Gold: All That Glitters Still Isn’t That Great Of An Investment

Gold had a moment.

In 2025, it was one of the best-performing assets, up nearly 65%, its strongest run in decades. And yes, that kind of return gets attention, especially when it wasn’t driven by the usual tech darlings.

But strong performance doesn’t automatically make something a great investment. And gold, in my view, still isn’t special.

Here’s why.

Unlike stocks, bonds, or real estate, gold doesn’t do anything. It doesn’t produce income, it doesn’t grow earnings, and it doesn’t generate cash flow. Its value depends almost entirely on what someone else is willing to pay for it in the future. Warren Buffett famously summed this up by saying you could own all the gold in the world, and what would you do… “climb up on top of it…polish it…stare at it,” but it still wouldn’t produce anything.

That lack of intrinsic value makes pricing gold tricky and unpredictable. There’s no earnings report to analyze, no yield to compare, no fundamental way to decide whether it’s cheap or expensive. You’re relying on sentiment, fear, and momentum.

“All you are doing when you buy [gold] is that you’re hoping that somebody else a year from now, or five years from now, will pay you more to own something that, again, can’t do anything,” Buffett added.

Inflation Hedge. Not so much.

Gold is also often described as an inflation hedge, but history doesn’t consistently back that up. Yes, it worked well in the 1970s. But for decades after, gold went nowhere. Even more recently, during the inflation spike of 2022, gold finished the year roughly flat. In one of the worst inflation years in a generation, it didn’t meaningfully protect purchasing power.

So why did gold do so well in 2025?

A handful of things lined up at the same time. Interest rates fell, making income-producing assets less attractive relative to gold. Global uncertainty pushed investors toward perceived “safe havens.” Central banks increased gold reserves. Concerns about government spending and currency debasement resurfaced. And once gold started rising, momentum pulled more investors in.

That combination created a near-perfect environment. But those conditions aren’t guaranteed to stick around.

The bigger risk now is behavioral. Chasing an asset after a massive run can be dangerous, especially one without cash flow or fundamentals to support its price. Past performance feels comforting, but it doesn’t protect future returns.

The good news?

You don’t need gold to build wealth. Diversified portfolios built around productive assets have done that job well for decades. There are many ways to invest thoughtfully without jumping into what’s already had its moment.

As with any single investment, we don’t want it to become a concentrated asset that increases your risk and reliance on its continued performance. Gold had a great year. That doesn’t mean it deserves a starring role in your long-term plan.

This article is for educational purposes and does not constitute personalized financial advice. Always consult a qualified financial advisor before implementing complex financial strategies.