(Kitco News) – As the conflict with Iran continues and equity indexes around the world post steep declines, investors are flooding into gold – and into bullion exchange traded funds (ETF) in particular.
“Global gold funds posted +$6.2 billion in inflows last week, the 3rd consecutive weekly intake,” noted The Kobeissi Letter in an X post on Monday, citing Bank of America data. “Year-to-date, gold funds have attracted a record +$148 billion in annualized inflows.”
“In other words, at this pace, investors will pour more capital into gold funds than the 2025 record of +$101 billion,” they noted. “This would also be +200% higher than the 2020 pandemic year. Gold funds saw +$19 billion in inflows in January, the strongest month on record. Asset owners are accumulating even more assets.”
With the Middle East’s millions of daily barrels threatened and disrupted by the conflict – and much of that flow destined for Asia – it’s no surprise that the world’s largest gold markets are leading the flow into bullion ETFs. The Times of India noted on Tuesday that investors are pivoting toward safe haven assets, with precious metals ETFs near the top of the list.
“Many traders are struggling to choose whether they should go for gold ETFs or towards silver ETFs, or allocate their portfolio to a combination of both,” they wrote. “According to market participants, current environment favours gold, although silver could still play a complementary role in portfolios.”
Siddharth Srivastava, ETF Product & Fund Manager at Mirae Asset Investment Managers, told the Times that in periods of heightened geopolitical tension, gold ETFs typically act as the primary safe-haven, while silver ETFs also participate in risk-off moves but are more influenced by industrial demand. He suggested that holding both can offer a balance of stability and tactical upside. Srivastava added that safe haven investors should always maintain a relatively higher allocation toward Gold ETFs.
This view was shared by Shivam Pathak, CFP and Founder of Asset Elixir, who said that in geopolitical conflicts like the current US-Israel-Iran war, gold ETFs represent the safer option as they are a pure safe-haven asset and react quickly to uncertainty.
Both experts told the Times that investors could consider allocating 10–15% of their overall portfolio to precious metals ETFs, again maintaining the majority of this in gold for increased stability.
Anthony Di Pizio noted in The Motley Fool that gold is far outperforming the stock market in the first two months of the year. He said that conditions favor further upside for gold, with the yellow metal an effective hedge against inflation, economic uncertainty, and political turmoil, cautioned investors to temper their expectations going forward.
“Gold soared in value by 64% in 2025, and it's already up by a further 18% in 2026,” Di Pizio said. “The S&P 500 stock market index, on the other hand, is up just 1% this year. Investors are piling into the precious metal to hedge against the consequences of soaring government spending, a ballooning national debt, and rising economic uncertainty.”
He noted that while returns of this magnitude are atypical, the conditions are ideal for further gains.
“Buying physical gold is the surest way to profit as the shiny yellow metal rises in value, but purchasing an exchange-traded fund (ETF) like the SPDR Gold Shares ETF might be a much simpler option for most investors,” he said. “It tracks the price of gold without the storage and insurance headaches that come with owning physical bullion.”
Di Pizio said one major reason why he believes investors should add gold to their portfolios is the sharp rise in the money supply, which should support higher gold prices.
“Gold's value is one of the few things the entire world seems to agree on, because investors, governments, and even central banks are consistent buyers,” he noted. “Over the past year, investors have bought gold at a more aggressive pace than usual, as they fear the growth in money supply will inevitably accelerate because of the U.S. government's unsustainable fiscal trajectory. During fiscal 2025 (ended Sept. 30), the government ran a budget deficit of $1.8 trillion, which sent the national debt skyrocketing to an all-time high of $38 trillion.”
Di Pizio cited the advice of hedge fund legend Ray Dalio that investors allocate as much as 15% of their portfolios to gold as a hedge against the current fiscal situation. “Another hedge fund billionaire, Paul Tudor Jones, recently piled into the SPDR Gold ETF because he says throughout history, civilizations have always tried to ‘inflate away their debt’ by printing more money,” he said.
Still, Di Pizio cautioned investors to temper their expectations going forward.
“Over the last 30 years, gold has averaged a compound annual return of around 8%, so the gains investors have enjoyed over the past 12 months probably aren't sustainable,” he wrote. “However, the U.S. government is on track to run another trillion-dollar budget deficit in fiscal 2026, so fears about a growing money supply probably aren't going away.”
But even if debts and deficits continue to rise at an unsustainable pace, Di Pizio said gold still might not necessarily be the best asset to own. “Although it's crushing the S&P 500 right now, the benchmark stock market index has delivered a much higher compound annual return of 10.7% over the last three decades,” he noted. “As a result, investors who parked their money in the S&P 500 instead of gold back then would be much better off today.”
Di Pizio said the divergent returns of the S&P 500 and the gold price underline the importance of diversification above all else. “Professional investors like Ray Dalio are probably right that it's a good idea to hold more gold in the current political climate, but stocks would still be the dominant asset class in a diversified portfolio where the yellow metal has a 15% allocation,” he said, adding that with relatively low management fees, holding this 15% allocation in ETFs is “probably still cheaper than owning physical gold” due to the latter’s storage fees and lower liquidity.
