Hard Assets, Soft Money: One Year On. A Simple Summary.
Based on the full article Hard Assets, Soft Money: One Year On.
Our core view remains unchanged:
Governments around the world continue to spend more than they earn, and central banks are increasingly supporting these deficits through monetary policy. This environment, often referred to as "fiscal dominance", is creating long-term challenges for traditional savings and fixed income investments.
Over the past year, our three key forecasts have largely played out:
☑ Government bond yield curves steepened
☑ Long-duration bonds continued to struggle
☑ Hard assets such as global equities, key commodities and metals significantly outperformed cash and many traditional asset classes
What Has Worked?
Gold
Gold remains one of the strongest beneficiaries of the current environment and will play out over a longer time frame.
Drivers include:
· Strong central bank buying
· Growing investor demand
· Increased global liquidity
· Concerns over government debt levels – debasement of currency / liquidity
Gold delivered exceptional returns during 2025 and continues to play an important role as a store of value.
Silver
Silver has been one of the standout performers.
Unlike gold, silver benefits from both:
· Monetary demand
· Industrial demand, particularly from solar energy and electrification trends
This dual support helped drive strong gains.
Global Equity
A clear beneficiary of fiscal dominance, financial repression and the ongoing debasement of currency. Equity selection is key, but overall equities protect the real value of money over time.
What Has Not Worked?
Long-Dated Bonds
Traditional government bonds continue to face structural headwinds.
As governments issue more debt, investors increasingly demand higher yields to hold longer-dated securities. This puts downward pressure on bond prices and limits their ability to provide the protection they historically offered balanced portfolios.
Cash
Cash remains useful for liquidity but has struggled to preserve purchasing power over time.
Although deposit and Money Market fund rates have improved, they have generally failed to keep pace with the growth in money supply and government debt.
Why This Matters
We believe the investment landscape has changed.
For much of the last 40 years, investors could rely on:
· Falling interest rates
· Rising bond prices
· Strong diversification benefits from traditional 60/40 portfolios
That environment appears to be ending. Today, investors must consider:
· Rising debt burdens
· Persistent fiscal deficits
· Greater pressure on currencies
· More frequent market volatility
These forces are creating a more favourable backdrop for real assets and a more challenging one for long-duration bonds.
Our Portfolio Approach
Strong investment views are important, but risk management remains paramount.
At Alpha Beta Partners, we do not build portfolios around headlines or forecasts alone. Instead, every investment theme must fit within a disciplined risk framework designed to:
· Protect client capital
· Diversify sources of return
· Manage volatility
· Avoid excessive concentration in any single theme or asset class
The objective is not simply to be proved right. It is to help clients achieve better long-term outcomes through a repeatable and disciplined investment process.
Key Takeaway
The era of fiscal dominance continues.
Government debt levels remain elevated, monetary and fiscal policy are increasingly intertwined, and traditional fixed income assets face ongoing challenges.
In our view, carefully selected hard assets, combined with disciplined portfolio construction and risk management, remain an important part of protecting and growing wealth in the years ahead.
Identifying a reputable investment manager with a credible forward-looking approach to asset allocation and a robust risk management framework is paramount. Alpha Beta Partners’ disciplined execution underpins this methodology.
