Is gold a good investment? The pros and cons

This page sets out the evidence on both sides using one consistent, published dataset, adds the real costs of owning coins and bars from our own October 2026 price checks, and explains who gold tends to suit and who it does not. It is information, not a recommendation to buy.

What does "investing in gold" actually mean?

Most people asking this question mean physical gold: coins and bars you own outright. Others mean gold funds (ETFs) or mining shares, which behave differently and have their own costs and rules. This page focuses on physical gold, with the performance figures based on the gold price itself.

Gold is different from most investments in one important way: it produces nothing. A share is part of a business that can grow its profits. A bond pays interest. A gold bar is the same bar in 30 years. The only way to make money is for someone to pay more for it later. Warren Buffett put the sceptic's case in his 2011 letter to shareholders: "Gold, however, has two significant shortcomings, being neither of much use nor procreative." Supporters reply that this is exactly the point: gold's value does not depend on any company, government or bank keeping its promises.

What are the pros and cons of gold?

How has gold performed against shares and inflation?

We use one dataset throughout so the comparison is fair: the historical returns file maintained by Professor Aswath Damodaran at NYU Stern. It uses year-end LBMA gold prices, the S&P 500 with dividends reinvested for US shares, 10-year US Treasury bonds, and US consumer prices from the Federal Reserve Bank of St. Louis (FRED). All figures are in US dollars, before costs and taxes. We start in 1976, the first full year after Americans were again allowed to own gold bullion.

GoldVetted calculation from Damodaran, "Historical Returns on Stocks, Bonds, Bills, Real Estate and Gold" (NYU Stern, data to 2025). Annual returns compounded over each calendar period.

In money terms, $100 put into gold at the start of 1976 would have grown to about $3,094 by the end of 2025. The same $100 in US shares with dividends reinvested would have grown to about $27,933, and in 10-year Treasuries to about $1,960. Prices overall rose about 5.8 times, so $100 of 1976 spending power needed about $584 in 2025.

The table shows why people disagree about gold. Pick the last 10 or 20 years and gold looks excellent, slightly ahead of shares. Pick 1980 to 2000 and it looks terrible: it lost money while shares grew more than twentyfold. Over the full 50 years, gold beat inflation and bonds comfortably but finished well behind shares.

Is gold a hedge against inflation?

Over the very long run, gold has broadly kept ahead of rising prices. After allowing for inflation, gold grew about 5.3 times in real terms from 1976 to 2025, roughly 3.4% a year above inflation.

Over shorter stretches the link is weak:

• 1980 to 2000: inflation averaged 4.0% a year, yet gold fell. After inflation, it lost about 76% of its buying power over those 21 years.
• 2022: US inflation was 6.5%, the highest in decades, but gold rose only 0.5%.
• 2025: inflation was 2.7%, and gold rose 66.2%.

So gold has protected buying power for patient holders over many decades, but it has not reliably tracked inflation year to year. Someone who bought at a peak could wait a very long time to be made whole.

Does gold rise when shares fall?

Sometimes, and that is the main case for holding a little of it. In the same dataset:

Source: Damodaran historical returns dataset, NYU Stern. Calendar-year returns in US dollars.

2022 is the interesting case: shares and bonds fell together, so the usual mix of the two gave little protection, while gold held roughly flat. But gold has also had bad years when shares did well, such as 2013 (gold -27.6%, shares +32.1%). It is a diversifier, not a guaranteed safe haven.

What does physical gold really cost to own?

The returns above are for the gold price itself. Owning coins or bars adds costs that a price chart does not show. These come from our own dated checks.

Worked example (US). On 11 October 2026, a 1 oz Gold Eagle cost $4,327.23 from SD Bullion paid by wire, and Kitco would buy one back for $4,091.99. That round trip costs $235.24, or 5.4% of what you paid. Gold has to rise about 5.7% just for you to break even, before any storage or tax. Over 50 years that hardly matters; over two years it can wipe out a typical gain.

Ways to keep costs down are covered in our how to buy gold guide: buy common 1oz coins or bars, pay by bank transfer, and avoid collectible or proof coins sold as investments.

What role do reputable sources say gold plays in a portfolio?

The World Gold Council's 2026 report argues that gold can improve a portfolio in three ways: delivering long-term returns, improving diversification and providing liquidity (being easy to sell). Bear in mind that the Council describes itself as a membership organisation whose members are gold mining companies, so it is not a neutral voice.

The sceptical view, put most famously by Buffett, is that money in productive assets such as businesses or farmland should grow faster over time than metal that produces nothing. The 1976 to 2025 figures support that on returns alone.

Both views can be true at once. Gold has lagged shares over the long run but has sometimes held up when shares and bonds fell. Whether that trade-off is worth it depends on your goals, time horizon and what else you own. Our guide to how much gold to own sets out the range of views, and gold vs stocks goes deeper into the comparison. In the UK, the FCA's investing pages explain how to check an adviser is authorised.

What are the main risks?

• Price risk: gold fell in 18 of the 50 years from 1976 to 2025, against 9 losing years for US shares.
• Timing risk: buying after a big rise, as in 1980, can mean decades of losses in real terms.
• Currency risk: the figures here are in US dollars. For buyers in pounds, Canadian or Australian dollars, exchange rates change the result, sometimes a lot.
• Theft and loss: gold at home needs a safe and suitable insurance.
• Scams and overpriced products: cold callers, "rare coin" upselling and too-good-to-be-true prices. See our gold scams guide.
• Tax and rule changes: sales tax and capital gains rules can and do change.

Who is gold not suitable for?

• Anyone who may need the money in the next few years.
• People who need regular income from their savings.
• Anyone with expensive debt or no emergency fund: paying those down usually comes first.
• People who would panic and sell if the value fell by a quarter in a year.
• Anyone being pressured by a salesperson or promised returns. Legitimate dealers do not promise profits.

What does this mean in the US, UK, Canada and Australia?

Premiums from the GoldVetted premium tracker, 10 to 11 October 2026, cheapest payment method. Tax summary only; check official sources or a tax adviser for your situation.

The UK stands out for long-term holders because of the CGT exemption on UK legal tender coins, which HMRC's manual confirms for Sovereigns and Britannias. The US stands out the other way, with a higher top rate on gold gains than on shares held for the long term.

Common mistakes when deciding whether to buy gold

• Judging gold on the last year or two. Recent gains say little about the next decade.
• Comparing a gold price chart with your actual return. Premiums, spreads and storage come out of your pocket.
• Thinking of gold as "safe". It has been a useful diversifier, but its price can and does fall sharply.
• Putting in money you will need soon. Gold's swings make it a poor home for short-term savings.

This page is general information, not financial advice. Past performance is not a guide to future returns. Consider speaking to a regulated financial adviser before making investment decisions.

Not financial advice. GoldVetted provides general information to help you compare options. It is not personal financial, tax or legal advice. Gold prices go down as well as up, and you may get back less than you pay. Check tax rules with the official source or a qualified adviser before you act.