Gold & Silver: Buy-and-Hold vs Trend Following

Not everything that glitters is gold

Nicolas Rabener
10 min read
2 Feb 2026

SUMMARY

  • Gold and silver had decades of exceptionally poor returns
  • Applying a trend following strategy improved their Sharpe ratios
  • However, it reduced their diversification potential for equity portfolios

INTRODUCTION

Thematic investing is often best described as performance chasing wrapped in a compelling narrative. Most investors are indifferent to a good story unless it is accompanied by attractive returns. Unfortunately, mean reversion is a powerful force in financial markets, and thematic strategies tend to underperform following periods of exceptionally strong performance. This dynamic makes thematic investing a structurally weak investment approach.

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