Is Gold a good Investment?

We often are asked "Is gold a good investment? This is a completely valid question and deserves a little background.

Gold has been a valuable commodity for centuries. Throughout recorded history, gold has been used as a currency and a symbol of wealth and power. Gold has been found in gravesites, buried alongside remains dating back as far as 4,500 B.C.E. This long history demonstrates the stability of gold and its attractiveness over time. Gold is considered by investors to be one of the safest investments, recovering its value quickly through economic downturns while its price often tracks in opposition to stock market swings and heavy inflation.

When investor confidence is shattered, gold prices often climb as nervous investors look for a safe place to put cash pulled out of the market. Gold is also a haven in times of inflation because it retains its value much better than currency-backed assets, which may go up in price, but drop in value.

Gold has been trusted by many investors for its wealth preservation qualities. Consider the comparison between owning $50 worth of gold in 1990 and owning a $50 note. Gold has since gone up in value, so the value of the gold far proceeds the original $50 investment. However, the $50 note has not increased in value and due to inflation, cannot buy nearly as much as it could have in 1990.

Unlike currencies, gold is not directly impacted by interest rate decisions and cannot be printed to control its supply and demand. Gold is a scarce asset that has maintained its value over time and has proven its worth to act as an insurance policy during adverse economic events. Because of this, gold is considered a safe haven by many investors.

Compared to the stock market the past 20 years, gold has provided a much better rate of return. Gold returned over 417% vs the stock market returned only 247% return in the same period.

But how much gold should investors add to achieve the maximum benefit? Portfolio allocation analysis indicates that investors who hold between 2% to 10% of their portfolio in gold can significantly improve performance. This is also true even when assuming a conservative average annual gold return of a modest 2% to 4% – well below its actual, long-term historical performance.

At Nugget Stacker you can purchase gold coins and bars or you can join the Nugget Subscription and buy gold every month depending on the amount you set. This is a great way to dollar-cost average your gold price throughout the year.