In Global X’s view, a mix of persistent inflation concerns, geopolitical uncertainty, rising central bank demand and long-term structural shifts, including electrification and artificial intelligence (AI), has driven investors back towards hard assets, such as precious metals.

Global X believes many of these forces appear structural rather than cyclical, leading investors to reassess the role precious metals can play within diversified portfolios.
 

Understanding precious metals 

Precious metals are naturally occurring metals with high economic value, driven by their scarcity, durability and wide-ranging uses. 

The four most commonly accessed precious metals by investors are gold, silver, platinum and palladium. While often grouped together, each metal has distinct characteristics:
 

1. Gold

The most well-known precious metal, gold, is often viewed as a defensive safe-haven asset. It has historically been used as a store of value and hedge against currency devaluation, inflation and geopolitical risk. 

Unlike most financial assets, gold has no cash flows – its value is derived from scarcity, durability and investor confidence. 

In Global X’s view, in recent years gold demand has been supported by central bank buying, increased usage of gold ETFs and diversification away from US-centric assets, amid a shift from the US dollar.

2. Silver 

Silver sits at the intersection of monetary and industrial demand. While it has historically been used as money, more than half of silver demand comes from industrial applications [1]. Silver plays a critical role in solar panels, electric vehicles, electronics and semiconductors, making it closely tied to electrification and energy transition trends. 

This dual role can make silver more volatile than gold but could also offer greater upside during periods of strong economic growth.

3. Platinum and palladium

These are primarily industrial metals. They are heavily used in catalytic converters for vehicles, helping reduce harmful emissions, and are increasingly being explored for applications in hydrogen fuel cells. 

These metals tend to have smaller, less liquid markets compared to gold and silver, which can lead to sharper price movements when supply or demand shifts.
 

Why precious metals have outperformed

As the chart below shows, the past 12 months have seen a powerful rally across precious metals, placing them among the best-performing asset classes globally.

Source: Bloomberg from 31 December 2024 to 31 January 2026 in AUD. Indices used: S&P/ASX 200 Index, MSCI World Index, LBMA Gold Price, LBMA Silver Price, LBMA Platinum Price, LBMA Palladium Price. Past performance is not a reliable indicator of future performance. You cannot invest directly in an index.

Several factors have contributed to this move

• Central bank demand: central banks have been buying gold at near-record levels, seeking to diversify reserves away from fiat currencies and reduce reliance on the US dollar [2].
  
  
• Inflation and currency concerns: while inflation has moderated from recent peaks, concerns remain around long-term currency debasement and rising government debt.
  
  
• Geopolitical uncertainty: ongoing conflicts and heightened geopolitical tensions may have reinforced gold’s role as a defensive asset.
  
  
• Structural growth themes: silver and platinum may have benefited from electrification, renewable energy investment and AI-driven demand for advanced electronics.
  
  
• Exchange Traded Fund (ETF) accessibility: growing global ETF usage has made it easier for investors to allocate capital to precious metals via exchanges.

Why include precious metals in a portfolio

From a portfolio-construction perspective, precious metals can potentially serve multiple roles.

First, they may act as portfolio diversifiers. Precious metals, particularly gold, have historically shown a low correlation (relationship) to traditional asset classes such as shares, as the table below shows. This means precious metals may help smooth portfolio returns during periods of market stress.
 

20 Year Correlation Matrix

Source: Bloomberg from 31 January 2006 to 31 January 2026 in AUD using weekly correlations. Indices used: S&P/ASX 200 Index, MSCI World Index, LBMA Gold Price, LBMA Silver Price, LBMA Platinum Price, LBMA Palladium Price. Past performance is not a reliable indicator of future performance. You cannot invest directly in an index.

Second, precious metals can potentially provide defensive characteristics. As the chart below shows, gold has often performed well during equity market falls, acting as a form of portfolio insurance. 
 

Gold trends to rise when share markets fall

Source: Bloomberg using MSCI World Index and LBMA Gold Price (AUD)
Past performance is not a reliable indicator of future performance. You cannot invest directly in an index.

Third, some precious metals offer growth exposure. Silver and platinum are leveraged to industrial activity, electrification and emerging technologies such as AI, meaning they may benefit from global economic expansion and structural investment trends.
 

Risks of investing in precious metals

While precious metals may offer diversification benefits, they are not without risk. Their main risks include:

• Price volatility: precious metals prices can be volatile, particularly silver, platinum and palladium, which have smaller and less liquid markets than gold.
  
  
• No income: precious metals do not generate cash flows such as dividends or interest. Returns are entirely dependent on price appreciation.
  
  
• Sensitivity to macro-economic factors: interest rates, currency movements and economic growth expectations can all influence precious metals prices.
  
  
• Industrial demand risk: metals with higher industrial usage are exposed to economic slowdowns and changes in technology.

Even when long-term structural themes appear supportive, short-term price movements in precious metals can diverge sharply from fundamentals. 

For this reason, precious metals are, in Global X’s view, generally best used as a complementary portfolio allocation rather than a standalone investment. 
 

Why use ASX-listed precious metals ETFs?

Historically, investing in precious metals often meant purchasing physical bullion, arranging secure storage, paying insurance costs and dealing with wide transaction spreads. For many investors, this was impractical.

ASX-listed precious metals ETFs may offer a simpler and more accessible solution. ETFs provide transparent exposure to the underlying precious metal, with prices available throughout the trading day. ETFs eliminate the need for physical storage of precious metals and typically offer lower transaction costs than buying bullion directly.

Today, precious metals ETFs account for more than $13 billion in assets on the ASX and have grown at a compound annual rate of around 38% over the past decade, as the chart below shows.

More information on the benefits and risks of ETFs is available here.

ASX-listed precious metals ETFs

Source: Global X, ASX as of 31 December 2025.
 

Conclusion

Precious metals are among the oldest asset classes in the world, yet their relevance continues to evolve. Gold’s defensive characteristics, alongside silver and platinum’s exposure to industrial and technological change, may enable precious metals to play multiple roles in modern portfolios. 
 

From ASX 

Options over GOLD ETF offers investors tools which could cushion their portfolios from sudden downturns in the gold price whilst potentially growing wealth and providing information about exchange traded options linked to gold ETFs.

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[1] The Silver Institute as of December 2025.

[2] The World Gold Council as of December 2025.