Which investment wins long term?
Investors can’t help but notice the shine of gold’s record run. But they may want to think twice before adding more to their portfolio; underperforms stocks and other assets over the long term.
“Gold is shining, but earnings are rising,” said Pat Beaird, a certified public accountant and co-founder of Beaird Harris Asset Management in Dallas.
“For over 30 years, compounding always wins,” he said. Beaird Harris Wealth Management is ranked No. 3 on CNBC’s 2025 Financial Advisor 100 list.
Gold returns ‘unreliable’
gold light A hot streak.
Spot gold rose above $4,000 per ounce for the first time. As of Tuesday’s close, it has increased 51.6 percent since the beginning of the year, and experts say there may be more room for movement amid a government shutdown, interest rate cut expectations and more geopolitical uncertainty.
Goldman Sachs analysts predict prices could reach $4,900 per ounce by the end of 2026, according to a research note published Monday.
Still, over the 30-year period through September, gold’s total annual return was 7.96%, according to Morningstar Direct data. During the same time period, the total return of S&P 500 stocks was 10.67% and real estate was 8.89%.
“Historically our view has always been that equities have more staying power as an inflation hedge,” Beard said. Gold can “explode” during periods of turmoil and massive deficit spending, but it is “not reliable,” he added.
“If I’m going to expose a portfolio to this level of volatility, I’d rather have it in the highest-yielding asset class.”
Mark Mirsberger, CPA and CEO of Dana Investment Advisors, ranked 6th on CNBC’s 2025 Financial Advisor 100 list, also said that other investments are more attractive than metals even now.
“We still find that diversified balanced portfolios using asset classes other than bonds and gold are more attractive and flexible than using tangible gold positions,” Mirsberger said. he said.
“Stocks have historically been a good hedge against inflation, and they provide earnings growth and pay dividends, which is something gold doesn’t do,” he said.
Why does gold shine in ‘bad economic times’?
Gold exceeded the level of $ 3,900 per ounce for the first time on Monday, driven by the decline in the yen and safe haven demand after the US government shutdown, while increasing expectations for additional interest rate cuts by the Fed also supported it.
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But at an economic forum on Tuesday, Ray Dalio, founder of Bridgewater Associates, said investors need to allocate resources. 15 percent of their portfolio is gold. He compared today’s environment to the 1970s, when the precious metal rose 100% due to geopolitical unrest, inflation, significant government spending and high debt.
“It’s an asset that performs very well when typical parts of the portfolio are down,” Dalio said.
Investors see gold as a hedge against “bad economic times” 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 in its second week and gold prices reaching new highs, “the trend is largely intact,” he said.
How to invest in gold?
Experts often recommend taking Risk 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 makes the most sense for the vast majority of investors,” Samana said.
But despite the metal’s historical trajectory, financial advisors generally recommend limiting gold exposure to a low-single-digit percentage in any portfolio.
“He always had a position in most of our portfolios, but it wasn’t a huge position,” said John Mullen, chairman and CEO of Parsons Capital Management, No. 1 on CNBC’s list of the top 100 financial advisors. Mullen is also a member of CNBC’s Council of Financial Advisors.
But Mullen said gold is looking increasingly attractive and his firm’s outlook is positive: “We think gold can continue to rise.”
Mullen said his position is not in line with Dalio’s 15% recommendation, but “given the fiscal turmoil in Washington and the uncertainty that comes from there, we’re becoming more and more constructive.”
Thanks largely to investments in bullion-backed ETFs and gold miner stocks, “we’ve probably added a few percentage points, but we’re still in the single digits,” he said.
Although Beaird says his firm allocates up to a 10 percent strategic allocation to various alternative investments in the portfolios they manage for clients, “gold is not one of them.”
