Investors are pairing gold with alternative assets because gold is liquid and has had low correlation with private equity, private credit, and hedge funds, so it can cushion a portfolio when those holdings are hard to sell. A 2025 World Gold Council study suggested a 5% to 8% gold allocation within an alternatives sleeve.1
Key takeaways
- Alternative assets under management are projected to approach $30 trillion by 2029, according to figures cited by the World Gold Council.1
- World Gold Council simulations pointed to an optimal gold weight of 5% to 8% of an alternatives allocation.1
- In its stress tests, adding gold reduced portfolio drawdowns by 50 to 90 basis points.1
- Gold’s main job here is liquidity: it can be sold quickly when private-market holdings are locked up.
- Gold is volatile and pays no income, so it works as a diversifier, not a guaranteed hedge.
What does the World Gold Council research say?
In July 2025, the World Gold Council (WGC) published research arguing that gold belongs alongside alternative investments because it adds liquidity and diversification that private assets often lack.1
The study, “The Portfolio Continuum,” used 20 years of historical data and Monte Carlo simulations to test portfolios with and without gold.1 A WGC research lead later summarized the findings for a broader audience on Livewire Markets.2
The WGC is an industry association funded by gold miners, so its research is best read as one informed perspective, not neutral advice.
What counts as an “alternative” investment?
Alternatives are investments outside traditional publicly traded stocks, bonds, and cash, such as private equity, private credit, hedge funds, real estate, and infrastructure.
Big institutions have poured money into these assets. Figures cited by the WGC project private equity assets under management to roughly double to $12 trillion by 2029.1
Why does gold complement alternatives?
Gold complements alternatives because it is highly liquid, has shown low correlation with them, and has tended to reduce losses during stress periods.
Liquidity when private assets are locked up
Private funds can restrict withdrawals or be hard to value during a crisis. Gold trades around the clock in deep global markets, so it can be sold to raise cash or rebalance when other holdings can’t.
Low correlation
The WGC found gold’s correlation with alternatives stayed low over 3-, 5-, and 15-year periods.1 Assets that don’t move together can smooth a portfolio’s overall ride.
Smaller drawdowns in stress scenarios
In WGC tests covering rate hikes, inflation spikes, equity crashes, and widening credit spreads, gold reduced drawdowns by 50 to 90 basis points.1 Over 20 years of simulated data, an allocation to gold lowered maximum drawdown from -43.2% to -38.8%.1
How much gold do researchers suggest?
The WGC’s simulations pointed to 5% to 8% of an alternatives allocation, not 5% to 8% of an entire portfolio.1
| Metric (20-year simulation) | Without gold | With 8% gold |
|---|---|---|
| Sharpe ratio | 0.56 | 0.61 |
| Annualized volatility | 11.7% | 10.9% |
Source: World Gold Council.1 These are backtested results; past performance doesn’t guarantee future results.
What’s happened since the study?
Gold rallied sharply after the study, topping $4,000 an ounce in October 2025 and setting a record above $5,500 in January 2026, before pulling back.45
- Gold first reached $4,000 an ounce on October 8, 2025.4
- Its all-time high came in late January 2026, above $5,500 an ounce.5
- As of October 2, 2026, spot gold was about $4,176, well below that peak.6
- Central banks bought 863 tonnes of gold in 2025, below 2022 to 2024 but well above the 2010 to 2021 average.3
That swing is a reminder that gold can fall as well as rise. Track the latest moves on our live precious metals charts.
What does this mean for individual and IRA investors?
Most individuals don’t own private equity funds, but the same logic applies: if your savings are concentrated in a few asset types, a modest gold allocation can add liquidity and diversification.
- Check your concentration. Count everything that could fall together in a downturn.
- Keep the allocation modest. Gold pays no income and its price can drop for long periods.
- Consider the tax wrapper. A self-directed IRA can hold IRS-approved bullion stored in an approved depository.7 Learn more in our complete Gold IRA guide.
- Rebalance on a schedule. After a big rally, trimming back to your target keeps risk in check.
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Why do investors add gold to alternative investments?
Gold is liquid and has shown low correlation with private equity, private credit, and hedge funds. That means it can often be sold quickly when private holdings are locked up. World Gold Council research found it also reduced drawdowns in several stress scenarios.
How much gold should be in an alternatives allocation?
World Gold Council simulations published in 2025 pointed to 5% to 8% of an alternatives allocation. That is a research finding, not a personal recommendation. The right amount depends on your goals, timeline, and other holdings.
Is gold considered an alternative investment?
Gold is often grouped with alternatives because it sits outside stocks, bonds, and cash. Unlike most private alternatives, though, physical gold trades in deep global markets every day. That liquidity is a key reason it is used to balance less liquid assets.
Does gold always go up when other assets fall?
No. Gold has often held up during periods of stress, but it can fall at the same time as other assets and can decline for long stretches. Diversification can reduce risk but doesn’t guarantee a profit or prevent losses.
Can I hold gold for diversification inside an IRA?
Yes. A self-directed IRA can hold IRS-approved gold, silver, platinum, and palladium bullion. The metals must be stored by a qualified trustee in an approved depository, not at home.
About the author: John Murphy
[[ROLE AT ANTHEM GOLD GROUP]]. [[X YEARS]] of experience in [[precious metals / retirement planning / financial writing]]. [[One sentence on relevant background, e.g., number of clients helped, credentials, publications]].- World Gold Council: The Portfolio Continuum: Rethinking Gold in Alternatives Investing (July 2025)
- Livewire Markets: Why smart investors are rebalancing alternatives with gold (Marissa Salim, World Gold Council, July 2025)
- World Gold Council: Gold Demand Trends Full Year 2025, Central Banks
- World Gold Council: Gold hits US$4,000/oz, trend or turning point?
- CBS News: What is the highest gold price in history?
- Forbes Advisor: Gold price today
- IRS: Investments in collectibles in individually directed qualified plan accounts
This article is for general education only and isn’t tax, legal, or investment advice. Anthem Gold Group is not a licensed financial advisor. Consult a qualified professional before making retirement decisions.
