Here's a question worth asking: When was the last time you saw a precious metal nearly double the S&P 500's returns? If you had just 10% of your portfolio allocated to these alternatives, you dramatically outperformed investors stuck entirely in traditional equities.
While Washington spent 43 days in the longest government shutdown in U.S. history—1.4 million federal workers either furloughed or working without pay—the markets barely blinked. The S&P 500 returned a modest 0.4% during the shutdown itself and closed the quarter up 2.7% (16% for the full year). Tech stocks carried most of that weight, continuing their dominance through 2025.
The Federal Reserve cut rates twice in Q4 (October and December), bringing the Fed Funds rate down to 3.50-3.75% by year-end. Expectations point to 2-3 more cuts in 2026. For you as an investor, this means your traditional fixed income yields will likely compress—making alternative sources of return even more valuable.
But if you were paying attention to alternatives and private markets, you witnessed something far more interesting—and potentially profitable.
Gold didn't just perform well in 2025—it crushed it. The precious metal surged 66% for the year, dramatically outpacing the S&P 500's already solid 16% return. Here's what that means for your portfolio: if you had allocated just $10,000 to gold at the start of 2025, you'd have $16,600 by year-end—a $6,600 gain compared to $1,600 from the S&P 500 on the same investment.
When uncertainty creeps into markets, investors historically rush to gold as a safe haven. But 2025 wasn't just about safety—it was about inflation hedging as governments worldwide grappled with persistent price pressures. As central banks worked to curb inflation while investors worried about long-term purchasing power, gold hit all-time highs quarter after quarter. For portfolios feeling the squeeze of inflation eating into real returns, gold provided genuine protection.
If gold's 66% return impressed you, silver's performance will shock you: 145% in 2025. That same $10,000 investment? It would be worth $24,500 today—a $14,500 gain in just 12 months.
Yes, you read that right. Silver more than doubled in value in a single year. To put that in perspective, an ounce of silver now costs more than a barrel of oil—something almost unthinkable just 24 months ago. If you're wondering why you didn't hear more about this opportunity, you're not alone. Most traditional financial advisors don't allocate to commodities, leaving their clients on the sidelines of one of 2025's biggest wealth-building opportunities.
What's driving this? Silver sits at an interesting intersection. It's both a precious metal (benefiting from safe-haven demand like gold) and an industrial metal (with 55% of annual demand coming from manufacturing and technology). Strong industrial demand, historically low inventories, and looming export controls created what FXStreet calls a "perfect storm" for silver prices. For forward-thinking investors, this trend likely has legs into 2026.
Not everything that glitters turned to gold in 2025. Cryptocurrency started the year with promise: supportive regulatory frameworks, robust ETF inflows, and growing institutional adoption. Bitcoin hit all-time highs in October, up 64% from its yearly trough. If you bought at the bottom, congratulations. But if you bought near the peak...
Then sentiment shifted. Fast. By year-end, Bitcoin had given back all those gains, finishing down 6.34% for 2025. Investors who entered at the wrong time experienced severe losses, while those at the bottom rode a roller coaster back to zero. This isn't a condemnation of crypto—it's a reminder that timing volatile assets is nearly impossible.
If you needed a reminder that volatility isn't confined to traditional markets, crypto delivered it in spades. More importantly, it reinforced why diversification across uncorrelated assets matters so much.
Here's the key takeaway: public equities performed adequately in 2025, but alternatives—specifically commodities—told a dramatically different story. While the S&P 500 delivered steady mid-teens returns, investors who allocated to gold and silver saw multiples of that performance. A balanced portfolio with even 10-15% in alternatives would have substantially outperformed a traditional 60/40 stock/bond allocation.
But here's what matters more than past returns: diversification across asset classes helps you manage the unpredictability that's guaranteed to come. 2025 proved this principle. While stocks did fine and crypto crashed, commodities soared. No one could predict this in advance—but diversified investors captured the upside regardless.
Public markets react to macro shocks, political uncertainty, and sentiment swings. Alternatives like commodities and private markets often move differently. They're not perfectly correlated to stock prices, which means when equities stumble, well-chosen alternatives can provide ballast—or even profit.
You don't need to become a commodities trader or crypto speculator to benefit from this principle. Private market investments—real estate-backed debt, for example—offer similar diversification benefits with more stability and transparency than volatile assets like crypto. The question isn't whether to diversify into alternatives; it's which alternatives match your risk tolerance and time horizon.
This is precisely why private markets matter for your portfolio in 2026 and beyond. They're not subject to the same daily sentiment swings as public stocks. They're not as vulnerable to macro headline risk. And crucially, they offer yields that remain attractive even as other asset classes compress.
As the Federal Reserve continues cutting rates, traditional fixed income yields will compress further. That 4-5% CD you're earning today? Expect it to drop toward 2.5-3.5% in 2026. Your high-yield savings account will follow. But private credit—backed by real assets like real estate—continues offering compelling risk-adjusted returns in the 8-10% range. For income-focused investors, this spread represents real money.
Gold's 66% and silver's 145% returns were extraordinary. They won't repeat every year. But what they demonstrate is timeless: spreading your capital across public markets, commodities, and private markets creates resilience. No single asset class performs best in every environment. Diversification isn't just portfolio theory—it's practical wealth preservation and growth.
As you plan for 2026, consider where your portfolio sits. Are you overexposed to public equity volatility? Are your fixed income holdings delivering adequate yield as rates decline? Is your emergency fund earning competitive returns, or is it sitting in a 3% savings account while inflation runs 3-4%? These are the questions that separate investors who build wealth from those who merely preserve it.
The lesson from Q4 2025 is clear: diversified investors who looked beyond traditional stocks and bonds captured extraordinary opportunities while managing risk. As you position your portfolio for 2026, the question isn't whether alternatives matter—it's how much exposure you should have. The next surprise is coming. Will your portfolio be ready?
If you’re looking for diversification, higher yields and exposure to private markets, take a look at how Groundfloor Notes compare to traditional and alternative credit products.