Investors can’t help but notice the glow of gold’s record run. But they may want to think twice before adding more to their portfolios: Over the long term, it underperforms compared to stocks and other assets.
“The gold shines but the profits pile up,” said Pat Beaird, a CPA and co-founder of Beaird Harris Wealth Management in Dallas.
“For 30 years, composition has won every time,” he said. Beaird Harris Wealth Management is ranked #3 on CNBC’s Financial Advisor 100 list for 2025.
Gold returns ‘unreliable’
Gold is on a good run.
Spot gold now exceeds $4,000 an ounce for the first time. It’s also up 51.6% year-to-date as of Tuesday’s close — and there could be more room to run amid a government shutdown, expectations of lower interest rates and heightened geopolitical uncertainty, experts say.
Analysts at Goldman Sachs predict prices could reach $4,900 an ounce by the end of 2026, according to a research note released Monday.
Yet over a 30-year period through September, gold’s annualized total return is 7.96%, according to Morningstar Direct data. Over the same period, the total return of S&P 500 stocks is 10.67% and that of real estate is 8.89%.
“Historically, we have always been of the view that stocks have better resilience as a hedge against inflation,” Beaird said. Although gold can “burst” in times of unrest and huge budget deficits, “it is not reliable,” he added.
“If I have to subject a portfolio to this level of volatility, I prefer to place it in the highest yielding asset class.”
Mark Mirsberger, CPA and CEO of Dana Investment Advisors, ranked No. 6 on CNBC’s Financial Advisor 100 list for 2025, also said other investments are more attractive than metals even now.
“We still view diversified balanced portfolios using bonds and asset classes other than gold as more attractive and more flexible than using large positions in gold,” Mirsberger said.
“Stocks have always been a good hedge against inflation, they generate profit growth and pay dividends, which gold does not do,” he said.
Why gold shines in “tough economic times”
Gold rose above the $3,900 an ounce level for the first time on Monday, driven by safe-haven demand following the fall in the yen and the U.S. government shutdown, while growing expectations of further rate cuts from the Federal Reserve also provided support.
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Yet at an economic forum Tuesday, Bridgewater Associates founder Ray Dalio said investors should devote up to 15% of their portfolios to gold. He compared the current environment to that of the 1970s, when the precious metal surged 100% amid geopolitical unrest, inflation, large government spending and high debt.
“It’s an asset that does very well when typical parts of the portfolio are going down,” Dalio said.
Investors view gold as protection against “bad economic times,” according to a study by the Federal Reserve Bank of Chicago.
As a safe haven, gold tends to perform well in low interest rate environments and during periods of political and financial uncertainty, according to Sameer Samana, head of global equities and real assets at the Wells Fargo Investment Institute.
With the U.S. government shutdown now in its second week and gold prices hitting new highs, “the trend is very much intact,” he said.
How to invest in gold
Experts often recommend investing in gold through an exchange-traded fund that tracks the price of physical gold, as part of a well-diversified portfolio, rather than purchasing actual gold coins or bars. “This is the most logical solution for the vast majority of investors,” Samana said.
But despite the metal’s historic rise, financial advisors generally recommend limiting exposure to gold to a low, single-digit percentage of any portfolio.
“It’s always held a place in a lot of our portfolios, but not necessarily a large position,” said John Mullen, president and CEO of Parsons Capital Management, ranked No. 1 on CNBC’s list of Top 100 Financial Advisors. Mullen is also a member of CNBC’s Council of Financial Advisors.
However, Mullen said gold looked increasingly attractive and his company’s outlook was positive: “We think gold can continue to move higher.”
Mullen said his position was not in line with Dalio’s recommendation of 15 percent, but taking into account “the fiscal mess that is Washington and the uncertainty that comes with it, we have become more and more constructive,” he said.
Largely through investments in gold bullion-backed ETFs and shares of gold mining companies, “we probably added a few percentage points, but still in the single digits,” he said.
Although Beaird said his firm maintains a strategic allocation – up to 10% – in various alternative investments in the portfolios it manages for clients, “gold just isn’t one of them.”
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