Golden opportunity for investors in South Africa

Due to global uncertainty, inflation, and market volatility, gold has surged to near-record highs in 2025, reaffirming its role as a reliable safe-haven asset that helps diversify and stabilise investment portfolios, especially for South African investors.

This was explained by investing experts at FNB, who explained that gold has always held a unique place in the global financial system.

It doesn’t generate income or pay dividends, but when inflation spikes, markets turn volatile or currencies weaken, gold can almost always be relied on to buck the trend and rise to the occasion.

In 2025, this pattern has been repeating itself. Gold has climbed to near-record highs, recently trading above US$3,000 (around R54,243) per ounce, which is up 38% from a year ago.

In rand terms, the gains have been even stronger, reflecting not only global price moves but also a weaker local currency.

South African investors holding gold have seen that dual benefit play out, deriving significant benefit from gold’s ability to perform under pressure.

“If one looks at the most recent development, the drivers are all too familiar,” said Chantal Marx, Head of Investment Research at FNB Wealth and Investments.

“The global economic growth outlook is uncertain, central banks are signalling caution after recent interest rate cuts, and policy uncertainty and geopolitical tensions continue to unsettle markets.”

In addition, both equity and bond markets have experienced heightened volatility. Against this backdrop, Marx said it is unsurprising that investor demand for gold has surged.

Gold’s value is not only measured in returns. It is also measured in how it behaves relative to the rest of a portfolio. Over the long term, gold has shown low, and often negative, correlation to major equity markets.

“In fact, research by FNB shows the five-year rolling correlation between gold and the JSE All Share Index has averaged close to zero and has been negative for most periods since 2009.”

“Even the precious metal’s relationship with offshore equities, such as the S&P 500, remains weak, with a correlation of around 0.3 for South African investors.”

An opportunity for South African investors

During major market downturns, this defensive quality becomes especially valuable. In 2008, while global stocks plunged, gold prices surged. In early 2020, during the Covid-19 crash, the pattern repeated itself.

Investors who held gold during these events weren’t just protected; they were rewarded and much better positioned to recover.

FNB’s analysis showed that portfolios with a 5% gold allocation during these periods experienced smaller drawdowns and improved long-term outcomes.

“Gold has consistently maintained its reputation as a safe haven during periods of global uncertainty,” said Sebastian Pillay, Head of Share Investing at FNB Wealth and Investments.

“For investors focused on risk management, gold offers a practical way to strengthen a portfolio’s resilience.” However, Pillay cautioned that not all gold investments are the same.

Since physical gold and gold mining stocks offer very different risk profiles, it is crucial for investors to consider how they access gold.

Gold mining equities are businesses, and while they benefit from a rising gold price, they also carry the full range of corporate risks such as management quality, cost control, debt levels, labour disruptions, and operational challenges.

While these shares may outperform when markets are strong, they are also often quite volatile and can fall sharply when sentiment towards bullion turns.

Physical gold, on the other hand, is ‘pure’ exposure to the asset itself. It doesn’t rely on management execution or quarterly earnings.

It holds intrinsic value, is globally liquid and isn’t subject to credit risk. “An ounce of gold remains an ounce of gold, irrespective of what the markets do,” Marx explained.

In South Africa, physical gold exposure is often achieved through the Krugerrand. First minted in 1967, this gold coin is legal tender and exempt from VAT, a significant advantage for local investors.

While it tracks the global value of gold, it’s also priced locally in rand, allowing South Africans to benefit from international price movements and currency depreciation.

Currently, a one-ounce gold Krugerrand starts at around R65,738, but prices easily exceed R100,000 depending on the coin type.

“Gold is not about chasing returns but about protecting what you have built,” Pillay said. “And in today’s world, that kind of stability is worth its weight.”