Gold Hit $5,589 in 2026. Silver Gained 144%. Here's the Commodities Allocation Most Investors Are Missing.
TL;DR: Gold hit $5,589.38 per ounce on January 28, 2026, after rising 65% in 2025. Silver gained 144.66% in 2025 and reached a new historical high of $64.21/oz in December. The Bloomberg Commodity Ind
The Case for Commodities Right Now
The World Gold Council's full-year 2025 report documents something that should change how you think about portfolio construction: gold demand exceeded 5,000 tonnes for the first time on record, ETF inflows hit 801 tonnes (the second strongest year ever), and central banks purchased 863 tonnes. This was not a speculative spike. It was a structural bid.
The inflation cycle of 2021 through 2025 ran a live experiment on every inflation-hedge thesis in the book. TIPS returned between 2% and 6% annually depending on vintage. Broad bond funds lost money in 2022. Commodities did what they were supposed to do. The S&P GSCI surged 34% from the start of 2022 and was up 213% from its 2020 pandemic low, while the S&P 500 dropped 22.5% in that same 2022 window.
The lesson from that cycle is not that you should hold every commodity. It is that you need to be specific. The Bloomberg Commodity Index returned +27.11% in 2021 and +16.09% in 2022, then gave back -7.91% in 2023 while inflation was still running at 3% to 4%. Blanket commodity exposure is not a precision instrument. Targeted metals and farmland exposure was the better trade.
Gold: What the Data Actually Shows
Gold set 53 new all-time highs during 2025. That is not a typo. The metal closed 2025 up 65.0%, its sharpest annual gain since 1979. The 2025 annual average price was $3,431 per ounce, up 44% year-over-year. By Q4 2025, the quarterly average had reached $4,135 per ounce. Then, on January 28, 2026, gold hit $5,589.38 per ounce, an all-time intraday high.
GLD, the SPDR Gold Shares ETF, returned 26.66% in 2024 and 63.68% in 2025. Its five-year compound annual growth rate stands at 20.57%. Its expense ratio is 0.40%.
The demand side of this story is not retail. Central banks bought 863 tonnes in 2025, roughly five times the pace from before 2022, when Russia's foreign currency reserves were frozen by Western sanctions. That policy moment changed how sovereign wealth managers think about reserve assets. The shift has not reversed. Goldman Sachs calls gold its "single favorite long commodity" and raised its year-end 2026 price target to $5,400 per ounce in January 2026. J.P. Morgan's Natasha Kaneva put it plainly: "The long-term trend of official reserve and investor diversification into gold has further to run."
Gold's 2025 average beat professional consensus forecasts by 25.6%. That was the sharpest outperformance in the two-decade history of LBMA polling. Analysts were not just wrong. They were structurally underestimating something.
Silver: The Industrial Demand Thesis
Silver's 144.66% return in 2025 is not primarily a precious-metals story. It is an industrial demand story with a monetary overlay.
Industrial demand for silver hit a record 680.5 million ounces in 2024, up 4% year-over-year. Solar photovoltaic manufacturing now accounts for 17% of total silver demand, up from just 5.6% in 2015. Every gigawatt of solar capacity installed requires silver. AI data centers, electric vehicle charging infrastructure, and consumer electronics add to the base. That demand is structural, not cyclical.
The silver market ran a cumulative deficit of approximately 800 million ounces from 2021 through 2025, roughly equivalent to ten months of total global mine production. London vault inventories fell about 30% between mid-2022 and early 2025. Mine production grew only 0.9% to 819.7 million ounces in 2024. The fifth consecutive annual supply deficit pushed silver to a new all-time high of $64.21 per ounce in December 2025. BNP Paribas projects silver could reach $100 per ounce by end of 2026.
SLV, the iShares Silver Trust, returned 20.89% in 2024 and 144.66% in 2025. Its AUM is $35 billion. Its one-year return through March 31, 2026 was still 112.40% even after some mean reversion. An investor who split exposure equally between GLD and SLV at the start of 2025 averaged roughly 104% for the year. TIPS returned about 2.2%. That spread is the allocation argument in a single comparison.
The Sprott Angle: Why Structure Matters
Not all gold exposure is equal. Sprott Inc. (NYSE: SII) closed 2025 with $59.6 billion in AUM, up 89% from $31.5 billion at year-end 2024. Its Physical Trusts suite grew 97% to $47 billion. By Q4 2025, total AUM had reached a record $70.1 billion. Management fees for the full year hit $199 million, up 28%. The flagship Gold Equity Fund returned 147.7% for full-year 2025. CEO John Ciampaglia described it directly: "The world is catching up with our view. We are in a new metals-driven commodity super cycle, with capital finally on the move."
The practical question for you as an accredited investor is this: GLD, PHYS, or physical metal? GLD is liquid, trades like a stock, and costs 0.40% annually. The Sprott Physical Gold Trust (PHYS) costs 0.39% and is custodied at the Royal Canadian Mint. The important distinction: PHYS may qualify for preferential capital gains treatment in the U.S., potentially at a 15% to 20% long-term rate versus the 28% collectibles rate that applies to GLD for some taxpayers. The 10-year annualized return between the two funds is nearly identical (GLD at 13.70%, PHYS at 13.18%), with a 0.94 correlation. Tax structure, not return profile, is the deciding variable.
Physical gold requires storage and insurance, typically 0.12% to 0.30% annually for insured vault custody. For a $500,000 position, that cost is manageable. For smaller allocations, an ETF or closed-end trust is the more practical choice.
Farmland: The Quiet Compounder
Ceres Partners managed 176,000 acres across 12 U.S. states with $1.8 billion in AUM when WisdomTree acquired the firm in October 2025 for $275 million in cash, plus up to $225 million in earnout contingent on revenue growth through 2030. That exit validated an 18-year track record that most accredited investors have never heard of.
Since its 2007 inception, Ceres delivered a 10.3% net average annual total return. Founder Perry Vieth cited a 16% gross return since January 2008. Those numbers include two financial crises, a pandemic, and a commodity supercycle. Farmland absorbed all of it without correlation to public equities.
Farmland produces returns through two channels: rental income and land appreciation. When commodity prices rise, farm revenue rises, rents follow, and the underlying land reprices. It is a natural pass-through mechanism with no derivatives, no futures roll costs, and no counterparty risk. Vieth framed the forward opportunity this way: "With WisdomTree's scale, distribution and digital innovation, we can bring farmland and adjacent opportunities in solar leasing, AI data infrastructure and water rights to a broader base of investors."
Farmland Partners (NYSE: FPI), the publicly traded REIT, returned 5.65% in 2024 and has a five-year CAGR of 14.25%. It is liquid access to the same asset class without a private fund minimum. The Ceres model required accredited investor status and a multi-year lockup. FPI requires only a brokerage account. The trade-off: public REIT valuations move with equity market sentiment. Private farmland does not.
The Bloomberg Commodity Index: 2025 in Numbers
The full-year BCOM return of +15.8% in 2025 masks a bifurcation with direct implications for how you build a position. Precious metals within the index returned +64%. Livestock was up 14%. Industrial metals gained 13%. Energy fell 3%. Grains dropped 2%.
Precious metals outperformed energy by 67 percentage points within the same index. An investor holding DJP, the iPath Bloomberg Commodity Index ETN, captured 17.20% in 2025 but was dragged down by energy and grains even as metals surged. Broad passive commodity exposure diluted the most productive sub-sectors. Bloomberg Professional Services noted that USD weakness was a key 2025 driver: as the dollar softened and capital rotated from U.S. to non-U.S. markets, dollar-priced commodities appreciated in nominal terms. Gold and silver amplified that effect.
| Asset | 2024 Return | 2025 Return | Access Method |
|---|---|---|---|
| Gold (GLD) | +26.66% | +63.68% | ETF (NYSE: GLD), 0.40% exp. ratio |
| Gold Physical (PHYS) | ~+26% | ~+63% | Closed-end trust (NYSE: PHYS), 0.39%, tax advantage |
| Silver (SLV) | +20.89% | +144.66% | ETF (NYSE: SLV), 0.50% exp. ratio |
| Bloomberg Commodity Index (BCOM) | +5.38% | +15.80% | ETN: DJP (+17.20% in 2025), ETF: PDBC |
| Farmland (Ceres/private) | N/A (private) | 10.3% avg since 2007 | Private fund (accredited only); FPI REIT for liquidity |
| TIPS (VTIP) | +6.60% | +2.20% | ETF (Nasdaq: VTIP), 0.03% exp. ratio |
The 1% Problem
Goldman Sachs surveyed 245 family office decision-makers for its 2025 Family Office Investment Insights Report. Commodities held steady at 1% of total portfolio allocation in both 2024 and 2025, while public equities rose to 31% and alternatives held at 42%. The UBS Global Family Office Report 2025, covering 317 single family offices with average net worth of $2.7 billion, found that only 19% use precious metals at all. 21% anticipated increasing that allocation over the next five years.
I think the 1% figure persists for three reasons. First, commodities do not pay dividends or interest, which makes them psychologically uncomfortable for yield-oriented allocators. Second, the 2023 drawdown in BCOM of -7.91%, while inflation remained elevated at 3% to 4%, undermined the narrative for advisors who had just added a commodity position. Third, most alternatives consultants are better trained on private equity, credit, and real estate than on physical asset structures. Commodities get a token allocation and no real attention.
The math does not support 1%. If a $10 million family office portfolio held 5% in GLD and 5% in SLV entering 2025, that $1 million position would have grown to roughly $2.04 million by year-end. A $1.04 million gain on a 10% commodity allocation. The same 1% standard position contributed $104,000 to a $10 million portfolio. The opportunity cost of under-allocation is measured in seven figures.
How Accredited Investors Actually Access These Assets
You have four practical entry points. ETFs are the simplest: GLD and SLV require no minimum, trade intraday, and are available in any brokerage account. The trade-off is tax treatment. GLD gains are subject to collectibles rates for some holders, and ETF shares cannot be redeemed for physical metal.
Sprott's physical trusts include PHYS for gold, and equivalent trusts for silver, platinum, and uranium. All are exchange-listed and liquid. Qualified PHYS unitholders can redeem shares for physical gold in 400-oz London Good Delivery bars. The tax treatment may be more favorable than GLD depending on your holding period and tax bracket. Sprott's AUM growth from $31.5 billion to $70.1 billion between year-end 2024 and Q4 2025 reflects institutional money moving into this structure at scale.
Private farmland funds are accredited-only and carry lockup periods, but they offer the lowest correlation to public markets of any option on this list. Ceres, now a WisdomTree subsidiary, is the best-documented example at scale. Farmland Partners (NYSE: FPI) provides daily liquidity with a 14.25% five-year CAGR and a $0.20 per share special dividend declared in December 2025. It is a reasonable substitute for investors who cannot accept an illiquidity premium.
For investors who want managed exposure across sub-sectors, PDBC (Invesco Optimum Yield Diversified Commodity Strategy, No K-1) uses active roll-yield optimization and issues Form 1099s rather than K-1s. That tax simplicity has real value for high-income investors at year-end.
The Risks You Need to Price
Commodity volatility is real. Silver fell more than 20% multiple times between 2020 and 2025 before recovering to make new highs. Gold pulled back 10% in early 2025 before resuming its run. If you size into these positions at 15% to 20% of your portfolio and gold enters a six-month correction, you will feel it. The appropriate position size depends on your existing inflation exposure through real estate and your capacity to hold through drawdowns without forced selling.
Currency effects cut both ways. Dollar weakness in 2025 amplified commodity returns for U.S.-dollar holders. A reversal would create a headwind. Gold priced in euros underperformed gold priced in dollars in years when the euro weakened. The reverse is equally true.
Physical storage carries real costs: insured vault custody for precious metals typically runs 0.12% to 0.30% annually. For large positions, that is a manageable fee. For a $50,000 gold position, the cost-adjusted return case still works. For smaller amounts, an ETF or closed-end trust makes more sense.
Farmland is illiquid and subject to weather, commodity price cycles, and water access risk, particularly in the western U.S. The Ceres portfolio spanned 12 states specifically to diversify those risks. Single-state or single-crop farmland funds are a different risk profile entirely.
Academic research reviewed by CME Group found that industrial metals and precious metals do hedge inflation statistically. Energy, agriculture, and livestock do not demonstrate the same consistent relationship across time periods. That finding, covering 1983 to 2021 data, suggests the inflation-hedge argument is strongest for metals specifically and weaker for a broad commodity allocation. It is another reason to be specific rather than passive.
Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.
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About the Author
Jeff Barnes, MBA