Gold has ripped over the past year. Explanations vary, but the returns have been undeniable. I like, and own, gold as a long-term store of value asset, but it’s important to remember its limitations during sudden downturns. I had clipped this WSJ quote from an article published 6-years ago during the Covid crash (emphasis mine):

The violent downdraft in stocks has created an acute need for cash. Declines in gold and other areas of the market often associated with stability, like the shares of utilities firms, show that investors are being forced to raise cash to make up for losses from stocks, some traders said - including margin calls to investors who had used stocks as collateral to buy other securities. With the value of those positions shrinking substantially, banks can demand repayment, triggering forced sales of unrelated assets. “You have a tremendous amount of people who needed cash,” said George Gero, managing director at RBC Wealth Management. “There is no haven at the moment with the exception of Treasurys.”

The quote explains why gold failed to act as a Safe Haven and retain value when needed most. As noted, margin calls often drive forced selling so it’s important to check-in on the current state of margin (from Grok):

As of January 2026, Margin debt stood at $1,279 billion (or $1.279 trillion).

It marks the ninth consecutive monthly increase and the eighth straight record high in nominal terms.

This puts margin debt at all-time nominal and inflation-adjusted highs

Suffice it to say, margin calls are a bigger threat than ever, and debts are paid in USD. Be prepared to see that gold go down, and stay out of situations that force you to sell. Sage advice from the Intelligent Investor, Ben Graham:

“The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation.”