5 min read
Everyone asks me this question wrong. “Is gold a good investment?” implies there’s a universal yes or no. There isn’t. Gold is a phenomenal investment for some people and a terrible one for others. The difference comes down to three things: what you’re trying to accomplish, how long you’re willing to hold, and whether you can stomach watching your “safe” asset drop 15% in a bad quarter.
Let me give you the honest answer the clickbait articles won’t.
What Gold Has Actually Done
Gold returned roughly 13% annually from 2020 to 2025. That’s not a cherry-picked stat – it’s five years covering a pandemic, two wars, and the worst inflation spike in 40 years. The S&P 500 did slightly better in some of those years and significantly worse in others.
Here’s the part people miss: gold’s value isn’t in beating stocks. It’s in what it does when stocks are getting crushed. During the 2020 COVID crash, gold held steady while equities dropped 34%. During the 2022 rate-hike panic, gold fell less than half as much as the Nasdaq. That’s the real product you’re buying – insurance that also appreciates.
Three Reasons to Buy Gold Right Now
Central Banks Can’t Stop Buying
Over 1,000 tonnes purchased in each of the last three years. China alone added 225 tonnes in 2025. This isn’t speculation – it’s sovereign nations actively de-dollarizing their reserves. When your biggest buyers are countries with unlimited budgets, that’s a structural floor under prices.
Inflation Isn’t Going Away
Despite aggressive rate hikes, core inflation remains above 3%. Gold has historically performed well in exactly this environment – sticky inflation that central banks can’t fully control without triggering a recession.
The Math on Diversification Is Clear
Gold’s correlation with the S&P 500 is approximately 0.05 over the past two decades. In English: gold and stocks move almost independently. A 10% gold allocation reduces portfolio volatility by roughly 12% – that’s one of the most efficient diversification trades available.
Two Reasons to Think Twice
Zero Income
Gold pays no dividends. No interest. Every dollar of return is price appreciation. In a world of 5% Treasury yields, that’s a real opportunity cost. You need to believe gold will appreciate enough to offset what you’re giving up in income.
It Can Hurt You
Gold dropped 28% from its 2011 peak to its 2015 trough. That’s four years of watching your “safe haven” lose value. If that kind of drawdown would cause you to panic-sell, gold isn’t right for you right now.
My Bottom Line
Gold belongs in most portfolios at 5–10%. Not because it’s “safe” – nothing is – but because it does things no other asset does: it hedges inflation, diversifies equity risk, and holds value during the kinds of crises that destroy paper assets. Just don’t expect it to make you rich. That’s not what gold is for.
FAQ
Will gold keep going up?
The structural drivers – central bank buying, inflation, geopolitical risk – haven’t changed. Most analysts have $3,200–$3,500 year-end targets. But I’ve been in this business long enough to know that consensus forecasts are wrong at least as often as they’re right.
Is gold better than stocks?
Different tools for different jobs. Stocks build wealth. Gold preserves it. Asking which is “better” is like asking whether a hammer is better than a screwdriver.
How much should I allocate?
5% if you’re skeptical. 10% if you’re convinced. 15% if you’re worried about what’s coming. Beyond 15%, you’re making a macro bet, not diversifying.
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