Introduction

Last week, I shared why I took the drastic step of liquidating my entire portfolio — lock, stock, and barrel. That wasn’t a decision made on impulse. It came from watching AI valuations spiral into bubble territory, macro indicators flash red, and historical signals line up uncomfortably with past crashes.

But liquidation is just one half of the story. The real question is: what do you do after selling everything? Where do you park your money when you believe equities are heading off a cliff?

For me, the answer was simple: I moved into gold and silver ETFs.

The Historical Case for Gold

When equities tumble, gold has a history of doing the opposite. It doesn’t always skyrocket, but it consistently protects capital while markets are in free fall. Let’s look at six major downturns over the last 50 years:

• 1973–74 Oil Crisis: Nasdaq collapsed by 58%, yet gold more than doubled, rising 137%.

• 1987 Black Monday: The market fell 33% in just a few months. Gold held steady, posting a slight 1% gain.

• 1990 Gulf War Recession: Nasdaq fell 29%, while gold quietly gained 8%.

• 2000–2002 Dot-Com Bust: Tech stocks were obliterated, down 75%. Gold stayed resilient, inching up 6%.

• 2007–09 Financial Crisis: Equities halved (-52%). Gold surged 25%, a safe haven when confidence evaporated.

• 2021–23 Post-COVID Adjustment: Nasdaq fell 25%. Gold preserved capital with a modest 4% gain.

The pattern is clear: gold doesn’t just sit idle. In every downturn of the last half-century where Nasdaq lost at least 25%, gold either gained significantly or at worst held steady. That’s exactly what you want when the rest of your portfolio is underwater.

Why Gold Remains the Ultimate Safe Haven

Numbers tell one part of the story. The other part is about why gold continues to be the world’s preferred hedge in times of crisis.

• Intrinsic Value That Doesn’t Vanish

Unlike paper currencies or equity valuations, gold isn’t tied to a single government or company’s survival. Its value is recognized universally, across borders and centuries.

• Hedge Against Inflation

When central banks respond to crises with money printing, fiat currencies lose purchasing power. Gold tends to hold — or even increase — its real value during inflationary waves.

• Crisis-Proof Liquidity

In turbulent times, markets for exotic assets dry up. Gold, on the other hand, remains one of the most liquid assets globally. You can sell it in almost any country, in any currency.

• Central Bank Confidence

A powerful signal: many nations, especially outside the West, are dumping U.S. Treasuries and stocking up on gold reserves. This shift signals declining faith in the dollar and rising confidence in gold as the bedrock of national financial security.

• Psychological Safety

Perhaps just as important as economics: when everything feels uncertain, gold is the asset people trust. That trust itself creates demand.

This combination — historical resilience plus structural advantages — explains why gold consistently acts as a stabilizer in portfolios.

Why Many Countries Are Dumping U.S. Treasuries and Stocking Up Gold

We’ve seen not just private investors retreat from equities, but also central banks and nation-states changing how they handle reserve assets. Below are recent data points, drivers, and what they mean.

Key Data & Trends

• China’s Treasury Holdings Down to Lowest Since 2009

As of 2024, China’s holdings of U.S. Treasuries dropped by about $57 billion to ~$759 billion — the lowest level since 2009.  

Analysts say some of the decline is real, while some is due to China holding assets in other custodian accounts to obscure the total.  

• Foreign Sales of Long-Term U.S. Treasuries

In early 2025, foreign investors sold a net $13.3 billion in U.S. long-term Treasury securities — those with maturities over one year.  

For example, Canada was a large net seller; Japan and others are following suit.  

• Central Banks Buying Gold, Moderating Pace, But Still Net Purchasers

Despite high gold prices and geopolitical uncertainty, central banks remain net buyers. In July 2025, they added around 10 tonnes globally.  

Countries like China are easing rules for gold import/export licensing — suggesting an intent to make gold transactions smoother and more integral to reserve policies.  

• “De-dollarization” is Real

The share of reserves held globally in U.S. dollar assets is gradually dropping; many countries are looking at alternative reserve assets: gold, other currencies, even certain commodities. China, Russia, India, Turkey are often cited.  

Why This Shift Is Happening (Drivers)

These aren’t random moves. Several powerful forces are pushing countries away from Treasuries / the dollar, and toward gold.

What It Means in Practice

• For an investor like you: this trend means gold isn’t just “a hedge” — it’s becoming a core reserve strategy globally. That boosts its relative safety in a crisis.

• It also suggests that when countries dump Treasuries, the ripple effects include rising yields, currency volatility for the dollar, and potentially higher inflation risk. Gold profits not just from fear, but from these structural forces.

• Demand from nation-states tends to be steady, not speculative. If states are building gold reserves, that creates a level of price floor and support hard to replicate via purely private demand.

Why I Also Bought Silver

Gold is the classic safe haven — but I didn’t stop there. I also added silver ETFs to my portfolio. Here’s why:

1. Industrial Demand: Unlike gold, which is mostly a monetary asset, silver is a hybrid. It’s both a store of value and an industrial metal. With rising demand in solar panels, EV batteries, and electronics, silver benefits not only from financial crises but also from technological growth.

2. Historical Outperformance in Bull Runs: Silver tends to lag gold at the start of a precious metals rally, but once momentum builds, it often outperforms. For example, during the 2008–2011 cycle, silver prices rose more than 400%, while gold rose ~150%.

3. Gold-to-Silver Ratio: Historically, the ratio of gold price to silver price hovered around 50–60. Today, it has often been above 80. If history is a guide, silver is undervalued compared to gold — meaning there’s room for catch-up gains.

4. Hedge Against Fiat Debasement: Just like gold, silver is a hard asset. It can’t be printed by governments. When fiat currencies come under stress, silver usually rallies alongside gold, giving me a diversified hedge.

So while gold is my anchor for safety, silver gives me asymmetric upside. If the economy weakens, gold protects my downside. If a precious metals bull market really takes off, silver magnifies the upside.

Why Not Crypto? Why Gold Instead

Some might ask: if I believe a crash is coming, why not move into Bitcoin or other cryptocurrencies, the so-called “digital gold”?

Here’s my reasoning:

• Volatility vs. Stability

Crypto behaves like a speculative asset. In times of panic, investors often sell crypto first, adding to its wild swings. Gold, on the other hand, has thousands of years of history as a store of value. When fear spikes, capital flows into gold — not out of it.

• Correlation With Risk Assets

Despite the “hedge” narrative, crypto has repeatedly shown strong correlation with equities. In the 2022–2023 downturn, Bitcoin fell more than the Nasdaq. Gold, in contrast, often diverges and acts as ballast when markets fall.

• Global Demand and Acceptance

Central banks aren’t buying Bitcoin — they’re buying gold. In 2022, global central bank gold demand hit the highest level in 55 years. Nations are quietly moving away from the dollar and anchoring reserves in gold. That’s the definition of safe haven demand.

• Regulatory and Technological Risk

Crypto faces unpredictable regulation, hacks, and infrastructure risks. Gold has none of these. It just sits as an asset you can trust when everything else looks shaky.

For me, the question wasn’t “crypto or gold?” — it was whether I wanted speculative upside or reliable downside protection. In a potential crash, I chose the latter.

What Should You Do if You Decide to Exit Equities?

If you come to the conclusion that markets are overheated and a correction is due, the question is: where do you park your money? For me, the answer was gold and silver ETFs — not as speculative trades, but as hedges.

The role of gold in a portfolio is very different from equities. You don’t buy it expecting outsized returns year after year. You buy it to protect your purchasing power when everything else is in free fall. Think of it less as “chasing returns” and more as “building resilience.”

A few principles worth keeping in mind:

• Diversification matters: I didn’t move 100% into gold. The goal isn’t to put all your eggs in a single basket, but to have a safe anchor while other assets reprice.

• Accessibility counts: I chose ETFs because they’re liquid, regulated, and easier than holding physical bullion. I can move in and out quickly without worrying about storage or premiums.

• Preservation over speculation: This isn’t about “winning” the downturn. It’s about coming out on the other side with your capital intact, ready to redeploy when valuations normalize.

In other words, gold is less about playing offense and more about playing defense.

Closing Thoughts

I don’t claim to know the exact timing of when the markets will break — no one does. But I’ve seen enough signals, from AI bubbles to stretched valuations, to know that when corrections happen, they tend to happen fast and brutal.

That’s why I’ve already moved. For me, reallocating into gold and silver ETFs is not about chasing a quick upside. It’s about peace of mind, preservation, and being in a position of strength when opportunities eventually appear on the other side of this storm.

If I’m wrong, and markets keep climbing, I’ll have lost some upside. But if I’m right, I’ll still be standing — and ready to act when others are forced to retreat.