Inflation

Inflation

Should you Invest in Gold?

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By Steve Lowrie, CFA

Special to Financial Independence Hub

Should you invest in Gold?

For most investors, no.  Gold does not produce income, has delivered inconsistent long-term returns, and is not a reliable hedge against inflation or market uncertainty. A disciplined, evidence-based portfolio built on equities and bonds has historically provided more consistent growth.

Why Gold gets Attention

I tend to get questions about gold at predictable times:

  • When gold or gold stocks have recently performed well, which triggers greed
  • During periods of political or economic uncertainty, which triggers fear

Both are emotional responses. Neither is a reliable investment strategy.

Is Gold a Good Investment when it is Performing Well?

Not necessarily.

Gold’s price is largely driven by what is often described as the “greater fool theory.” You buy it today hoping someone else will pay more for it later.

Unlike productive assets like stocks or bonds, gold does not generate income. It does not pay dividends or interest, and it does not produce cash flow. In many cases, it also comes with costs such as storage or insurance.

Your return depends entirely on price appreciation, which is unpredictable.

What has Gold’s Long-term Return looked like?

Gold has not delivered reliable long-term returns.

Over extended periods, gold’s return after inflation has been modest and inconsistent. While there have been periods of strong performance, these gains have often been followed by long stretches of little to no real progress.

In contrast, productive assets such as global equities have provided sustained long-term growth.

Investors who try to time gold’s periods of strong performance often take on additional risk and may miss out on the more consistent compounding provided by equities.

Does Gold protect against Inflation?

Not reliably.

There have been periods where gold has outpaced inflation, but there have also been long stretches where it has not.   For example, following its peak in 1980, gold experienced a prolonged period of weak performance, taking almost 20 years to recover in real or after-inflation terms.

More importantly, gold is far more volatile than inflation. Since 1970, gold has been about 10 times more volatile than inflation as measured by the Consumer Price Index.

That level of volatility undermines its usefulness as a stable hedge against rising prices.

Is Gold a Safe Haven?

This is a common belief, but the evidence is inconsistent.

Gold may perform well in certain environments, but those outcomes are unpredictable and not dependable. The idea that gold consistently protects wealth during crises is not strongly supported by data.

Much of the “safe haven” narrative is driven more by perception than by evidence.

Does Gold improve Diversification?

Less than many investors expect.

Gold and commodities do not produce income, and their returns depend on price changes. That makes their long-term outcomes less reliable than productive assets such as stocks or bonds.

A well-constructed portfolio should prioritize asset classes with positive expected returns.

Should you hold any Gold?

Only indirectly, as part of the broader market.

For Canadian investors, a material exposure to gold already exists through mining companies within the TSX Index. Unlike gold bullion, these companies generate earnings and may pay dividends. A diversified portfolio naturally includes this exposure without requiring a separate allocation.

Anything beyond that moves from disciplined investing toward speculation.

A simple framework for Decision Making

When evaluating any investment, I encourage clients to ask three questions:

  1. Does it produce income?
  2. Does it have a reliable long-term expected return?
  3. Does it improve portfolio outcomes in a measurable way?

Gold struggles to meet all three.

That does not make it useless, but it does make it difficult to justify as a core holding in a long-term portfolio.

A Real-World Observation

Over the years, I have had many conversations about gold in social settings.

They often follow a familiar pattern. A discussion about markets turns to gold, and someone becomes very passionate about it. These individuals are often referred to as “gold bugs,” and they tend to hold strong convictions about gold as a store of value or protection against the financial system.

In one conversation, I was told quite confidently that I was doing a disservice to my clients by not allocating the majority of their portfolios to gold.

What stood out was not just the conviction, but the certainty. In investing, that level of certainty is often where the risk lies.

What happened next is what matters.

Over the following decade, gold prices were largely flat. During that same period, a globally diversified portfolio delivered strong long-term returns.

The real cost was not just the lack of return from gold. It was the opportunity cost of missing the growth of productive assets.

That experience reinforced a simple truth. In the long run, evidence tends to be more reliable than conviction.

Bottom Line

Gold tends to attract attention during periods of greed and fear.

But when you step back and look at the evidence:

  • It does not produce income or cashflow
  • Its long-term returns have been inconsistent
  • It is not a reliable inflation hedge
  • Its diversification benefits are limited

For most investors, a disciplined approach grounded in evidence and focused on long-term outcomes remains the more reliable path.

Frequently Asked Questions

Should Canadians invest in gold?

For most Canadian investors, no. A diversified portfolio of equities and bonds provides a more reliable way to grow wealth and manage risk over time. Exposure to gold already exists indirectly through the broader market. Continue Reading…

5 Key Factors that Influence Investment Decisions every Investor should know

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Understand the factors that affect investment decisions so you maximize your portfolio returns

TSInetwork.ca

It’s generally a waste of time to obsess about a short-term downward movement in the economy, stock market or both.

These downward movements can occur for a wide variety of reasons, at any time: even outside the kind of significant downturn caused by COVID-19 or, more recently, higher inflation and the Russian invasion of Ukraine, or the current U.S./Israel attack on Iran.

Still, for every “real” short-term downturn, you can spot a dozen fake-outs: situations where the market or economy looked like it was going into a tailspin but pulled out of the drop and began rising at the last minute.

On the other hand, it does pay to obsess about factors that affect investment decisions like portfolio diversification, investment quality, and the extent to which your portfolio suits your personal goals and temperament.

1.) What is the appropriate asset allocation for my portfolio?

A diversified investment portfolio should be spread across multiple asset classes for risk management and potential growth. The main components typically include:

Stocks provide growth potential and can help protect against inflation over the long term. They tend to be more volatile but historically offer higher returns.

Bonds offer steady income and help reduce overall portfolio risk. They generally provide more stability than stocks but lower potential returns.

Cash equivalents, like money market funds or GICs, offer safety and liquidity but usually provide the lowest returns.

The specific percentage allocated to each depends on your personal circumstances, but maintaining this basic diversification helps balance risk and return potential.

Remember that regular rebalancing helps maintain your target allocation as market values change over time.

Spread your money out across most if not all of the five main economic sectors (Finance, Utilities, Manufacturing, Resources, and the Consumer sector). The proportions should depend on your objectives and the risk you can accept. The Finance and Utilities sectors generally involve below-average risk. Manufacturing and Resources tend to be riskier, and the Consumer sector is in the middle.

As well, balance aggressive and conservative investments in your portfolio, in line with your investment objectives and the market outlook. Above all, avoid the urge to become more aggressive as prices rise and more conservative as prices fall.

Discover more about properly diversifying your portfolio.

2.) How do I find quality investments?

Quality investments can be identified by examining key financial metrics such as consistent revenue growth, stable profit margins, low debt levels, strong cash flows, and competitive advantages within their industry.

The best blue-chip stocks offer strong investment quality. When the market suffers a significant downturn like that prompted by the emergence of the coronavirus pandemic, these stocks generally keep paying their dividends, and they are among the first to recover when conditions improve.

In keeping with the Successful Investor philosophy, we feel stocks that have been paying dividends for five years or more are some of the safest investments you can have. Dividends are a sign of quality and a company’s financial health. Canadian banks and utilities are among the income-paying stocks that we consider to be safer investments.

Learn more about developing a long-term strategy focused on stocks with high investment quality.

3.) Why is it important to have a disciplined savings plan?

A disciplined savings plan creates financial stability by building wealth consistently, protecting against emergencies, and helping achieve long-term goals through the power of compound growth.

If there is one piece of personal wealth management advice you should immediately implement, it’s to have a disciplined plan for saving during your working years. This, above all things, can set you up for optimal investment gains. We talk more about this in 9 Secrets of Successful Wealth Management, which is free for you to download.

Many of our wealth management clients live off their investments. From time to time, they need to sell some of their holdings to supplement their dividend income. But rather than trying to predict price changes or spot highs and lows, we ensure that decisions affecting the client’s portfolio are tailored to his or her circumstances and temperament.

4.) How can I find hidden assets on a company’s balance sheet?)

A company’s hidden assets can be uncovered by analyzing the footnotes in financial statements, examining goodwill valuations, reviewing off-balance sheet items like operating leases or joint ventures, and investigating intangible assets like patents, brand value, and customer relationships. Continue Reading…

Reduce your Credit Exposure Immediately!

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Image courtesy of Pexels: Dave Garcia

By John De Goey, CFP, CIM

Special to Financial Independence Hub

A month ago, I wrote about how the cycles pointed out by Kuznets, Kondratieff, and Minsky, combined with the writings of Joseph Schumpeter seemed to be coming together at the same time. Now that the war in Iran is nearly a month old, it seems the match has been lit that will set the frightening confluence ablaze. It sure looks like we’re in a credit bubble that is beginning to burst.

The challenge when writing about major developments is to sound calm and purposeful when the natural inclination might be to be more animated.  How to get people to take urgent action without coming across as an over-the-top doomsayer?

To begin, I need to stress that I do not see myself as a pessimist.  I’ve been speaking to college students throughout southern Ontario for the past few months and when I tell them about something I call Bullshift (the optimism bias fomented by the financial services industry), they often ask if I’m not being biased and overly gloomy.  I respond both with evidence and by conceding that everyone has biases, so their allegations against me, while not incorrect, are nonetheless likely to be overstated.  My view is that better wealth decisions are made using facts, critical thinking and a dash of skepticism regarding the finance industry’s motives.

If Iran war lingers on, credit markets will be stressed

There are multiple indicators that are now showing credit markets in a state of high stress. The longer the war in Iran persists, the worse the situation is likely to become.  As such, here are a few things you could do immediately to reduce your exposure to credit:

1.) If you have not already done so, build an emergency fund. Many people use the equity in their home for this. The caveat here is that real estate prices are likely to drop in the short term, as well, so be careful. Where possible, consider setting aside money in a high-yield savings account for emergencies. When you’re financially cushioned, you’re less likely to rely on more punitive alternatives when money is tight. Continue Reading…

Retirement Is getting Longer. Your Portfolio should too.

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Retirement may last longer than you expect. The question is: is your portfolio built to keep up?

Image courtesy BMO ETFs/Getty Images

By Alain Desbiens, Vice-Chair BMO ETFs

(Sponsor Blog)

Canada is undergoing a profound demographic transformation that will influence the nation’s economic trajectory and long‑term investment landscape for decades to come. By 2036, Canadians aged 65 and older will account for roughly 23% of the population, up from approximately 19% today. 1

This aging shift is propelled by three powerful forces: rising life expectancy, persistently low birth rates, and immigration serving as the country’s primary source of population growth. Together, these drivers are reshaping not only the size and composition of Canada’s population but also the way investors and financial professionals must approach planning and portfolio construction.

For investors, these demographic changes create a dual reality. On one hand, the economy faces challenges such as higher healthcare and social‑support spending, and increasing strain on retirement income systems. On the other hand, new long‑horizon opportunities are emerging.

Sectors tied to aging populations, innovation in healthcare, longevity planning, and intergenerational wealth transfer all stand to benefit. Exchange‑traded funds (ETFs), with their cost‑effectiveness, diversification, and transparency, offer an efficient toolkit for capturing these evolving trends.

 Key Demographic Trends  

1.) Aging Profile & Generational Mix

Baby Boomers still represent about one quarter of Canada’s population, but by 2029, Millennials are projected to surpass Boomers in absolute numbers. 2 This generational shift will reshape demand across housing, consumption, and financial services. Millennials tend to prefer digital-first advice, sustainable investing, and simple yet sophisticated products — including ETFs — while Boomers continue to prioritize income generation, capital preservation, and tax‑efficient3 decumulation strategies. This changing balance in generational influence will increasingly dictate the types of investment solutions that gain traction in the market.  

2.) Retirement Wave

Canada is entering a period where record numbers of Boomers are exiting the workforce and see increasing need for accumulation and decumulation strategies, and a higher demand for financial, will and decumulation strategies.  

3.) Longevity Realities

Canadians are living longer than ever before, with meaningful implications for retirement planning.

  • Women 65+: Over half are expected to live to age 90. 4
  • Men 65+: More than half reach age 90 as well, though only about 39 per 1,000 do so without a major critical illness. 5
  • FP Canada/IQPF: A 50-60-70‑year‑old has roughly a 25% probability of living to age 94 (men) or 96 (women).6 

This extended lifespan introduces significant longevity risk: the risk of outliving one’s capital. Financial plans must now be stress‑tested for longer retirement horizons, rising living costs, and variable health outcomes.  

4.) Rising Costs for Aging‑in‑Place & Care

Healthcare inflation, long‑term care, and home‑care services are expected to grow sharply. These realities underline the need for specialized insurance solutions, inflation‑aware portfolios, and steady income vehicles that can sustain retirees across multi‑decade retirement periods.  

5.) Wealth Distribution & Investor Segmentation

Canada is on the cusp of a major wealth transition:

  • Gen X is set to surpass Boomers in total net worth. 7
  • An estimated $450 billion will transfer to Gen X over the next decade. 8
  • Total household wealth is projected to reach $10 trillion by 2030, reshaping investor behavior, risk profile8, and demand for advice.9  

The Bottom Line

Canada’s aging demographic is more than a statistic: it is a structural force that will shape markets, spending patterns, and investment requirements. Investors who proactively position for these changes can build portfolios that are both resilient and growth‑oriented. With their flexibility, transparency, and broad exposure to demographic‑driven themes, ETFs remain one of the most effective vehicles for navigating this new era.  

ETF Investment Opportunities  

1.) Income Solutions for Retirees

• Longer lifespans + market volatility = demand for stable, tax-efficient income

• Covered Call ETFs: Combine dividends + option premiums for predictable monthly cash flow

2.) Simplified Diversification

• Asset Allocation ETFs (BMO Conservative ETF – ZCON, BMO Balanced ETF – ZBAL, BMO Growth ETF – ZGRO,BMO All-Equity ETF – ZEQT): All-in-one portfolios with global diversification and automatic rebalancing

• Risk profiles: Conservative (40% equity) → Aggressive (100% equity)

3.) Tax-Efficient Solutions

• T Series ETF: Systematic withdrawals for retirees, combining ETF efficiency with predictable cash flow

• Helps manage longevity risk and optimize after-tax returns  

ETF Strategy Highlights

  • Covered Call ETFs
    • Benefits: Higher yield, volatility reduction, tax efficiency
    • Innovative options by geography or sector

If retirement is on the horizon, now is the time to look beyond when you plan to stop working and focus on how long your portfolio will need to support you. Longer lifespans mean portfolios must balance growth, income, and flexibility before the first paycheque replacement ever begins. Reviewing your asset mix, understanding your future income needs, and considering simple, diversified ETF solutions today can help reduce stress and create more confidence tomorrow. The years leading up to retirement aren’t just a finish line, they’re the foundation for decades ahead.

Want to learn more? Join Alain Desbiens and host Michelle Allen as they explore why longer retirements demand smarter strategies: inflation-aware portfolios and steady income that lasts decades, not just years. Listen to the podcast episode now!

Fund name YTD 1 mo 3 mo 6 mo 1 Y 2 Y 3 Y 5 Y 10 Y Since Inception Inception date
BMO All-Equity ETF
ZEQT		 1.98% 1.98% 2.42% 12.97% 17.42% 22.76% 19.02% — — 13.97% Jan 24, 2022
BMO Balanced ETF (ZBAL) 1.34% 1.34% 1.28% 8.68% 11.37% 14.96% 12.52% 8.08% – 8.70% Feb 12, 2019
BMO Conservative ETF(ZCON) 1.02% 1.02% 0.71% 6.56% 8.40% 11.13% 9.29% 5.18% – 6.27% Feb 12, 2019
BMO Growth ETF(ZGRO) 1.66% 1.66% 1.85% 10.82% 14.39% 18.87% 15.78% 11.02% – 11.13% Feb 12, 2019

Source: BMO GAM as of February 2026

Sources :

1: Stats Canada : Alternative format – Portable Document Format (PDF)

2 : Stats Canada : A generational portrait of Canada’s aging population from the 2021 Census

3:Tax Efficient: as compared to an investment that generates an equivalent amount of interest income.

4: Globe and Mail : Here’s how long Canadian women can expect to live in retirement – The Globe and Mail

5: Globe and Mail : What are the odds of a man reaching 100 in reasonably good health? – The Globe and Mail

6: InstituteFP-PAG2025

7: Generation X may soon beat the boomers in household wealth | Financial Post

8: Risk Profile – Comprised of a client’s risk tolerance (i.e., client’s willingness to accept risk) and risk capacity (i.e., a client’s ability to endure potential financial loss).

9: Household assets to approach $10 trillion by 2030 | Advisor.ca

8: Household assets to approach $10 trillion by 2030 | Advisor.ca

Alain Desbiens is Vice Chair, BMO ETFs. Alain brings more than 30 years of financial services experience to his new role. A seasoned financial expert and former broker, Alain has raised awareness of ETF benefits among advisors, direct and institutional clients through both individual discussions and impactful presentations. Alain is also active in multiple media formats helping provide insights on both the industry and investments. Over his career, Alain held roles as wholesaler, sales manager, branch manager, and investment advisor. He is a graduate of Laval University with a BA in Industrial Relations and has been recognized multiple times at the Canadian Wealth Professional Awards, including winning “Wholesaler of the Year” Award three times.

Disclaimer:

Commissions, management fees and expenses all may be associated with investments in exchange-traded funds. Please read the ETF Facts or prospectus of the BMO ETFs before investing. Exchange-traded funds are not guaranteed, their values change frequently and past performance may not be repeated.

Distribution yields are calculated by using the most recent regular distribution, or expected distribution, (which may be based on income, dividends, return of capital, and option premiums, as applicable) and excluding additional year end distributions, and special reinvested distributions annualized for frequency, divided by current net asset value (NAV). The yield calculation does not include reinvested distributions. [Bold]Distributions are not guaranteed, may fluctuate and are subject to change and/or elimination. Distribution rates may change without notice (up or down) depending on market conditions and NAV fluctuations. The payment of distributions should not be confused with the BMO ETF’s performance, rate of return or yield. If distributions paid by a BMO ETF are greater than the performance of the investment fund, your original investment will shrink. Distributions paid as a result of capital gains realized by a BMO ETF, and income and dividends earned by a BMO ETF, are taxable in your hands in the year they are paid. BOLDYour adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, you will have to pay capital gains tax on the amount below zero.

Cash distributions, if any, on units of a BMO ETF (other than accumulating units or units subject to a distribution reinvestment plan) are expected to be paid primarily out of dividends or distributions, and other income or gains, received by the BMO ETF less the expenses of the BMO ETF, but may also consist of non-taxable amounts including returns of capital, which may be paid in the manager’s sole discretion. To the extent that the expenses of a BMO ETF exceed the income generated by such BMO ETF in any given month, quarter, or year, as the case may be, it is not expected that a monthly, quarterly, or annual distribution will be paid. Non-resident unitholders may have the number of securities reduced due to withholding tax. Certain BMO ETFs have adopted a distribution reinvestment plan, which provides that a unitholder may elect to automatically reinvest all cash distributions paid on units held by that unitholder in additional units of the applicable BMO ETF in accordance with the terms of the distribution reinvestment plan. For further information, see the distribution policy in the BMO ETFs’ prospectus.

This article may contain links to other sites that BMO Global Asset Management does not own or operate. Any content from or links to a third-party website are not reviewed or endorsed by us. You use any external websites or third-party content at your own risk. Accordingly, we disclaim any responsibility for them.

BMO ETFs are managed by BMO Asset Management Inc., an investment fund manager, a portfolio manager, and a separate legal entity from Bank of Montreal.

“BMO (M-bar roundel symbol)” is a registered trademark of Bank of Montreal, used under licence.

Retired Money: Does the Iran conflict justify major changes in Retirement portfolios?

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My latest MoneySense Retired Money column looks at the Iran conflict that erupted suddenly late in February: you can find the full column here: How Retirees should respond to the Iran Crisis.

On Tuesday, the day after Trump TACO’d over his threat to attack Iran’s oil infrastructure (a 5-day reprieve that calmed stock markets at least for the week ending March 27th) Findependence Hub ran a blog that collected input from 14 financial advisors and business owners based largely in the United States. Those sources were collected via a partnership with long-time contributor Featured.com, which works with Linked In to select input. You can find the resulting column here: Financial Experts and Business Owners on what if any moves Retirees should consider if Iran War drags on.

You can get the gist of the messages those experts sent by quickly scrolling down through an admittedly long blog and reading the subheadings highlighted in Blue in the original post. Below I append my favourites, some of which I flagged on social media. If you find the headline summaries intriguing, you’ll find the accompanying observations useful, if not actionable:

Avoid Knee-jerk Liquidation

This is more of a rebalance-and-defend moment than a reason to overhaul the portfolio

Put Capital Preservation over Aggressive Growth

Seek Robust diversification across asset classes and sectors

Rebalance toward defense, yes. Blow up your entire strategy? No.

Make sure existing Allocation is suitably Defensive and Liquid

Don’t over-rotate into a single ‘safe’ bet that can whipsaw when the narrative changes

Remain diversified enough to absorb uncertainty

Reduce volatile individual Growth Names but maintain Diversified Index Funds

Move from Sector Rotation to Structural Resilience

Canadian perspective, with CUSMA renewal looming

The MoneySense column focuses more on the Canadian situation, with input from Toronto-based advisors like John De Goey, Matthew Ardrey and Steve Lowrie, all of which should be familiar to readers of this site and the Retired Money column.

See also a recent blog on Stagflation penned by Dale Roberts of the Retirement Club and cutthecrap investing. Among his many suggestions, the most valuable may be his emphasis on maintaining an “All-Weather Portfolio” catering to all four possible economic quadrants: Inflationary Growth, Disinflationary Growth, Stagflation and Deflation/Recession. Continue Reading…