Every so often, the headlines turn from “market update” to something heavier — a pandemic, a war, a banking crisis, a recession that seems to be spreading everywhere at once. Your portfolio, which felt like a sensible long-term plan a month ago, suddenly feels like it’s standing in the open during a storm.
Two thoughts tend to show up at the same time. The first is some version of “should I get out of the market until this passes?” The second, often right behind it, is “I keep hearing people say you should hold some gold for exactly this kind of situation — is that actually true, or is it just something people say?”
Both questions deserve honest answers, not reassurance for its own sake. So let’s take them one at a time.
“Should I get out until this passes?”
This is the same instinct covered in Stuck Holding a Losing ETF? — just wearing a bigger, scarier costume. The logic feels different because the headlines are bigger, but the mechanics are identical: nobody can reliably tell you when a crisis will bottom out, and moving to cash requires getting two decisions right — when to sell, and when to get back in — instead of just one.
Here’s what history actually shows, without pretending it makes the experience any less frightening in the moment: broad markets have gone through pandemics, world wars, oil shocks, and multiple deep recessions, and in every case on record, they eventually recovered and went on to new highs. That’s not a guarantee about the next crisis — nobody can promise that — but it’s a meaningfully different fact than “the market might never come back,” which is the fear that actually drives panic-selling.
The honest, harder truth is this: a crisis doesn’t create a good reason to sell that didn’t already exist before the crisis started. If your original reasoning for owning what you own hasn’t changed — as covered in When Should You Sell an ETF? — then a scary headline isn’t a new reason on its own. It’s the same test, under more pressure.
What actually prepares a portfolio for a crisis (built in advance, not reacted to in the moment)
The honest answer to “what should I do when a crisis hits” is: most of the useful preparation happens before the crisis, not during it. By the time the headlines are frightening, you’re mostly choosing between a small number of decisions you should have made earlier while you were calm.
An emergency fund outside the market matters more than any portfolio move. Cash set aside for 3-6 months of expenses, sitting in a savings account rather than invested, means a downturn never forces you to sell investments at a bad time just to cover rent or groceries. This single habit prevents more crisis-driven bad decisions than any specific asset choice.
Genuine diversification does real work here. As covered in “I Own 5 ETFs, So I’m Diversified” — Are You Sure?, a mix of asset classes — stocks, bonds, and cash-equivalents in a proportion that fits your timeline — tends to behave differently across a crisis than a portfolio concentrated in a single asset class or sector. Bonds in particular have historically cushioned some (not all) equity downturns, precisely because they respond to different forces.
Matching your timeline to your holdings matters more in a crisis, not less. Money you’ll need in the next year or two shouldn’t be sitting somewhere that can drop 20% on short notice, crisis or not. If a downturn is causing real financial stress rather than just discomfort watching a number, that’s usually a sign the money was in the wrong place for its timeline — a planning issue, not a market-timing one.
A downturn is also when a standing plan quietly pays off. If you’re dollar-cost averaging on a schedule, as covered in What Price Should You Buy At?, a crisis doesn’t require you to do anything differently — the same monthly amount simply buys more shares at lower prices, without you having to decide anything new in the moment.
So — should you own gold?
This is genuinely a topic where thoughtful people land in different places, so it’s worth laying out the actual case on both sides rather than a one-line verdict.
The case for holding some gold: Gold doesn’t depend on any company’s earnings, isn’t a claim on any government’s debt, and historically hasn’t moved in lockstep with stocks — in some crises, it has held up or risen while stock markets fell, which is the entire argument for holding it: not to grow your wealth, but to zig when your other assets zag. Some investors and advisors suggest a modest allocation — often cited in the range of 5-10% of a portfolio — as a diversifier for exactly this reason, treating it more like insurance than an investment.
The case against, or against too much of it: Gold produces no dividends, no interest, and no earnings — its price is driven entirely by what someone else is willing to pay for it, which means its long-term returns have historically lagged stocks by a wide margin. It’s also not a reliable hedge in every crisis; there have been downturns where gold fell alongside stocks rather than protecting against the drop, because “safe haven” behavior isn’t guaranteed to repeat the same way every time. For a long-term investor with a genuine diversification plan (stocks, bonds, an emergency fund) already in place, gold can end up being an extra layer of complexity that doesn’t add much beyond what a solid bond allocation already provides.
The honest middle ground: Gold isn’t “right” or “wrong” as a blanket rule — it’s a trade-off. It can play a legitimate small role as a diversifier for someone who wants an asset that doesn’t move with stocks and bonds and is comfortable holding something that pays no income and can still be volatile on its own. It’s a weaker fit for someone chasing long-term growth who already has a diversified stock-and-bond portfolio and an emergency fund doing the actual crisis-preparation work. If you’re considering it, the same journal habit from Should You Write Down Why You’re Buying an ETF? applies here too: write down specifically what role you expect it to play, before you buy it — “insurance I don’t expect to grow” is a very different reason than “this will go up during the next crisis,” and only one of those is something gold has reliably done.
Some investors and advisors suggest a modest gold allocation — often cited in the range of 5-10% of a portfolio — as a diversifier, treating it more like insurance than an investment.
The plan that actually works, regardless of which crisis comes next
Nobody can tell you whether the next global shock will be a pandemic, a war, a banking crisis, or something nobody’s named yet. That uncertainty is exactly the point — a portfolio built to survive “whichever crisis happens” looks the same regardless of the headline: an emergency fund outside the market, genuine diversification across asset classes and geography, holdings that match your actual timeline, and a standing plan you don’t have to reinvent under pressure.
The goal was never to predict the next crisis. It was to build something sturdy enough that you don’t have to.
Related Articles
- How to Build a Dividend ETF Portfolio for Retirement Income →
- Stuck Holding a Losing ETF? Here’s How to Think It Through →
- When Should You Sell an ETF? A Beginner’s Guide to Not Second-Guessing Yourself →
Enjoying This? Get More Like It
Join the newsletter for practical, no-hype dividend ETF strategies — delivered straight to your inbox. No spam, unsubscribe anytime.
A quick, honest disclaimer: I’m not a licensed financial advisor, and this isn’t personalized investment advice. It’s a framework I use and believe in, but your situation is your own — for anything specific to your finances, it’s worth talking to a qualified professional. Investing involves risk, including the potential loss of principal, and past performance doesn’t guarantee future results.