Should I buy gold now
Every few years, someone will ask me, “Should I buy gold now?” It is an interesting question because usually I am asked because gold has recently reached a new record high. –A fact that typically indicates that the best time to buy gold was months or years prior. Sadly, gold only seems to become an interesting investment after it has achieved an amazing rise.
So far this year, gold is up over 60%.1
The most important thing to know about gold is that it is unlike any other stock or bond investment. As such, I will attempt to explain what makes gold unique and why an investor may or may not want to own gold.
What makes gold different?
Gold is very different from a stock or bond investment. It is a tangible store of value that has a long history. For centuries civilization has used gold for trade and commerce, making it a familiar commodity. Like other commodities, there is only so much gold on earth and only so much in circulation. While the ability to mine and extract has continued to improve, there is a finite amount of gold. Because there is only so much gold, the value of it tends to be governed by supply and demand. Gold is not like currencies where a government can decide to increase supply by just printing more money. For that reason, gold can retain its value better than currencies during periods of high inflation. As the cost of goods and services increase, the value of gold tends to rise. As such, investors often get interested in gold when inflation is expected to accelerate.
The converse is also true, when inflation is modest, other investments can become more attractive such as dividend paying stocks or bonds that pay interest. Gold pays you nothing while you own it. It is simply a store of value.
Other reasons gold can rise
Gold is also viewed as a safe haven when there are wars, civil unrest, and political or economic uncertainty. In these environments, gold is expected to retain or grow in value. In the last few years, the number of wars and conflicts have increased globally, which has lent support to the price of gold.
Another reason gold can be in demand is when a government borrows too much money or has shaky finances. This can have a negative effect on the country’s currency and economy. If the value of a currency is falling, citizens may want to own gold because it is believed to offer better protection from the falling currency value.
Gold as an investment
Gold tends to perform differently than stocks and bonds. In other words, gold may rise when stocks or bonds are falling in price. As such, gold is often viewed as a diversifier, helping to offset losses in a portfolio when it is rising. However, gold does not pay any dividends or interest. As a result, gold may not be useful to income-oriented investors such as retirees who are counting on a steady stream of income.
Gold compared to other commodities
Every commodity has its own supply and demand characteristics which can affect its price. Other precious metals may perform similarly but gold remains the best known and understood in the metals area. Fossil fuels such as oil, natural gas and other petroleum products are another very large commodity category but they consumed requiring their replacement. Gold tends to stay around.
Commodities can be volatile
Because the supply and demand for a commodity such as gold can change significantly, sometimes in a short period of time, commodities can move quickly in price. In addition, most commodities are traded in the global markets. So, even though the supply of gold might be stable in the United States, the discovery of a new, large deposit of gold ore overseas could eventually flood the market with a new supply. This could cause the price of gold to fall.
Where does gold fit in my portfolio?
Commodities can have a place in your portfolio if you understand the risks and rewards. Gold, in particular, can serve as a store of value if the US dollar is expected to decline. It can also serve as a hedge against economic uncertainty and higher expected inflation because it typically increases in value during such periods. To reach the best possible balance between risk and expected return over the long term, most investment professionals recommend owning less than 10% in commodities including gold. Some investors prefer not to own gold because they find its performance unpredictable compared to stocks and bonds.
What is the best way to invest in gold?
You can by gold bars, coins, or funds that hold gold bullion (e.g., physical gold). One downside to owning gold in physical form is that you must store and safeguard it. If you acquire gold in any significant amounts, you will likely incur additional costs to protect it. It is also heavy and is not easily divided into specific amounts you may want to use. You can also invest in the companies that mine and extract gold which can amplify the ups and downs of holding gold bullion. There are also other investments that do not hold physical gold such as futures or options contracts. There are many choices on how to invest in or participate in gold depending on your own personal preferences.
Gold has been around for a long time but investing in it is not for every investor. If you have questions about gold, give me a call to find out if it is appropriate for your portfolio.
You can schedule a quick call with me by clicking HERE.
Lyman H. Jackson
Lyman@PlanWithFPS.com
617-630-4978
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©2025 by Financial Planning Solutions, LLC (FPS), a Registered Investment Advisor. Reprinting or redistribution only by permission. This blog was written by a professional with 30 years of real-world experience in finance. AI did not write this article. FPS provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client after entering into an advisory relationship. The information herein includes opinions and forward-looking statements that may not come to pass. Information is derived from sources believed to be reliable. Information is at a point in time and subject to change without notice. Such information may not be independently verified by FPS. Please see the important disclosures link at the bottom of this page.
[1] Sources: Wall Street Journal (wsj.com) and YahooFinance.com as of 10/20/25.