Gold has been used as money and a store of value for thousands of years. Today most investors hold it for a few specific reasons.
Diversification
Gold does not pay interest or dividends, and its price often moves differently from stocks and bonds. That low or uneven correlation can reduce the overall swings of a portfolio, which is the main case for owning a small amount.
Protection against inflation and currency weakness
Over long periods gold has tended to hold its purchasing power, and it is priced in US dollars, so a weaker dollar can lift its price. This is a tendency, not a rule: there have been long stretches where gold lagged inflation.
Ways to own it
- Physical gold (coins and bars): direct ownership, but with storage and insurance costs.
- Gold ETFs: easy to trade and track the price, with an annual fee.
- Mining stocks: exposure to gold prices plus company-specific risk.
What to keep in mind
Gold can be volatile and can fall for years. It generates no income, so its return depends entirely on the price rising. Many advisers suggest keeping it to a modest share of a portfolio rather than the core of it.
This article is general information, not investment advice. Consider your own goals and risk tolerance, or speak to a licensed adviser.