Gold, Silver and the Fear of Missing Out

Gold and silver surged this year, prompting a wave of questions from investors. In this conversation, Investment Strategist Ross Mayfield and PWM Market Analyst Mike Antonelli unpack what drove the surge and how long-term investors should think about precious metals when market noise gets loud.

Ross: Mike, you were early in writing about this move to help make sense of it for our clients – what was really behind it?

Mike: When prices started rising quickly, the first question we heard from clients was simple: Why now? I boil it down to four main drivers:

1. Debt and Currency Concerns
When governments manage their debt by printing more money, they can weaken the value of their paper currency. Because gold and silver can’t be printed, they attract more interest when people worry about their currency losing value.

2. Questions Around the Shifting Global Economy
Some international investors are questioning the U.S. outlook and have been moving money out of U.S. assets and into gold and silver.

The bigger changes were the last two:

3. The Amount of Financial Activity Built Around Metals
ETFs, leveraged ETFs, futures contracts and even crypto projects backed by physical metals all compete for the same underlying supply. When investors start worrying about shortages, prices can move quickly.

4. The Crowd Effect
We’ve seen this GameStop- and AMC-style momentum before, where rapid retail trading accelerates movements in price. One clear signal this time was options activity, with an unusual volume of call options on silver bought in a single week. That’s short-term trading, not long-term investing.

These forces caused gold and silver to move sharply higher – and then reverse just as quickly. It’s important to remember: Fast moves work in both directions.

Ross: That context matters, especially on the first two drivers – it’s not like rising government debt and geopolitical tension suddenly appeared this year. What changed was leverage, retail speculation and fear of missing out. So the real question is what, if anything, should investors do with all of this?

Mike: I tried to think through every reason a wealth management client might want to own gold or silver. I keep coming back to these four:

1. To Benefit From a Price Increase
That’s the most common reason – and usually the worst one. Chasing performance is how investors end up buying at the top.

2. To Act on a Belief That the World Is Shifting Away From U.S. Dominance
If that’s part of your long-term view, it might support a small allocation. But that’s a decades-long strategy, not a short-term trade.

3. To Hedge Against Extreme Risks
For some, owning precious metals provides comfort if they fear a collapse of the U.S. dollar or some other severe financial breakdown. Even in that scenario, though, gold bars are unlikely to help you with rent or groceries.

4. To Diversify
This is the strongest reason. Wanting an asset that behaves differently than stocks and bonds is a reasonable conversation to have with your advisor.

The key is being intentional. Any allocation should be well understood and aligned with a long-term plan, not driven by headlines or anxiety.

Ross: It’s also worth noting that for all the investor interest in gold and silver, those assets don’t generate income or fuel economic growth. They are stores of value that investors hope will help during inflation, geopolitical stress or uncertainty. It reminds me of a quote from behavioral finance author Morgan Housel about the fear of missing out: “Being immune to the siren song of other people’s success – especially when it’s sudden and extreme – is practically required to do well over time.” If you can look at gold and silver and say, “This might have a small role, but I don’t need to chase it,” that’s a win.

Mike: That’s exactly right. Be clear about why you own what you own and how it fits into your plan. Recent losses in gold and silver were real, and those lessons can be costly. If recent market moves raised questions, that’s a good reason to talk with your advisor.

For more from Ross and Mike, be sure to check out our All That Matters monthly video series, where they tackle real questions from clients.

This information has been developed by a member of Baird Wealth Solutions Group, a team of wealth management specialists who provide support to Baird Financial Advisor teams. The information offered is provided to you for informational purposes only. Robert W. Baird & Co. Incorporated is not a legal or tax services provider and you are strongly encouraged to seek the advice of the appropriate professional advisors before taking any action. The information reflected on this page are Baird expert opinions today and are subject to change. The information provided here has not taken into consideration the investment goals or needs of any specific investor and investors should not make any investment decisions based solely on this information. Past performance is not a guarantee of future results. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances, so speak to your Baird Financial Advisor before taking action.