Gold Is Headed Higher. There’s a Safer Way to Bet on the Rally.

A one kilogram gold bar at the ABC Refinery in Sydney, Australia. (Brendon Thorne/Bloomberg)

The stock market’s wall of worry is made of gold.

The feel-good asset in times of economic duress, real or imagined, gold is like Bitcoin for investors who are old enough to remember when cryptocurrencies didn’t even exist.

If the world order implodes, and fiat currencies and stocks are damaged—fears that show few signs of abating, no matter how far-fetched—bars of gold will still exist, as will crypto. Should the world get unusually kinetic, it is comforting to know gold’s melting point is 1,943 degrees Fahrenheit.

In the perpetual battlefield of markets and politics, demand for gold shows few signs of abating.

Investors and foreign central banks are buying it to hedge President Donald Trump’s tariff diplomacy, to offset changes reshaping economic globalization, and to assuage fears that artificial intelligence is fueling a stock market bubble.

Gold’s special quality as an all-purpose, antianxiety asset for investors is evident in its performance. The metal is up 43% this year alone, compared with 14% for the S&P 500 index, and the U.S. government’s gold reserves are now worth $1 trillion.

The SPDR Gold Shares exchange-traded fund (ticker: GLD), which is backed by physical gold and tracks its price, has outperformed the S&P 500 over the past three years, rising an average 32% a year, compared with 24% for the benchmark index.

Gold is a leading actor in the Kabuki theater of global central banks that hope to topple the U.S. dollar’s primacy. The mere act of amassing gold, as China is doing, exacerbates erroneous speculation that the U.S. dollar isn’t the world’s only reserve currency.

Interestingly, nary an investor, strategist, or analyst is warning that the gold market is in a bubble or at risk of getting tossed aside by momentum traders who want another toy to play with.

This column last focused on gold in late May as frightened investors questioned Trump’s plan to remake the U.S. and global economies.

Then, as now, gold was outperforming the S&P 500, creating challenges for new investors. Our recommended call option spread—buying the September $310 call and selling the September $330 call—just expired with a profit.

Since the reasons for gold’s rally remain intact—despite a recent slowdown in central bank buying—aggressive investors can reset the trade.

With GLD at $355.47, investors could buy the January $360 call and sell the January $375 call for $5.25. Investors who are willing to buy the ETF at lower prices could also sell the January $340 put option for about $5.80.

Should GLD expire at $375 or above, the spread’s maximum profit is $9.75. If it is below $340 at expiration, the trade fails. During the past 52 weeks, the ETF has ranged from $236.13 to $355.57.

Put sellers must understand they are positioning to buy gold at lower prices. Everyone likes that, in theory, because pullbacks seem improbable. But few investors feel sanguine when the stock is below their put strike. They whine and act as if they have been mugged.

Still, the allure of controlling hot assets with options is capital preservation and risk management. Options cost less than the underlying asset, and risk is limited to the money spent.

The January expiration covers the October and December meetings of the Federal Reserve’s interest-rate setting committee, countless economic reports, and gold market data that will be used to critique the health of the U.S. and global economies.

The avalanche of news will likely accentuate market tension, and that should boost gold, at least through this trade’s expiration.

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