Let’s call this the golden age of gold.
After posting a historic 60% rally in 2025, the shiny stuff has hit new highs this year, with prices now exceeding $4,900 per ounce.
What’s good for gold doesn’t necessarily mean it’s good for the rest of the market. Precious metals have long been considered “safe haven” assets. That means investors tend to flee other assets and flock to gold during economic or geopolitical turmoil.
Nicky Shields, head of metals strategy at U.S. commodities company MKS PAMP, recently told CNBC. From the federal investigation into Federal Reserve Chairman Jerome Powell to the U.S. military operation in Venezuela to the U.S.’s recent economic turmoil over its control of Greenland, the scandals that are fueling market uncertainty and pushing up gold prices could be a pick-me-up for investors, he told CNBC.
“Over the past decade, we have entered a world where there is a strong need to secure critical metals and critical commodities,” she said.
Generally, investors can hold gold in one of two ways. One is physically in the form of coins or bars, and the other is through exchange-traded funds or mutual funds that track changes in the price of the metal. Which approach is right for you depends on your reason for holding it, says Mike Casey, a certified financial planner with AE Advisors in Alexandria, Virginia.
“If you have an appetite for risk, value sovereignty, or expect long-term volatility, you would reserve up to 5-10% of a diversified portfolio for physical gold,” he said. “Otherwise, use paper gold.”
It’s also wise to consult a trusted financial professional before making any changes to your portfolio.
Owning physical gold as a disaster hedge
Gold has been considered a currency for thousands of years, so many investors prefer it during volatile times.
Owning precious metals could be helpful in the event of a major problem in the financial system, such as a major devaluation of the U.S. dollar, said John Bell, CFP at Free State Financial Planning in Highland, Maryland, adding that he typically advises clients interested in gold to own a combination of physical and “paper” gold.
“I’m not a pessimistic person who thinks the apocalypse is near, but I like the fact that gold and silver are outside of the broader banking and financial services system,” Bell says. “For example, if it’s physical, you can always access it and take it to your local dealer and get your money back.”
Gold has several other benefits in trying times, Casey adds.
“Counterparty risk is eliminated,” he said. In other words, there is no need for investment trust companies or securities companies to provide funds. “(It) provides tangible ownership and acts as a privacy shield in times of uncertainty, such as when it comes to estate planning or moving across borders.”
However, there are some drawbacks to holding gold this way.
Typically, you have to pay a higher premium (often a 5% to 10% markup, according to Casey) over gold’s “spot” price (the price tracked by ETFs) to own the physical piece. Plus, unless you’re comfortable hiding it under your mattress, you’ll have to pay extra to store your gold somewhere.
Additionally, under normal circumstances, it is much more difficult to sell physical gold for cash than it is to click “sell” on a gold ETF position in your brokerage account.
Holding gold as a portfolio diversifier
Even if you don’t have big concerns about geopolitics or the economy, there are still reasons to have some gold exposure, says Casey.
“The appeal of gold is its role as a portfolio diversifier,” he says. “This has historically been uncorrelated with stocks and bonds, providing stability during market fluctuations and currency devaluations.”
In other words, the factors that drive the price of gold are different from the factors that drive stock and bond returns, such as corporate earnings and interest rates. And, as Casey points out, during periods of market turmoil, gold’s value held steady or rose.
For example, in 2002, when the S&P 500 fell more than 22%, gold rose nearly 25%. And in 2008, when the overall stock market fell 37%, the price of gold rose nearly 6%.
Of course, gold doesn’t always move in the opposite direction of the stock market. 2025 was a great year for gold and a good year for stocks. But experts say owning a mix of assets that perform differently under different conditions reduces overall portfolio volatility and generally provides a smoother ride.
To add “paper” gold to your portfolio, consider purchasing a mutual fund or ETF that tracks changes in the metal’s price. These funds are typically backed by physical cash of precious metals and accurately track spot prices.
The reason investment professionals recommend holding gold as a small part of a diversified portfolio is because unlike other assets such as stocks and bonds, gold does not generate returns or drain cash.
“Nothing changes, it just sits there unproductively, and its value is determined by what the next buyer is willing to pay,” said Alex Kanellopoulos, CFP at Vista Capital Partners in Portland, Oregon.
“That doesn’t mean investors will never benefit from higher gold prices,” he says. But he and other experts caution against making it a major component of a portfolio.
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