What's The (Gold) Rush?

By Investment Analyst Elizabeth Molique

Gold has delivered eye-catching gains in recent years, surging past $4,000 per ounce this year and headlining financial media with talk of safe havens, inflation fears, and geopolitical uncertainty.[1] This performance has increased investor enthusiasm, but history and research suggest caution.

At SJS, we believe investments should be grounded in fundamentals. Assets ought to generate earnings or possess inherent value beyond the hope of resale at a higher price. When the rationale for owning something is simply that someone else might pay more for it later, we’ve crossed into speculation - where value is propelled by hope or hype.

Gold is a unique asset. It doesn’t produce income like stocks or bonds. It doesn’t compound, doesn’t pay dividends, and for most investors, it has limited practical use. Its value is largely determined by sentiment by what someone else is willing to pay for it, which makes it inherently different from productive assets.

The supply of gold remains relatively stable; demand is less so. Gold supply is driven by mining and recycling, with lab-grown gold contributing in rare cases. Advances in lab-grown gold may increase supply in the future, with the impact on prices difficult to predict. Investor psychology, macroeconomic fears, and geopolitical tensions can all drive demand, and therefore price, in unpredictable ways. This volatility creates a mismatch with the narrative often attached to gold: that it is a reliable hedge against inflation. But historically, gold has not consistently behaved as an inflation offset. Its price movements are often more volatile than inflation itself, and its correlation with inflation is far from perfect.

Comparatively, the long-term value of stocks is driven by the profits and cash flows of the underlying businesses. The long-term value of fixed income is driven by contractual payments with businesses and other entities in exchange for providing financing. We think that there are more robust economic theories underlying why stocks and fixed income will increase over time than for gold.

Since 1969, gold has lagged U.S. stock returns. Its annualized return has been lower than the S&P 500 Index, while its standard deviation, a measure of risk, has been notably higher from April 1969 to October 2025.[1]

Source: Morningstar. Data spans from 4/30/1969 – 10/31/2025 for average annual return, standard deviation, and correlations. Inflation is represented by the US BLS CPI All Urban SA. Gold is represented by the LBMA Gold Price PM USD, the official benchmark price for gold set in US dollars each afternoon in London, used globally to standardize gold pricing. S&P 500 is represented by the S&P 500 TR Index. See Important Disclosure Information.

Gold is not new - it has been used as a currency and investment asset for thousands of years. Based on a 2025 study by Claude Erb and Campbell Harvey, gold has held its after-inflation value for the last 2,000-plus years; at the same time, its after-inflation purchasing power has not changed much, which implies a real return around 0%.[2]

This 2,000-plus year performance is in contrast to the past few decades, when gold has performed well. Even the recent performance has been uneven - a gold investor would have had to endure nearly 25 years of cumulative losses from the early 1980s to the mid 2000s. While no one knows what will happen, historical precedent does not lead us to be optimistic about the future prospects of gold.

Source: Morningstar. Gold is represented by the LBMA Gold Price PM USD, the official benchmark price for gold set in US dollars each afternoon in London, used globally to standardize gold pricing. The SPDR® Gold Shares ETF (GLD) was the first gold ETF launched in the U.S. on November 18, 2004. See Important Disclosure Information.

While gold has hedged against inflation and has preserved purchasing power for over 2,000 years, few of our clients have such a long investment horizon. Over shorter periods, gold has exhibited volatility comparable to stocks. Even though direct ownership of gold may not be our preferred strategy, there are several indirect approaches that can help create exposure to gold, serving as useful portfolio diversifiers during periods of speculation.

One option is to invest in companies connected to gold supply and demand, such as mining firms. In a well-diversified portfolio, ownership of these companies is typically already included as part of broader market exposure. Another approach is to access gold exposure through alternative investment strategies - such as buying & selling gold futures within a diversified investment strategy as well as providing price certainty to investors through insurance-like instruments - that have historically been profitable. These methods can be particularly beneficial in times of heightened inflation or when inflation expectations are rising.

When considering investing in gold, it is important to remember historical lessons. During the California Gold Rush in the mid-1800s, the reported wealthiest individual in California was not a gold miner, but a businessman who profited from selling mining supplies and publishing news about the rush.[3][4] While gold remains a time-tested store of value, we believe that successful investing requires a balanced approach that considers both historical insights and practical portfolio strategies that are not solely focused on golden opportunities to strike it big.

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Important Disclosure Information & Sources:

[1] Source: LBMA. Gold is represented by the LBMA Gold Price PM USD, the official benchmark price for gold set in US dollars each afternoon in London, used globally to standardize gold pricing.

The S&P 500 TR Index tracks the price changes of 500 leading publicly traded US companies.

Inflation is represented by the US BLS CPI All Urban SA, which measures the average change over time in the prices paid by urban consumers for a market basket of goods and services in the US, seasonally adjusted.

[2] “Understanding Gold”. Claude B. Erb and Campbell R. Harvey, 07-Oct-2025, papers.ssrn.com.

[3] “California Gold Rush”. History.com Editors, 28-May-2025, history.com.

[4] “Samuel Brannan: Gold Rush Entrepreneur”. PBS, pbs.org.

Past performance does not guarantee future results. Diversification neither assures a profit nor guarantees against a loss in a declining market. There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. 

Indices are not available for direct investment. Their performance does not reflect the expenses associated with management of an actual portfolio. Index performance is measured in US dollars. The index performance figures assume the reinvestment of all income, including dividends and capital gains.

MarketPlus® Investing models consist of registered investment companies. Investment values will fluctuate, and shares, when redeemed, may be worth more or less than original cost.

Statements contained in this document that are not statements of historical fact are intended to be and are forward looking statements. Forward looking statements include expressed expectations of future events and the assumptions on which the expressed expectations are based. All forward looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected.

Walking the Tightrope: The Fed, the Market, and Your Bonds

By Senior Advisor, Director of Institutional Investment Management Kirk Ludwig, AIF®.

Interest rates don’t always make headlines, but when they do, they tend to shake everything else. That’s because rates sit at the heart of the economy: they influence borrowing costs, savings yields, and business investment. When rates rise, borrowing slows down and saving money becomes more attractive. When rates fall, money moves more freely, boosting spending and growth. The Federal Reserve adjusts short-term interest rates to keep this balance in check - more like walking a tightrope than pulling a lever. One wrong step, and they risk leaning too far in either direction.

Lately, that balancing act has gotten tougher. One day, markets are reacting to sticky inflation. The next, it’s fears of slowing growth (i.e., recession). Economic data keeps shifting, headlines flip week to week, and forecasts feel outdated the moment they’re made. With so much in flux, the Fed held interest rates steady at its last meeting, opting to wait for more clarity. Tariffs could end up raising prices and slowing growth at the same time - a combination economists refer to as stagflation. It’s not a word we throw around lightly, but it explains why the Fed isn’t rushing into a decision.[1] Sometimes, staying put is the most thoughtful move.

It’s a challenging environment for policymakers, but it’s just as noisy for investors. And in times like these, clarity isn’t the most realistic goal. Preparation is.

That’s why, at SJS, we don’t try to guess the next move. We focus on building portfolios that can withstand evolving markets. Our fixed income strategy (bonds) is designed for a wide range of outcomes:

• Short-duration bonds to help in an environment where prices stay elevated and yields potentially rise.

• Inflation-protected bonds to assist in times of unexpected or prolonged inflation.

• Longer maturity holdings that benefit if growth slows and yields fall.

• A diversified mix of credit bonds, including investment-grade corporate bonds, as well as selectively-chosen high yield bonds and private credit to capture higher yields.

We don’t build portfolios to match the news. We build them to withstand it.

We’ve seen many economic cycles. Each one brings its own uncertainty, but this one feels especially dynamic. With so many moving parts, the outcome may look very different from what anyone expects. That’s why we don’t build portfolios around predictions; rather we build them to adapt. Time and again – we believe thoughtful diversification, discipline, and a clear process prove more effective than chasing headlines.

So yes, the Fed may be walking a tightrope. And yes, markets may stay moody.

But your bond portfolio? That should stay steady.

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Important Disclosure Information & Sources:

[1] “Federal Open Market Committee”. Board of Governors of the Federal Reserve System, federalreserve.gov.  

There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. Diversification neither assures a profit nor guarantees against a loss in a declining market.

MarketPlus® Investing models consist of institutional quality registered investment companies. Investment values will fluctuate, and shares, when redeemed, may be worth more or less than original cost.

Statements contained in this report that are not statements of historical fact are intended to be and are forward looking statements. Forward looking statements include expressed expectations of future events and the assumptions on which the expressed expectations are based. All forward looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected.

The Case For International Diversification

By SJS Investment Services Managing Director & Senior Advisor Jennifer Smiljanich, CFP®.

We believe that diversification is one of the foundational principles of investing. While many of us might have a favorite stock or two, it is not ideal for most of us to invest in just a few names or in particular parts of the market, such as sectors, countries, or regions. While concentrating portfolios may certainly be a way to create wealth, it also concentrates risk.

Rather, if your concern is to protect your investments, reducing risk by investing across a broad spectrum of asset types may be the better strategy. American film producer Jerry Bruckheimer may have said it best:[1]

I mean if you put all of your eggs in one basket, boy, and that thing blows up you've got a real problem.

Film-making aside, as investors, we know that it is difficult to be able to predict the best part of the market to invest in over any length of time. Case in point, who would have predicted the strong US stock market performance of 2020, especially if we go back to March of last year?[2] While history has shown that US stock markets (as represented by the S&P 500 Index) have handily outperformed international developed markets (as represented by the MSCI EAFE Index) in nine of the last eleven calendar years, we may be due for a sea change. From 2002-2009, it was international stock markets that outpaced US stock markets.[2]

Source: Morningstar, as of 31-Dec-2020. See Important Disclosure Information.[2]

Another potential benefit of global diversification is exposure to different currencies. Diversified currency exposure can protect your portfolio from unexpected risks, such as inflation. Given the start of a weakening dollar, international markets might again take the lead in the performance race. When the US dollar weakens, international stocks are worth more in US dollar terms. This was generally true from 2001-2010, when the international markets last experienced their stretch of outperformance.[3]

Source: “U.S. Dollar Index (DXY)”. Wall Street Journal, 30-Mar-2021, wsj.com. See Important Disclosure Information.[3]

As we enter the modified “Awards Season,” cinema buffs may recall the 2020 Oscar for Best Picture went to the foreign film Parasite, which became the first non-English language film to win the Academy Award for Best Picture.[4] Could this be a coincidental foreshadowing of what’s to come in the markets? We’ll have to wait and see what the envelope holds! But know that you can sit back, relax, and enjoy the show, knowing that your MarketPlus Portfolio is well diversified and strives to be positioned for whatever the future brings.

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Important Disclosure Information & Sources:

[1] “Jerry Bruckheimer Quotes”. quote.org.

[2] Morningstar, as of 31-Dec-2020. The S&P 500 Index is a free float-adjusted market-capitalization-weighted index of 500 of the largest publicly traded companies in the United States. The MSCI EAFE GR USD Index is a free float-adjusted market-capitalization-weighted index that measures the performance of the large and mid cap segments of developed markets, excluding the US & Canada equity securities.

[3] “U.S. Dollar Index (DXY)”. Wall Street Journal, 30-Mar-2021, wsj.com. The U.S. Dollar Index (USDX, DXY, DX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners' currencies.

[4] “Parasite (2019 film)”. Wikipedia, en.wikipedia.org.

There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. Diversification neither assures a profit nor guarantees against a loss in a declining market.

Indices are not available for direct investment. Their performance does not reflect the expenses associated with management of an actual portfolio.

MarketPlus Investing® models consist of institutional quality registered investment companies. Investment values will fluctuate, and shares, when redeemed, may be worth more or less than original cost.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

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Unmasking The 2020 Stock Market

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By SJS Founder & CEO Scott Savage.

Irrespective of your opinion about wearing a mask, all of us can now better relate with what Batman (aka Bruce Wayne) had to deal with while fighting crime in Gotham City. As we begin the last quarter of a surreal 2020, SJS feels compelled to “unmask” the U.S. stock market’s performance year-to-date, shining a light on how the returns of just five stocks are obscuring how, in our opinion, the average U.S. publicly traded company is doing.

Despite unprecedented market volatility and the resulting decline fueled by panic selling in February and March, the S&P 500 Index has seemingly fully recovered. As of September 30th, the S&P 500 enjoyed a positive return of 5.6% year-to-date. During the same time, the “S&P 495”, that is, the same index with the five largest companies removed had a negative return, -7.7%! These five companies are Apple, Amazon, Microsoft, Facebook, and Alphabet (Google’s parent).

Sources: Yardeni Research and Yahoo Finance, as of 30-Sep-2020.

How did this happen? Well, the S&P 500 and many market indices are “cap-weighted” meaning, the larger the company, the more “weight” it carries in the index. In fact, these five companies made up 25% of the S&P 500 as of September 30th. And these five stocks have gained 47.5% year-to-date through the end of September. That’s right, 47.5%! This remarkable performance so far in 2020 has masked the fact that the average stock is down this year!

Sources: Yahoo Finance, as of 30-Sep-2020.

A similar phenomenon happened in the technology sector during the dot-com era of the late 1990’s. The dot-com bubble burst, and the average investor in an S&P 500 index fund earned no return during the subsequent ten-year period. Some have called this “the lost decade.” And with these five companies trading at a price earnings multiple of 35, we are happy to be more diversified in our investment strategies than these cap-weighted indices.

While we are not predicting a crash in the five companies that have led the U.S. market’s advance so far this year, diversification remains a foundational principle of MarketPlus Investing® and is instrumental in managing future risks and reaping future expected returns. Risks include those we perceive as well as those we cannot yet anticipate. Expected returns will vary across market environments, and the SJS Investment Committee reviews future capital market return expectations in decisions about investment design and asset allocation. Just another way that we work on your behalf to help you unmask the noise of the markets, and to focus on the time-tested strategies that can help you achieve your goals.

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Important Disclosure Information and Sources

Past performance does not guarantee future results. Diversification does not eliminate the risk of market loss.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

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You're A Winner (By Design!)

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By SJS Founder & CEO Scott Savage

When you find yourself at your family get-together, or football watching party, and the conversation switches from football, to the kids, grandkids, and golf, to the inevitable subject of the stock market – we want you to know that SJS Investment Services has your back.

When “Cousin Eddie” starts boasting about the killing he made in his Apple or Tyson Foods stocks last year, while conveniently saying nothing about the “hit” his portfolio took on cannabis stocks, recognize you could be just as much the bragger, although you may not even realize it. How so? Well, your MarketPlus Investing® portfolio held this year’s big winners, too.(1) And not just one or two, like Eddie, but all of them. Yes, that’s right – all of them. In fact, as of November 30, 2019, you owned every one of the top 20 performing stocks in the S&P 500 Index in the institutional quality mutual funds that make up your MarketPlus equity portfolio.(2)

Interestingly, the likelihood of Eddie, you, or most people “picking” these individual stock winners in advance out of the pool of 500 stocks, let alone picking all of them, is virtually zero. Some of the 2019 S&P winners listed in the “Top 20 U.S. Equity Performers of the Year” article as of November 30 are quite surprising, such as Xerox Holdings, up 97%, and Chipotle Mexican Grill, up 88%. Others are a little obscure, like COTY, a multinational cosmetics company, which was up 76%, and Copart, Inc., a company that offers online vehicle auctions around the globe, up 86%.(2)

So how can you get in on these winners even before the stock market recognizes them? By implementing the first tenet of MarketPlus Investing: broad diversification.(3) It’s an intentional part of the design of your portfolio to hold most, if not all, of the top-performing stocks found in indexes like the S&P 500. There’s a lot of science behind our proprietary portfolio strategy that puts the “plus” in MarketPlus – and allows you to tell Cousin Eddie a thing or two.

Admittedly, MarketPlus strategies will hold losing, or even the bottom-performing, stock positions as well. But that is part of the strength of the strategy: any given “up year” in the markets is usually driven by a select number of winners. And, as shown in the graph above, the winners will outweigh the losers in an “up year” and provide relative benefit to your holdings even during a “down year.”(4) Holding the winners – even when balanced by some losers – is what we believe to be the key to successful investing for the long-term. And your MarketPlus Investing strategy will hold most of the winners, year in and year out, by design.

So, as we look ahead into 2020, we’ll keep our focus on the numbers and the science. You can have a glass of New Year’s cheer while you high-five Eddie and tell him how great it is to know your portfolio was designed to hold all of the 2019 S&P winners. And you can feel free to emphasize ALL.

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Important Disclosure Information & Sources:

(1) Stock positions held indirectly through institutional class mutual funds.

(2) Financial Advisor Magazine, “Top 20 U.S. Equity Performers of the Year,” 12/11/2019, Raymond Fazzi. Securities cross-referenced with mutual fund equity holdings as held in MarketPlus Investing® strategies.

(3) Diversification does not eliminate the risk of market losses. Past performance is no guarantee of future results.

(4) Dimensional Fund Advisors, “Study of Total Market vs. Excluding Top 10% vs. Excluding Top 25%, Performance 1994-2018,” May 2019.

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