Based on Jack Bogle’s market cap target, ‘gold would be about 12% of your portfolio’ – WisdomTree CEO Steinberg
Gold is still drastically underowned in investor portfolios, and the key drivers that pushed prices above $5,000 per ounce have only strengthened in a “Trump world,” according to Jonathan Steinberg, founder and CEO of WisdomTree.
In a recent interview with Barron’s, Steinberg explained why WisdomTree – the fourth-largest manager of gold in the world with around $27 billion – favors the yellow metal over all other alternative assets.
“If you think about gold, it's an alternative store of value,” he said. “Often it does better in inflationary moments. It also does well as an offset to global political crises. What's really been driving gold for the last few years is that central banks around the world are trying to diversify away from their dollar exposure. They saw what we did when Russia invaded Ukraine: they were cut off from the financial system.”
“Under a Trump world, the central banks have no desire to stop buying gold,” he said. “They are really buying gold; They're buying gold more than the retail investor globally. You understand markets: more buying than selling, gold goes up. Gold has been trading incredibly well.”
“I think the underpinnings for gold, which has been a store of value for centuries, isn't going anywhere,” he said. “They seem to have some very interesting characteristics, which makes us bullish on it.”
Steinberg mentioned a few other factors that make him bullish on gold. “Bitcoin, which is also an alternative store of value – they actually did a better job of selling the role of Bitcoin in the portfolio than gold – but they serve a very similar role in the portfolio,” he said. “There was always a relationship between gold and silver. There is also a relationship between gold and Bitcoin. And Bitcoin cannot go to $500,000 a coin without gold trading up as well.”
Steinberg noted that while Bitcoin has been down of late, gold has been soaring. “For the last 15 years, it was all Bitcoin, not gold,” he said. “Gold has caught up.”
He also offered another way to think about gold allocation in investor portfolios: Owning assets relative to their total market cap.
“If you go back to Jack Bogle, the founder of Vanguard, and his approach to investing: own the world of liquid assets proportionally to their market cap,” Steinberg said. “Under that scenario, gold would be about 12% of your portfolio.”
