained regardless of what prices are doing on any given Tuesday. The emotional component is virtually eliminated by dollar-cost averaging, which involves investing set sums at regular intervals regardless of whether gold is rising or falling. It’s not glamorous advice. Financial media isn’t particularly interesting. However, it clearly does not function in the same way as compulsive price-watching.
It’s difficult to ignore how much the current gold rush is similar to all of the others in terms of its emotional architecture rather than its surface causes, which are always distinct. Fear grows. Costs increase. Prices rise as more investors join in, confirming the anxiety. In some way, the trade is still alluring despite feeling crowded and obvious. Eventually, risk assets rise, gold stalls, and confidence subtly returns to other markets. Investors who purchased at the peak of the market are left with an asset that may take years to recover.
There is no secret about the cycle. Because human emotion is not updated based on past data, it simply continues to function. It’s still unclear if this specific run has reached its emotional peak because gold’s momentum is still strong and the underlying macro uncertainties haven’t subsided. However, those who are looking at price charts at six in the morning are most likely not the investors who stand to gain the most from gold’s long-term characteristics.