Investors can’t help but notice the sparkle of gold’s record run. But they may want to think twice before adding more of it to their portfolios — over the long haul, it underperforms compared to stocks and other assets.
“Gold glitters but earnings compound,” said Pat Beaird, a certified public accountant and co-founder of Beaird Harris Wealth Management in Dallas.
“Over 30 years, compounding wins every time,” he said. Beaird Harris Wealth Management is ranked No. 3 on CNBC’s Financial Advisor 100 list for 2025.
Gold returns are ‘not reliable’
Gold is on a hot streak.
Spot gold is now over $4,000 per ounce for the first time. It’s also up 51.6% year-to-date, as of Tuesday’s close — and there may be more room to run amid the government shutdown, expectations of interest rate cuts and further geopolitical uncertainty, experts say.
Goldman Sachs analysts forecast prices could hit $4,900 an ounce by the end of 2026, according to a research note published Monday.
Still, over a 30-year period through September, the annualized total return for gold is 7.96%, per Morningstar Direct data. Over the same time frame, the total return of S&P 500 stocks is 10.67%, and for real estate, 8.89%.
“Historically, our view has always been that equities have more staying power as an inflation hedge,” Beaird said. While gold can “pop” during periods of turmoil and huge deficit spending, “it’s not reliable,” he added.
“If I’m going to subject a portfolio to that level of volatility, I’d rather have it in the highest returning asset class.”
Mark Mirsberger, a CPA and CEO of Dana Investment Advisors, which ranked No. 6 on CNBC’s Financial Advisor 100 list for 2025, also said other investments are more appealing than metals, even now.
“We still see diversified balanced portfolios utilizing bonds and asset classes other than gold as more attractive and flexible than using material gold positions,” Mirsberger said.
“Equities have historically been a good hedge against inflation, and they generate earnings growth and pay dividends, something gold doesn’t do,” he said.
Why gold shines in ‘bad economic times’
Gold surged past the $3,900-an-ounce level for the first time on Monday, driven by safe-haven demand following a fall in the yen and a U.S. government shutdown, while growing expectations of additional Federal Reserve rate cuts also lent support.
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Yet, at an economic forum on Tuesday, Bridgewater Associates founder Ray Dalio said investors should allocate as much as 15% of their portfolios to gold. He compared today’s environment to the 1970s, when the precious metal jumped by 100% amid geopolitical unrest, inflation, significant government spending and high debt.
“It is one asset that does very well when the typical parts of the portfolio go down,” Dalio said.
Investors regard gold as protective against “bad economic times,” according to research by the Federal Reserve Bank of Chicago.
As a safe-haven investment, 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 getting investment exposure to gold through an exchange-traded fund that tracks the price of physical gold, as part of a well-diversified portfolio, rather than buying actual gold coins or bars. “That makes the most sense for the vast majority of investors,” Samana said.
But despite the metal’s historic run, financial advisors generally recommend limiting gold exposure to a low single-digit percentage of any portfolio.
“It’s always had a position in a lot of our portfolios, but not necessarily a big one,” said John Mullen, president and CEO of Parsons Capital Management, which ranked No. 1 on CNBC’s list of the top 100 financial advisors. Mullen is also a member of CNBC’s Financial Advisor Council.
However, Mullen said gold is looking increasingly attractive and his firm’s outlook is positive: “We do think that gold can continue to move higher.”
Mullen said his position is not in line with Dalio’s recommendation of 15%, but factoring in “the fiscal mess that is Washington and the uncertainty coming out of there, we’ve become increasingly constructive,” he said.
Largely through investments in gold bullion-backed ETFs and gold miner stocks, “we’ve probably added a couple of percentage points, but still in the single digits,” he said.
Although Beaird said his firm maintains a strategic allocation — of up to 10% — in various alternative investments in the portfolios they manage for clients, “gold is just not one of them.”