Is Gold Truly a "Safe Asset"? A Data-Driven Review of Prices, History, and Academic Evidence (October 2025)

Is Gold Really the "Safe Asset" People Claim?

— A Deep Dive Through Price Data, History, and Academic Evidence (As of October 2025)

Introduction: Let's take apart the image that "gold equals stability"

Whenever people talk about investing or protecting wealth, we often hear "gold is a safe asset." News headlines about wars, inflation, or currency anxiety routinely mention gold buying. But how "safe" is it really? In this article we will trace concrete numbers around gold prices, currencies, and macro drivers to unpack what "stability" actually means, and explain—drawing on academic research—when gold helps and when it disappoints, in a lecture-style walkthrough.

Think of gold as the emergency rations you bring on a voyage without a map. When a storm hits, you are glad to have it. On a calm route, it is bulky and not as useful as you imagined. The key is "when, in what situation, and how much" you carry.

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Chapter 1. Read the "now" through data (October 2025)

1. A new phase in the global price

As of October 2025, gold has reached a record-high zone above USD 4,000 per ounce (USD 4,031 intraday in London on October 7). Reports cite a roughly +50% surge year-to-date. The drivers overlap: geopolitical risk, uncertainty around U.S. monetary policy, continued central-bank buying, and ETF inflows.

1. Japan's retail price has settled in the JPY 20,000 per gram range

The benchmark posted by Tanaka Precious Metals—a bellwether for domestic retail—first broke JPY 20,000 per gram in late September 2025. At 14:00 on October 10 it was quoted at JPY 21,529 per gram (tax-included retail).

1. Yen-denominated gold = gold price × FX

Remember that one troy ounce equals 31.1035 grams. If gold trades at USD 4,000 per ounce and USD/JPY is 152, the implied value is about JPY 19,500 per gram (4,000 × 152 ÷ 31.1035). Japanese retail quotes sit above that theoretical number because of consumption tax and small-lot fees, so a JPY 20,000-plus display is perfectly consistent. Actual ranges in early October were JPY 19.1–19.8 thousand per gram.

Mini takeaway: The headline "JPY 20,000 per gram" is eye-catching, but the components are global price gains + yen weakness + domestic tax and margin. For Japanese investors, yen-based volatility can be amplified by FX compared with the dollar gold price.

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Chapter 2. The day the gold peg was undone

People often say "gold used to have absolute value." The turning point was the 1971 Nixon Shock when the U.S. suspended direct convertibility between the dollar and gold. The Bretton Woods system collapsed de facto, currencies shifted to fiat money, and foreign exchange moved to a floating regime. In short, the state's promise—"you can always redeem dollars for gold"—disappeared.

From that day forward, gold's role moved from "the foundation of money" to "an asset with a market price." Prices are now driven by a mix of real interest rates, the dollar index, risk-off sentiment, central-bank demand, and other financial factors.

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Chapter 3. Demand pillars: central banks, investors, and jewelry

Recent data show that central-bank purchases are a powerful force. Worldwide, central banks bought over 1,000 tons annually for three straight years through 2024. In 2025 the monthly data through August still show net buying, and surveys indicate 95% of central banks expect global gold reserves to rise over the next year. The structural driver is reserve diversification—especially among emerging economies seeking to reduce dollar dependency.

Investor flows are also back, with ETF inflows returning. Multiple reports note that in 2025 higher holdings among Western ETFs contributed to price strength.

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Chapter 4. Quantifying "stability": volatility and correlation

How do professionals measure gold's "stability"? They look at volatility (standard deviation) and correlation with other assets.

• Volatility

Long-run data put gold's annualized volatility at roughly 15% (method and currency matter). Some studies say that is similar to long-run S&P 500 volatility, yet yen gold feels bumpier because it embeds FX moves. In a year like 2025, the lived experience is not "stable" but rather "a risk asset with sharp rallies and pullbacks."

• Inflation and real rates

Research suggests gold's hedge effect strengthens in periods of high inflation or falling real rates. But short-term behavior is messy; significance varies by country and sample period. Several papers on Japan conclude it is only a partial hedge over the long run.

• Insurance value in crises

During shock moments like early COVID, gold often falls less or rises faster, helping cushion equity drawdowns. However, the inverse correlation is not guaranteed, so the position size matters when treating it as insurance.

Mini takeaway: Do not equate "stable" with "small price moves." Gold's stability lies in its portfolio reinforcement during stress. The price itself is highly variable, as the 2025 whipsaws remind us.

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Chapter 5. How to interpret 3,000 yen → 20,000 yen per gram

Many readers remember gold at the JPY 3,000 level per gram roughly 20 years ago. Indeed, yen gold traded in the JPY 3,000 range in the mid-to-late 2000s. From there, yen depreciation and higher global prices pushed it toward JPY 20,000. In 2025 we have simultaneous record dollar prices and a weak yen, so domestic prices jumped.

• Global price factors: gold supply-demand, real rates, and risk sentiment.
• FX factors: moving from JPY 70 per dollar to JPY 150 pushes up yen prices.
• Domestic factors: sales tax and small-lot margins.

The key is decomposition:

So it is not simply that "gold itself went up sixfold"—it is the joint effect of gold × FX × domestic markups.

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Chapter 6. Gold versus real estate: which is truly "stable"?

The big question—"Isn't a good property near a train station more stable?"—requires comparing their natures.

1. Price movement at the macro level
• Gold: Extremely liquid, moves every day. In 2025 it experienced a ~+50% rally year-to-date.
• Japanese land and housing: Nationwide prices rose around +2–3% per year in 2024–2025 (the fastest pace in 34 years). Urban condo indices show roughly +10% annual gains. But real estate has large regional differences, and downturns can last years (think of the post-1990s adjustment).

1. Liquidity and transaction cost
• Gold: Physical and ETFs are easy to trade; storage costs exist but you can exit quickly.
• Real estate: Illiquid with high friction (registration, brokers, taxes). Apparent price smoothness often hides the fact that some quotes are "prices at which nothing sells."

1. Local and idiosyncratic risk
• Gold: Backed by global demand with relatively little regional bias.
• Real estate: Exposed to location, building condition, regulation, plus disasters and demographics.

1. Correlation and diversification
• Gold: Low and unstable correlation with stocks and bonds, so it helps diversify portfolios.
• Real estate (especially your primary home) behaves more like a consumption good; the optimal allocation varies by person and purpose.

Key insight: If you define stability as small observed price swings, prime real estate can look steadier. But from the angles of liquidity, resilience to geopolitical shocks, and currency diversification, gold delivers a kind of insurance-style stability you cannot easily replace. In practice they are complements, not substitutes.

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Chapter 7. What the literature says about gold's benefits and limits

• Long-term purchasing power: Many studies support gold as a very long-run store of purchasing power against inflation and currency debasement, although short- to medium-term outcomes can diverge.
• Inflation hedge in Japan: Evidence is weaker than in the U.S. and often partial. Results depend on the inflation regime and movements in real rates.
• Crisis performance: Gold tends to show relative defensiveness during sell-offs, but do not over-trust a permanent negative correlation.
• Misunderstood volatility: Some long-run statistics put gold's volatility close to equities, and years like 2025 feel far from "stable." Think in terms of stable insurance and diversification, not a stable sticker price.

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Chapter 8. Why is gold soaring in 2025? Stacking structural drivers

1. Persistent central-bank buying driven by geopolitics and reserve diversification, especially among emerging-market central banks.
2. ETF money returning, with Western ETFs increasing holdings and strong demand for bars and coins among individuals.
3. Real-rate and policy uncertainty: Rate-cut speculation and concerns about fiscal or sovereign credit risk make gold relatively more attractive.
4. Foreign exchange (yen weakness): For Japanese investors, a weaker yen is a strong tailwind for yen-denominated gold.
5. Geopolitical shocks: Headlines about ceasefires can trigger short-term pullbacks, yet in an uptrend they often become buy-the-dip moments.

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Chapter 9. Is gold a "stable asset"? How to frame the conclusion

So is gold stable? The answer has two layers.

• Price stability? Not really.

A ~50% rally year-to-date in 2025, multi-percent swings in a single day, and FX amplification all show that gold is volatility-prone in price terms.

• Functional stability? Yes, as insurance/diversification.

Gold tends to work during currency confidence shocks, high inflation, and geopolitical crises. It often lowers correlation with stocks and government bonds, and historically helped preserve purchasing power (with country-to-country variation). That insurance function is comparatively stable.

Bottom line: Gold's price is not stable; its function is. Owning gold can provide psychological comfort—the feel of a tangible asset—but data also support its role as portfolio insurance. Conversely, relying solely on gold is dangerous. Gold delivers when combined with equities, bonds, cash, and real estate.

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Chapter 10. A practical guide: five questions to ask yourself

1. What is your objective?
2. In which currency will you hold it?
3. Which wrapper will you use?
4. Quantify scenarios ahead of time
5. Assess diversification for the whole portfolio

Are you chasing capital gains, or do you want currency diversification and crisis insurance? The goal dictates position size. Yen gold = gold × FX. Decide whether you hedge and how you diversify into foreign currencies. Physical bars and coins entail storage costs and bid-ask spreads. ETFs charge fees and can have tracking error. Futures require rolling and margin management. Gold miners layer corporate risks on top of gold prices. Example: USD 4,000 → 3,600 per ounce (-10%) × JPY 152 = -10% in yen terms. If the yen strengthens to JPY 140, the yen decline widens to about -18%. Work through these two-axis sensitivities in advance. Does gold's lower correlation help soften drawdowns in other assets? Back-test actual crisis periods to see the practical effect.

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Chapter 11. Common myths versus facts

• "Gold always beats inflation."
• "Gold is always safe."
• "Real estate never doubles or triples."

Gold tends to preserve purchasing power over very long spans, yet short- and medium-term mismatches are common. Sharp drops happen. A ceasefire or risk-on headline can knock prices down by several percent within days. Annual indices look smooth, but transaction-level data show double-digit gains in selective urban segments, and illiquidity often hides the true volatility.

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Chapter 12. Takeaways for your decisions

1. Gold is insurance whose function is stable, not an asset with a stable sticker price.
2. Yen gold is heavily influenced by FX. Always pair your view on dollar gold with an FX assumption.
3. Central-bank demand and ETF inflows are current supports, but headlines can still trigger pullbacks—phase in rather than go all-in at once.
4. Gold and real estate complement each other: gold for liquidity and geopolitical resilience, real estate for housing, income, and collateral value. Assign roles by objective.
5. Work from the whole portfolio downward. Design the split across stocks, bonds, cash, gold, and property first. Keeping gold at roughly 5–10% as an insurance sleeve remains a reasonable classic guideline (always adjust to your own case).

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Appendix: 2025 quick-reference cheat sheet

• 1 troy ounce = 31.1035 g. USD 4,000 per ounce equals about USD 128.6 per gram. With USD/JPY at 152, that's about JPY 19,500 per gram.
• Domestic retail prices (Tanaka Precious Metals) include tax and small-lot margins, so they can sit several to double-digit percent above theoretical values. First break above JPY 20,000 in late September; JPY 21,529 on October 10.
• Drivers of the 2024–2025 rally: central-bank buying (over 1,000 tons for three consecutive years), ETF inflows, expectations for lower real rates, and geopolitical stress.
• Downside triggers: ceasefire news, rate-hike expectations, rising real rates, dollar strength, profit-taking. Example: a brief dip below USD 4,000 on October 9.

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Closing: A question for you

Has the meaning of "stability" become clearer? Gold is not an asset with a stable price, yet as insurance with a stable function, it deserves a seat when currency, political, and market uncertainty is high. Remember: stability is not the property of a single asset—it is the outcome of portfolio design. Gold, real estate, stocks, and bonds can all deliver stability when seated in the right place. Use that lens to craft your own definition of stability.