Gold – sound and steady,
but overextended in the short term

However, precious metals have outperformed all other asset classes this year. Gold increased in value by 57 percent and silver by over 76 percent – while gold mining stocks rose by around 130 percent (all figures in US dollars and for the period from 1 January to 25 November 2025). Therefore, strong performance in 2025 has typically been associated with an allocation to precious metals and/or gold mines.

It is no surprise, then, that sentiment towards precious metals has shifted, with many investors now reexamining the asset class. Interestingly, however, gold and silver often play only a minor role in various multi-asset fund concepts that can invest across many asset classes.

This does not apply to Sentix Risk Return -M- (ISIN DE000A2AJHP8, share class I). For years, our multi-asset fund has been guided by the motto 'Gold – good and steady'. This is based on a key observation: in the long term, the price of gold correlates with the growth of sovereign debt, particularly that of the US federal debt.

Since 1975, the total amount of outstanding US government debt has increased from 500 million US dollars to nearly 38 trillion US dollars today. Against this backdrop, the rise in the price of gold from 183 US dollars to around 4,200 US dollars seems almost restrained by comparison.

This relationship may not be intuitive for many investors, likely shaped by their experience with gold in the 1980s and 1990s. During that period, the price of gold fell from 800 US dollars to below 300 US dollars by the year 2000. The reason was the exceptionally strong performance of bond markets. In the early 1980s, the US Federal Reserve decided to combat high US inflation by raising interest rates drastically.

That effort was successful, with interest rates declining over the following three decades - ultimately reaching zero and even negative levels in the wake of the global financial crisis. Bonds thus became a popular asset class because they delivered solid returns and often offered attractive diversification benefits, including favourable correlation with equities and other risk-bearing investments.

However, bonds have now largely lost those characteristics. Inflation rates are rising, not least due to increasing protectionism; fiscal discipline has been largely abandoned across many advanced economies; and trends such as artificial intelligence are raising questions about the future resilience of many companies - and even entire economies.

Therefore, it is unsurprising that interest in real assets, and in financial assets without credit and counterparty risk in particular, continues to grow. Many investors’ practical experience suggests that silver and, above all, gold have increasingly replaced bonds as a source of diversification. In today's financial market environment, a multi-asset portfolio can hardly do without an allocation to precious metals.

This is precisely why we have given this asset class a meaningful weight in sentix Risk Return -M- in recent years. At times, gold and silver investments accounted for as much as 30 percent of fund assets, materially supporting performance.

Despite this constructive strategic outlook, however, we have reduced the fund’s precious metal allocation to close to zero for the second time this year. The reason for this is simple: in the short term, the risk/reward trade-off is no longer favourable. Using the sentix Risk Radar, which measures over- and under-estimations across asset classes, we identified a dangerous overextension of the gold trend in October, with a reading of -2.3 standard deviations. We have observed a similar situation only four times before. On average, the gold price was almost six percent lower six weeks later.

Since the risk signal from the Sentix database, the gold price has corrected by around ten percent this time as well — more than the average expected correction. However, the correction is still in relatively early stages, and the gold signal is by no means back to green yet.

Multi-asset funds with precious metal components, such as the Sentix Risk Return -M-, have demonstrated their attractiveness for years as a yield alternative allocation. However, investors should focus not only to this strategic case, but also on whether the fund management consistently incorporates changing market opportunities and risks. With a disciplined, contrarian investment approach based on high-quality data, such as the sentix sentiment and risk radar indicators, the sentix Risk Return funds can offer a valuable portfolio building block for many investors.