Is Gold Still a Good Investment?

Gold has stood the test of time as a trusted store of value and a safe haven asset during economic downturns. Investors flock to gold to diversify their portfolios, hedge against inflation, and protect wealth when markets are volatile. Unlike fiat currencies, which can be printed at will, gold is a finite resource, giving it intrinsic value. Its long history as a monetary asset makes it a favoured choice in uncertain times.

Why Invest in Gold?

The value of investing in gold depends on your financial goals. Gold does not pay dividends or interest, which means it won’t generate income. However, its price often rises when other asset classes falter, helping to reduce portfolio risk. Historically, gold has shown a low correlation with stocks and bonds, making it an effective portfolio diversifier.

Is It Worth Investing in Gold?

For those looking to include gold in their strategy, choosing the best broker for long term investing can help ensure access to reliable platforms and favorable terms. The potential for price appreciation, combined with its inflation-hedging properties, often makes gold a worthwhile addition for long-term investors.

Should I Invest in Gold?

Determining whether to invest in gold depends on your portfolio goals and risk tolerance. You can invest directly in physical gold (coins and bars), or through financial instruments like gold ETFs, gold mining stocks, or gold mutual funds.

Each option has trade-offs:

• Physical gold offers security but requires storage.
  
• Gold ETFs: These funds track the price of gold and allow investors to gain exposure without owning physical metal. They are liquid and cost-effective.
  
• Gold mining stocks: Investing in miners can provide leveraged gains if gold prices rise but involves company-specific risks like operational challenges.
  

Combining these approaches can help balance risk and reward.

👉 Read here for more information on the best ETF platforms

Is Gold a Good Investment in 2025?

Looking ahead to 2025, gold continues to hold appeal amid rising global debt levels, inflation pressures, and geopolitical tensions. Central banks around the world have been accumulating gold reserves, signalling confidence in its stability. However, factors like rising interest rates and a strong US dollar could limit short-term gains. Investors should weigh gold’s defensive qualities against its lack of yield when considering their 2025 investment strategy.

Investing in Gold Coins

Gold coins offer a tangible, portable way to invest in gold. Popular coins like the American Gold Eagle or Canadian Maple Leaf carry numismatic value in addition to their gold content. While coins often trade at a premium above the spot price, their liquidity and ease of storage make them attractive for many investors.

Investing in Gold Bars

Gold bars are typically more cost-efficient than coins, especially for larger investments, because they have lower premiums. They come in various sizes, from small grams to large kilo bars. However, buying bars requires secure storage and insurance. For investors comfortable with these considerations, bars can be a practical way to accumulate physical gold.

Bottom Line

Not every investor includes gold in their portfolio, as it doesn’t generate income and can underperform during strong equity rallies. It’s important to understand gold’s role as a defensive asset rather than a growth driver and to decide if it fits your investment style.

Alternatively, if you’re interested in investing in tangible assets like gold, you may also want to explore how to invest in rare earth elements. Like gold, rare earth metals are physical resources with significant value, driven by growing demand in technology and clean energy sectors. Adding rare earth elements to your portfolio can provide diversification and exposure to emerging markets. 

FAQs

Does Gold Protect Against Inflation?

Gold is widely regarded as a hedge against inflation because its value tends to rise when the purchasing power of fiat currencies falls. However, this relationship is not always consistent. At times, gold can underperform during inflationary periods if real interest rates rise sharply. Despite this, over the long term, gold has preserved purchasing power better than many other assets.

Can I hold gold in an ISA or SIPP in the UK?

Yes. You can invest in gold through certain Stocks and Shares ISAs or SIPPs using gold-backed ETFs or gold-focused funds.

How Much Gold Should I Hold in My Portfolio?

Most financial advisors recommend allocating between 5% and 15% of your portfolio to gold. This range offers diversification benefits without overexposing your investments to gold’s price volatility. Your personal allocation should reflect your risk tolerance, investment horizon, and broader portfolio composition.

Does gold pay interest or dividends?

No. Gold is a non-yielding asset, meaning it doesn’t generate income. Its value lies in capital preservation and potential price appreciation.

When is the best time to buy gold?

Timing the gold market is difficult, but historically, investors buy during economic uncertainty, inflation spikes, or when interest rates are low.