'They're not investments': A CIO overseeing $15 billion warns that all commodities — not just gold and silver — are speculative bets

• Gold prices surged 65% last year, sparking investor interest.
• But Hank Smith of Haverford Trust warns to be cautious when investing in volatile commodities.
• Commodities lack yield and haven't outperformed stocks over the long term.

Gold and silver's wild rally and sudden plunge left investors stunned last week, and the event illustrates what one investment chief says is the problem with commodities: they're just speculative bets at the end of the day.

Gold is up 70% in the last year, even after its 12% plunge last Friday. Silver, meanwhile, is still up 160% over the last 12 months despite its recent 30% meltdown.

But Hank Smith, who oversees more than $15 billion in assets as the chief investment officer at Haverford Trust, says investors ought to be careful about putting money into precious metals — and any other commodities, for that matter.

"It seems to us that, notwithstanding Friday's drop, this run in the last quarter of '25 into '26 is more driven by momentum investing," Smith told Business Insider on Tuesday, before quipping: "Hey, here's an asset, it's going up. We're investing in it because it's going up."

Last year's rally in gold, in particular, is why some financial experts advocate allocating a portion of your portfolio to the metal or other alternative assets, like oil futures. The thinking goes that these are either stores of value that provide safety or appreciation during recessions or inflationary episodes, or that offer returns uncorrelated with stock movements.

But Smith doesn't buy into such a philosophy. Instead, your money is better off in assets that offer yield, like dividend stocks, he thinks. His portfolio has no exposure to commodities such as precious metals, wheat, or oil.

Commodities trading has become more widely available in recent decades through futures and spot-price ETFs. Instead of owning and physically storing assets like gold bars or barrels of oil, investors can simply gain exposure to the price action of these assets by buying funds like the SPDR Gold Trust (GLD) or the United States Oil Fund (USO).

"Those are speculations. They're not investments," he said. "Because physical commodities do not have earnings, they don't have an income statement, a balance sheet, they don't pay dividends or interest — you're buying that with the expectation that someone's going to come along and buy at a higher price. That's the only way you're going to make money."

Smith added that the previous primary users of commodities markets were companies that had to hedge some physical interest or ownership, versus the investors today who are mainly betting on the price to go up or down.

"You go back 30, 40 years ago, the vast, vast majority of buyers in the futures market that were buying contracts on oil had a physical interest in the oil. In other words, they were airlines hedging, there there were other companies that needed to put a hedge to to to protect them, to protect themselves," Smith continued. "Well, today, that's a small minority. It's hedge funds."

Another popular argument for holding gold is that it provides a store of value to keep pace with inflation. While that might generally be true, it has lagged stock performance over the long term, particularly when dividends are reinvested.

"I also don't buy the common notion or refrain that gold is a store of value," Smith said. "Let me tell you something, if you owned gold for 100 years, you don't have much to show for yourself," Smith said. "The return is probably less than a T-bill or your checking account."