THE GOLD STANDARD OF DIVERSIFICATION

Everyone’s heard the old saying: “Don’t put all your eggs in one basket.”

That’s the essence of diversification — protecting yourself so one event, market, asset class, or policy change doesn’t derail your entire plan.

Diversification isn’t about chasing the highest return every year. It’s about survival — making sure you can withstand uncertainty and still move you towards your long-term goals.  Concentrated bets can make you look smart when they work, but they can also leave little room for recovery when they don’t. Diversification keeps you standing when things don’t go your way.

Here are two examples of diversification in practice — one more traditional, and the other a little less traditional — both built around the same common principle:

1. The importance of spreading risk, maintaining flexibility, and positioning yourself to weather whatever comes next.
2. Or, put another way: diversification means saying sorry for something but never apologizing for everything.

Part 1

Gold: The Classic Case for Diversification

Gold has been the headline act in 2025.

While most conversations this year have revolved around AI, gold has quietly become one of the best-performing asset classes. Priced in U.S. dollars, it’s up more than 50% over the past year, nearly 30% in the last three months alone, and has recently reached all-time highs.

Typically, gold is seen as a safe-haven asset — the place investors turn when markets are volatile or uncertainty runs high. Yet today, we’re seeing something different: gold rallying alongside rising stock markets, positive bond performance, and even a surge in Bitcoin.

So, why the rally?

• Strong Appetite: Central banks are on pace to match or even exceed last year’s record gold purchases, diversifying away from the U.S. dollar.
• Monetary policy tailwinds: As central banks pivot toward rate cuts, real interest rates decline — historically a positive backdrop for gold.
• Fiscal pressures: Rising U.S. deficits and a weaker US dollar boost demand for alternative stores of value.
• Geopolitical tension: Conflicts, energy concerns, and shifting global alliances are keeping investors focused on safety and diversification.
• Healthier gold companies: Many miners have deleveraged, strengthened their balance sheets, and are now rewarding shareholders through dividends and buybacks.

So, is there still a case for gold here?

As Blake Millard wrote in The Sandbox Daily titled “All That Glitters is Gold,” the case for gold today is as much about protection as it is about opportunity — a unique hedge in a world of fiscal strain and uncertainty.

Still, not everyone views gold as essential. Ben Carlson, in A Wealth of Common Sense (“Why I Don’t Own Any Gold”), reminds us that while gold performs well in certain environments, it can go long periods doing very little. From 1980 to 2019, it returned roughly 2.8 percent per year versus about 11 percent for stocks. His point:

“It would be nice to own gold when it goes through boom times like 2025, but you have to get used to not always owning the most popular asset each year.”

That’s the heart of diversification.

Gold isn’t meant to lead the pack — it’s meant to behave differently. When equities and bonds both struggle, gold often holds its own or moves in the opposite direction. That contrast is precisely what makes it valuable in a balanced portfolio.

In other words, gold’s worth lies not in timing it right, but in owning something that doesn’t move with everything else. It’s a reminder that true diversification isn’t about prediction — it’s about preparation.

Part 2

Why Account Mix Matters as Much as Asset Mix

If gold represents the traditional side of diversification — spreading risk across different asset classes — then tax diversification is its quieter counterpart: spreading your wealth across different account types so that changing tax rules or income levels don’t dictate your future.

Just as no single investment should carry your entire portfolio, in an ideal situation, no single type of account should carry your entire financial plan.

In Canada, that means thinking carefully about where your savings live:

• TFSA: grows and withdraws completely tax-free.
• RRSP/RRIF: contributions are deductible today, but withdrawals are taxed later.
• Non-registered accounts or corporate accounts: offer flexibility in timing and tax character of income.
• Other accounts such as RESPs or FHSAs add goal-specific advantages.

On paper, it’s tempting to focus entirely on whichever option seems to give the biggest mathematical benefit today — whether that’s maximizing RRSP deductions or prioritizing TFSA growth.

But real life isn’t lived on paper. Tax rates change. Governments change. Your income, deductions, or residency might change.

TAX DIVERSIFICATION BUILDS FLEXIBILITY INTO YOUR PLAN

It gives you choices:

• When retirement comes, you can draw strategically from the accounts that make the most sense for your situation that year.
• If tax rules shift or new credits appear, you can adapt without overhauling your entire plan.
• If markets underperform or a business opportunity arises, you can adjust your cash flow efficiently.

In short, tax diversification gives you control, not just optimization.

It’s about ensuring that your future financial decisions aren’t boxed in by a single tax treatment.

The Common Denominator: Diversification

Whether we’re talking about gold or tax strategy, the lesson is the same.

Diversification isn’t about maximizing one outcome — it’s about minimizing regret.

Gold can help balance your portfolio when markets surprise you.

Tax diversification can help protect your income when legislation surprises you.

Both create resilience — the ability to stay on track through whatever the world, the economy, or policy might throw your way.

That’s exactly how we design every plan: diversified by investment, diversified by tax structure, and built around one goal — helping you move confidently toward the life you’re planning for, no matter what changes along the way.

 

Adil Mohammed, CFP®, CIM®, FCSI®
Wealth Advisor
Assante Financial Management Ltd.

 

The opinions expressed are those of the author and not necessarily those of Assante Financial Management Ltd. This material is provided for general information and the opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on the information presented, please seek professional financial advice based on your personal circumstances. Insurance products and services are provided through Assante Estate and Insurance Services Inc.