Is gold still a good investment?

The History and Appeal of Gold

Gold’s reputation as a hedge against inflation dates back to the 1970s and early 1980s when inflation in the U.S. surged. Investors turned to gold, believing in its value during turbulent times. However, history shows mixed results. While gold performed well in some inflationary periods, in others, such as the 1980s and 1990s, it underperformed significantly, even as inflation climbed.

Lab-Grown Gold and Changing Perceptions

Recent scientific breakthroughs have raised new questions. Scientists at CERN have successfully transformed lead into gold using nuclear transmutation, prompting comparisons to the lab-grown diamond industry. Much like synthetic diamonds are gaining market acceptance for ethical and cost reasons, lab-created gold could disrupt traditional perceptions of rarity and value.

If gold becomes more manufacturable, its scarcity and therefore its value as a hedge may come into question. This raises concerns that gold may begin to behave more like fiat currency, which is also “created” and subject to inflationary pressures.

Gold’s Role in Modern Portfolios

Gold is often referred to as the “fear trade.” It doesn’t generate income or dividends, so its value depends entirely on what others are willing to pay for it. In times of high inflation, market volatility, or currency devaluation, gold can perform well. However, during periods of rising interest rates or strong stock market performance, gold often lags behind.

Gold also doesn’t have a consistent correlation with the stock market. Over the past decade, its movement has largely been independent, sometimes rising with equities and other times falling during expected hedging moments, like during recent tariff-related sell-offs.

Practical Drawbacks of Gold

Investing in physical gold comes with transaction costs well above market value. Dealers charge premiums of 1–15% above spot prices for purchases and offer lower-than-market prices when buying it back. On top of that, long-term capital gains on physical gold are taxed at a higher rate (28%) than other assets. Then there’s the issue of storage, security, and liquidity.

Some investors prefer gold ETFs like GLD or IAU to avoid these hassles, though those, too, are not ideal for those who fear systemic collapse, since they’re paper representations, not physical assets.

The Role of Education and Alternatives

A common theme in gold investing is fear of inflation, market collapse, or political change. But with proper financial education and planning strategies like bucket systems and diversified portfolios, many investors may find they don’t need to rely on gold for protection. Other tools, such as short-term Treasury bonds or well-structured equity portfolios, often provide more reliable inflation hedging while also offering income and growth potential.

Gold vs. Bitcoin: The New Generation Shift

While older generations may still turn to gold, younger investors increasingly prefer Bitcoin. Often called “digital gold,” Bitcoin was born out of distrust in centralized banking systems and has evolved as a speculative asset and technological innovation. Though more volatile, it may offer more upside and cultural relevance than gold in the modern era.

Is Gold Still a Good Investment?

Gold can still play a role in a diversified portfolio, especially for conservative investors, but moderation is key. Allocating more than 10% may expose you to long periods of underperformance and opportunity cost. For investors focused on growth, income, or inflation protection, equities and bonds often offer more practical benefits.

Before making a move into gold or any alternative asset, it’s essential to consider your long-term goals, risk tolerance, and the broader economic picture. Schedule a consultation with one of our fiduciary advisors to evaluate whether gold, or any alternative asset, aligns with your goals, risk tolerance, and overall portfolio strategy. We’re here to help you make informed, confident decisions.