Gold Isn't An Investment- So Stop Treating It Like One!!

by: Jeffery A. Keill, CFP, CIM, FMA, FCSI, CEA

Portfolio Manager and Senior Wealth Advisor

“Good as Gold” is a phrase we have all heard. The cliché  is as old as a cliché can be. It generally means to be in a good state or well mannered. The phrase comes from the intrinsic value of gold over history and it’s ability to maintain integrity as an element and its value as an asset. With that said, we should never view gold as an investment asset (because it is NOT) but more as a barometer of global stability and confidence. For thousands of years gold has done just that-and nothing more.

Why is gold the perfect economic barometer and currency but not an investment?

I remember a certain rule of thumb I learned years ago. ”Focus your insights on that which can not be printed”. In other words- a flat currency-or any government currency for that matter-can be printed at the whim of a government. Gold can not be reproduced. This has been the reality since the unpegging from the gold standard in 1971 when the US desperately needed to print money.

For those who suffered through Grade 9 science like myself you might remember that “fun” Periodic Table in school. Gold, known by its element symbol of Au, sits at spot 79 between Platinum and Mercury. Why does this particular rare earth element hold such a strong position like money well: 

• Gold does not erode or corrode

• Gold is malleable and can be separated without loosing its integrity. 

• Gold has historical confidence by societies

• It’s transferrable and bearer owned

• There is limited quantity available (Scarcity)

• Lastly- as noted above- gold can not be printed by governments. 

All of these points are true but if you strip away the mythology and folklore and look at how wealth grows, gold behaves far less like an investment and more like a vault: it can help you keep purchasing power but over time gold does not help you create more of it.

Let’s take a minute and get to the real problem with the vernacular out of the way- because until we do you are going to keep arguing what you have learned in life-wrongly. There’s a practical way to settle the debate you may have with these statements so far-an investment is an asset that is expected to produce value by generating cash flows (interest, rent, dividends) that can and may be redeployed to allow for the power of compounding over time. Gold does not produce any cash flow.  Nada. Zero.   Gold simply sits there- on a shelf basking in the sun, like it has done since the beginning of time. A simple store of value. Over the longer term, it has proven to preserve purchasing but has never produced income along the way.

By definition, investing requires an investor to purchase an asset with their intent for that asset to  produce either interest, dividends, or rent. The profits from companies or the consideration for lending and postponing their useful enjoyment of their capital today. If the asset later appreciated in value- that’s really the secondary benefit resulting from successful outcome of the first intention.

So, if buying gold is not ‘investing’ what is it? Well, gold has always had a strong following of believers- mostly doomsday proclaimers and a greedy lot of neophytes- making crazy statements like “economy is failing” or “gold prices always goes up”.   Well, lets look at that, shall we. Of course, it will go up in value- that is what a store of value does over time. Most importantly the statement also includes most often an element of scarcity of supply against a backdrop of increased demand. If we look back to Economics 101 we all learned that when this happens- the price must rise. 

Buying an asset for the purpose of achieving an increase in value is not investing- it is speculating. Speculation is as different from investing as stalactites and stalagmites or crocodiles and alligators. Like the Investor a Speculator buys an asset but not because of its cash flow properties but because they believe there will be a change in the demand and supply of the asset. They are betting not on the income as the outcome but on the change of the price. Speculating is simply not Investing. 

When we buy gold and call it an investment- we are using the wrong terminology- badly. When we buy gold, we can only truly mean that we are speculating. Gold is not a potential cash flow. Only an increase or decrease in value based on supply and demand.

History is clear: gold can preserve wealth, but it’s not a long-term growth engine

One way to see the difference between “investment” and “store of value” is to compare long-run returns. Using a long U.S. dataset compiled by NYU professor Aswath Damodaran and summarized by Ben Carlson, U.S. stocks returned about 9.5% per year from 1928–2024, while gold returned about 5% per year over the same period—before considering storage costs or custodial and management costs, and taxes. Inflation averaged about 3% per year in that window, meaning gold’s historical edge (after carrying costs, inflation, and tax)  is often closer to preservation than compounding growth. You may ask, How should gold be used in a portfolio then? 

Gold is not useless as an asset- far from it! During periods of high inflation, geopolitical stress, or global financial anxiety- it can perform quite well. On the other hand it would perform poorly during periods of calm, peace, and low inflation. You might want to think of Gold as an insurance policy more than an engine of wealth creation. Sort of like a fire extinguisher in a kitchen or a plunger in a bathroom. It kind of just sits there collecting dust until it is desperately needed. 

The most useful mindset we believe is gold as a hedge, not as a plan. Gold can reduce reliance on any single currency, a flat currency, or financial system. It may diversify a portfolio when other assets struggle to do so. 

Gold is best understood as a store of value, think of it as more of a wealth vault.

Posted May 2026