With gold setting new records, a prominent wealth manager is urging investors to rethink their portfolios. Eddie Ghabour, co-founder of Key Advisors Wealth Management, said on Fox Business’ Varney & Co. that traditional bonds are “dead money” while markets push higher. He recommended keeping at least 10% of a portfolio in gold to protect gains and hedge risk.
Ghabour’s comments come as investors weigh inflation, interest rate policy, and uneven stock market leadership. The debate over bonds and safe-haven assets is intensifying after years of volatile returns.
Market Backdrop: Inflation, Yields, and a Record for Gold
Gold has climbed to fresh highs in recent months as investors sought safety from inflation and geopolitical tension. The move follows a historic slump in bonds during 2022, when rising interest rates drove prices lower and delivered rare losses to many balanced portfolios.
While inflation has eased from its peak, it remains above central bank targets at times, complicating the outlook for interest rates. That push and pull has kept both gold and stocks in focus. High cash yields also pulled attention from longer-dated bonds, as investors demanded more compensation for taking on duration risk.
Ghabour’s Call: Add Gold, Cut Duration
“Bonds are dead money,” Ghabour said, urging investors to “keep at least 10% in gold” while the market keeps rising.
He framed gold as a hedge against policy uncertainty and a way to lock in gains after a long equity run. His suggested floor for gold exposure points to a defensive stance even as stocks stay near highs. He also described the current environment as one in which traditional bond returns may lag cash and equities.
The Case for Bonds: Income, Balance, and Timing
Not all strategists agree that bonds have lost their role. Many point to the classic mix of stocks and bonds as a way to manage risk, especially for investors nearing retirement. Yields are still higher than in the low-rate years that followed the global financial crisis, which can improve expected income from quality debt.
Some advisors argue that if the economy slows or the Federal Reserve cuts rates, core bonds could gain in price. That potential for diversification remains part of the defense against stock downturns.
Yet the timing is tricky. If inflation proves sticky and rates stay elevated, longer-term bonds can still struggle. That has led some to favor shorter maturities or a mix of treasuries and high-quality corporate bonds to limit interest rate risk.
Gold’s Appeal and Its Limits
Gold has no cash flow, but it carries appeal in periods of stress. It can benefit when real yields fall or when investors seek protection from currency risk. Central bank purchases in recent years have added support, according to market reports, although flows can shift quickly.
Critics note that gold can be volatile and can underperform for long periods. It is best used as a slice of a diversified plan rather than a core holding. That aligns with a measured allocation rather than an all-in shift.
What Investors Are Doing Now
- Keeping more cash or short-term treasuries to earn yield while staying flexible.
- Adding some gold or gold-related funds as a hedge.
- Maintaining core bonds but shortening duration to manage rate risk.
- Rebalancing equities after strong gains in large-cap leaders.
Risks and Next Catalysts
The path of inflation and the timing of any rate cuts remain the key drivers. A faster cooling of prices could lift bonds and calm volatility. A surprise rebound in inflation could keep pressure on longer maturities and add to gold’s appeal.
Earnings season and fiscal policy may also sway sentiment. Any sharp change in labor data could reset expectations for growth and rates.
Ghabour’s message has struck a chord with investors watching gold surge to new highs. His call for a minimum 10% gold allocation offers a clear, simple rule for an uncertain period. Others caution against abandoning bonds altogether, pointing to their role in income and protection if growth slows.
For now, investors face a split decision. Hold some gold to guard against shocks. Keep bond exposure targeted and mindful of duration. Watch inflation and central bank signals. The next move in rates is likely to decide whether Ghabour’s “dead money” label sticks—or proves short-lived.
