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The best way to own gold, according to financial experts

Call it the golden age of gold.

After a historic 60% increase in 2025, the shiny stuff is reaching new highs this year, with prices now exceeding $4,900 per ounce.

What is good for gold is not necessarily good for other parts of the market. The precious metal has long been considered a “safe haven” asset; This means investors tend to flee other assets and turn to gold amid economic or geopolitical turmoil.

Nicky Shiels, head of metals strategy at commodities firm MKS PAMP, recently told CNBC that investors can pick out the dustups that are fueling market uncertainty and pushing gold prices higher, from the federal investigation into Federal Reserve chairman Jerome Powell to the U.S. military operation in Venezuela to the latest U.S. economic offensive to control Greenland.

“You are entering a world in this decade where there is a strong demand to secure critical metals and critical commodities,” he said.

Investors can generally hold gold in one of two ways: physically in the form of coins or bars, or through an exchange-traded fund or mutual fund that tracks fluctuations in the price of the metal. Which approach is right for you depends on your reason for holding, says Mike Casey, a certified financial planner with AE Advisors in Alexandria, Virginia.

“If you’re risk-tolerant, value independence, or anticipate long-term instability, I wouldn’t allocate more than 5-10% of a diversified portfolio to physical gold,” he says. “Otherwise, stick to paper gold.”

It’s also wise to consult a trusted financial professional before making any changes to your portfolio.

Owning physical gold to protect against disaster

Gold, which has been accepted as currency for thousands of years, is preferred by many investors in times of instability.

In the event of something serious going wrong with the financial system, such as a large-scale devaluation of the U.S. dollar, owning some precious metals can come in handy, says John Bell, CFP with Free State Financial Planning in Highland, Maryland, adding that he often recommends clients interested in gold own a mix of physical and “paper” gold.

“While I’m not a doom and gloom person who thinks the apocalypse is coming, I like that gold and silver are outside the broader banking and financial services system,” Bell says. “For example, if it is physical, you can access it at any time and take it to a local merchant to collect money.”

Casey adds that gold brings a few other advantages in difficult times.

“It eliminates counterparty risk,” he says, meaning you won’t have to rely on a mutual fund company or brokerage firm to give you your money. “[It] It provides tangible ownership and can serve as a privacy shield in uncertain times; Consider estate planning or cross-border mobility.”

However, there are some disadvantages to holding gold this way.

To own physical goods, you’ll typically have to pay a premium over the “spot” price of gold (the price that ETFs track) — typically a 5% to 10% markup, Casey said — plus you’ll have to pay extra to store it somewhere if you’re not comfortable storing it under your bed.

Also, under normal circumstances, selling your physical gold for cash is much more difficult than clicking the “sell” button on your gold ETF position in your brokerage account.

Owning gold as a portfolio diversification tool

Even if you don’t have major concerns about geopolitics or the economy, there’s still a reason to own some gold, Casey says.

“Gold’s appeal lies in its role as a portfolio diversifier,” he says. “It is historically unrelated to stocks and bonds, providing stability during market volatility or currency devaluation.”

In other words, the factors that drive gold prices are different from the factors that drive stock and bond returns, such as corporate profits and interest rates. As Casey points out, gold’s value has maintained or increased during some periods of market turmoil.

For example, in 2002, The S&P 500 fell more than 22%, while gold rose nearly 25%. Gold also recorded a price increase of approximately 6% in 2008, when the stock market fell by 37%.

Of course, gold does not always move in the opposite direction as in the stock market; 2025 was a great year for gold and a good year for stocks. But having a mix of assets that perform differently under different conditions reduces overall volatility in your portfolio and makes for a smoother ride overall. experts say.

To add “paper” gold to your portfolio, consider purchasing a mutual fund or ETF that tracks the change in the metal’s price. These funds are often backed by a physical cache of precious metals and do an accurate job of tracking the spot price.

The reason investment experts recommend keeping gold as a small portion of a diversified portfolio is that, unlike other assets such as stocks and bonds, gold does not generate profits or lose cash.

“It just sits there, unchanged and inefficient, its value dependent on what the next buyer is willing to pay,” says Alex Canellopoulos, CFP at Vista Capital Partners in Portland, Oregon.

“This doesn’t mean investors can never benefit from rising gold prices,” he says. But he and other experts caution against making it a major building block of your portfolio.