Q: The price of gold has recently topped $1,400 an ounce, providing eye-popping returns to investors. It seems we’ve missed out; should we reconsider whether gold belongs in my portfolio?
A: There is no denying the rapid ascent in the price of gold over the past few years.
We do not, however, view gold as an investment. Gold does not provide the inherent return stream (like interest income and/or cash flow) which makes core asset classes such as stocks, bonds and real estate attractive for long-term investment. Returns from gold, rather, are speculative: they come from the difference in the purchase price and what someone is willing to pay today. That’s not to say we don’t benefit from increases in the price of gold.
After all, a diversified index fund portfolio holds virtually every publicly-traded company that mines or processes the yellow metal.
Published on March 16, 2011
Connect with Dougal Williams, CFA
Related articles
Still the world’s safe haven: The strength of U.S. Treasury bonds
In a world of uncertainty, U.S. Treasury bonds continue to shine. Learn why they remain the bedrock of portfolio safety—offering unmatched liquidity, global demand, and downside protection.
Opinion: With the market a mess, the stock pickers are back
With U.S. stock prices down and volatility up, some suggest it’s time for stock pickers to shine. But does the evidence support the claim?
April 17, 2025: (Webinar) What today’s markets mean for investors
In this webinar, we share our perspectives on what’s driving markets, how we’re responding, and what this means for your portfolio and financial plan.