Morgan Stanley Backs Gold Strategy

Morgan Stanley’s chief investment officer, Mike Wilson, has signalled a significant shift in portfolio construction by creating a place for gold alongside equities and fixed income. Speaking with Reuters, Wilson said he favours a 60/20/20 strategy, with the final allocation reserved for gold as an explicit hedge against inflation and periods of stress in financial markets. While many on Wall Street have historically attempted to ignore gold and go for a 60/40 approach in stocks and fixed income, this highlights the growing distrust in long-term investments.

"Gold is now the anti-fragile asset to own, rather than Treasuries. High-quality equities and gold are the best hedges" – Mike Wilson, CIO at Morgan Stanley

Wilson argued that gold’s role has become more compelling as inflation risks remain elevated and the outlook for real interest rates turns less certain. He described gold as “anti-fragile,” noting its tendency to perform when real yields decline, even if nominal rates appear high. The precious metal has increasingly shown its value not only as a store of wealth but as a defensive anchor when traditional bonds fail to protect portfolios.

For investors used to the conventional 60/40 approach, the shift toward a 20 per cent gold allocation highlights a broader recalibration in how risk is managed. While equities are still expected to provide growth and shorter-term Treasuries can deliver rolling yield, Wilson stressed that long-dated bonds carry greater vulnerability in today’s environment. Gold, he said, fills that gap, offering resilience in a way that other assets cannot.

Gold prices hit another all-time high last week, making talk about gold as a strategy unignorable. With rising interest in precious metals as hedges, silver has also had an impressive performance. Silver’s last day of trading shows an astounding 3.36% rise in AUD terms – more than double gold’s rise on the same day. The underlying strategy is the same for both: With lower rates and a lack of confidence in long-term investments, precious metals tend to appreciate.