Buy and hold gold in 2021: Experts (2024)

FAQs

Buy and hold gold in 2021: Experts? ›

The bottom line. Generally, gold's benefits as a hedge against inflation and safe haven make it a useful option worth considering right now. But experts often recommend allocating no more than 10% of your portfolio to gold.

Financial planners say investors should look at gold as a diversification tool, not as an investment that will earn high returns. Yes, gold should be part of the investment portfolio, but the allocation to the metal should not exceed 10-15%. That's roughly what most multiasset funds allocate to the metal.

The bottom line. Waiting for an investment price to change favorably is always risky but is arguably more so for alternative assets like gold. And although the price of the precious metal has risen significantly in the past few years, it still may make sense to buy now.

Gold is often hailed as a hedge against inflation—increasing in value as the purchasing power of the dollar declines. However, government bonds are more secure and have shown to pay higher rates when inflation rises, and Treasury Inflation-Protected Securities (TIPS) provide built-in inflation protection.

The price of gold will hit $3,000 a troy ounce in the next six to 18 months, according to Citigroup analysts. Gold futures were ticking higher Tuesday morning and on pace for their 19th record close of 2024, trading at $2371.40 a troy ounce.

As Buffett told his shareholders at a Berkshire Hathaway annual meeting, “If you take all the gold in the world…and put it into a cube, it will be a cube that's about 67 feet on a side…but it's not going to do anything for you.” Buffett therefore doesn't see any utility in owning gold because it can't produce things.

I'd stop investing in gold and silver completely. I don't put money in precious metals at all, because they have a lousy long-term track record. — Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover.

As we step into 2024, the allure of investing in gold persists — and you may want to consider buying into gold at some point in the near future. Still, as with any type of asset, it's important to be well-informed before diving into this precious metal market.

Con: It doesn't give you passive income or steady returns

Unlike some investments that yield passive income (e.g., rental properties, some stocks and bonds), physical gold doesn't provide passive income, dividends or interest. You will only earn once you sell your gold.

However, because so many investors purchase gold as a safe-haven asset, its value remains relatively constant. Long-term investments in the precious metal are unlikely to experience losses.

Is there a better investment than gold? ›

If you want an investment that provides an income stream, stocks are likely the better choice. Note: You might be able to earn dividends from gold stocks or gold ETFs, but these are riskier than investing in physical gold like bars and coins.

The reason gold tends to be resilient during stock market crashes is that the two are negatively correlated. In other words, when one goes up, the other tends to go down. This makes sense when you think about it. Stocks benefit from economic growth and stability while gold benefits from economic distress and crisis.

That said, it's generally not an income-producing asset in the same way that more volatile stocks and bonds can be. So you'll need to invest in the precious metal differently than you would with those assets. Most experts recommend limiting your gold investment to 10% or less of your overall portfolio.

The bottom line. There's no way to know exactly how much an ounce of gold might cost 10 years from now. However, most experts predict that the price of the precious metal will be significantly higher in 2034 than it is today.

Mining equities offer leverage to rising gold and silver prices. Royalty & streaming companies and developers with large, high-quality resources are favored. Gold is seen heading to $3,000-$5,000+ per ounce, with silver rising to $35-$70+ per ounce. Timing the peak is difficult, but the bull market has years to run.

Gold in Rich Investors' Portfolios

It turns out the average ultra-high net worth individual (UHNWI) with a net worth over $30 million does own a little gold.

Investors typically turn to gold when there is fear in the market and they expect prices of stocks to go down. Furthermore, gold is generally not an income-generating asset, though there are some gold bonds. Unlike stocks and bonds, the return on gold is typically based entirely on price appreciation.

John Maynard Keynes called the gold standard a barbarous relic, but the yellow metal recently has outshone far more modern assets. The price of gold is up 15% this year to a recent $2,409, and has gained 22% since the Federal Reserve began raising interest rates in March 2022, a move that typically batters bullion.

To put this into perspective, we visualized the performance of gold alongside the S&P 500. See the table below for performance figures as of April 12, 2024. Over the five-year period, gold has climbed an impressive 81.65%, outpacing even the S&P 500.