What Is Gold Like As An Investment?

While many investors see gold as a reliable store of value, it’s actually more volatile—and often riskier—than stocks. Gold tends to perform well under certain conditions, both of which have helped fuel its recent surge:

• Inflationary periods: Since gold is limited in supply, when more money is printed or the value of currency declines, sellers often demand higher prices for gold.

• Geopolitical uncertainty: In times of global tension or financial instability, investors often turn to gold as a safe haven when other assets feel too risky.

However, it’s important to remember that gold doesn’t generate income. Unlike stocks or bonds, it has no yield. This means gold’s value can decline when yields on other assets rise—especially when what's called the "real yield" increases.

Real yield

is the return you get on cash or fixed-income investments after accounting for inflation. For example, if interest rates are 3% and inflation is 2%, the real yield is 1%. As real yields rise, gold tends to become less attractive. That said, there are exceptions. Interestingly, much of gold’s recent rally has occurred even as real interest rates have gone up.

What Is The Role Of Gold In A Portfolio?

f you're thinking about investing in gold, there are several ways to do it—none of which require a pickaxe:

• Gold ETFs: These exchange-traded funds, which we include in our classic portfolios, are usually backed by physical gold held in trust for investors. They offer a low-cost, convenient way to follow the price of gold.

• Gold mining stocks: You can invest directly in companies that mine gold or choose ETFs that hold a basket of mining companies. These stocks can offer growth potential but also come with added risks tied to the mining industry.

• Gold royalty and streaming companies: These businesses finance mining operations in exchange for a share of future revenues or the right to purchase a portion of the gold produced—often at a discounted price. They provide exposure to gold prices with potentially less operational risk than traditional miners.

• Physical gold: This includes bullion bars and gold coins. Owning physical gold gives you direct ownership, but it also means you’ll need to handle storage, insurance, and the logistics of selling it.

Each approach has its pros and cons, so it’s important to choose the one that aligns with your goals and comfort level.

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