In recent years, gold has seen a significant price increase as investors turn to the precious metal amid heightened market volatility. With ongoing economic uncertainty, geopolitical tensions, and persistent inflation, gold’s appeal as a safe-haven asset continues to grow. Currently, gold trades near $3,300 per ounce, reflecting strong demand.
Gold offers investors portfolio diversification and a degree of stability during unpredictable market conditions. However, experts emphasize the importance of a well-planned strategy when incorporating gold into investment portfolios. We consulted leading gold specialists and financial professionals to outline four key strategies that investors should consider in today’s economic environment.
Put Gold’s Price Movements Into Context
“This year, gold’s performance has been exceptional,” says Joshua Barone, wealth manager at Savvy Advisors. Gold opened the year near $2,650 per ounce and has risen to around $3,300—a gain of more than 20%. While impressive, such rapid appreciation is unusual.
Barone explains, “Although buying gold at current prices may feel daunting, the fundamentals remain strong. Central banks, especially in India and China, continue to make large gold purchases. In times of uncertainty, gold remains a trusted store of value.”
For investors hesitant about the current high prices, Barone suggests considering gold mining stocks as an alternative exposure to gold.
Understand the Different Forms of Gold Investments
Gold investment comes in various forms, each with unique benefits and considerations. Physical gold—such as bars and coins—offers direct ownership but involves additional challenges like secure storage, insurance, and potential short-term price volatility.
Paul Williams, managing director at Solomon Global and an expert in physical gold, advises, “Physical gold is best viewed as a long-term store of wealth, with a buy-and-hold approach to mitigate short-term market fluctuations.”
In contrast, gold exchange-traded funds (ETFs) provide more liquidity and can be used to react quickly to market events, though they are generally more exposed to short-term price swings. For investors preferring convenience over physical custody, gold ETFs offer an accessible alternative.
“Our strategy has increasingly focused on positioning gold in portfolios through ETFs,” adds Barone.
Consider Liquidity When Choosing Your Gold Investment
John Berman, founder and CIO of Berman Capital Group, highlights gold’s long-standing role as a hedge against inflation and geopolitical risk. “For most investors seeking gold exposure, physical gold ETFs provide the best balance of accessibility and liquidity,” he notes.
Physical gold investments, such as bars and coins, often entail logistical complexities, including storage and resale challenges, making them less liquid.
Be Mindful of Tax Implications
Tax treatment varies across different gold investments and can significantly impact returns. Barone points out that, in the U.S., physical gold is classified as a collectible and may be subject to a higher long-term capital gains tax rate of up to 28%, compared to the standard 20%.
There are exceptions for certain coins and bullion stored by approved custodians, but investors should carefully evaluate tax obligations based on the gold investment type.
Additionally, investors may explore gold-backed individual retirement accounts (IRAs) for potential tax advantages.
The Bottom Line
Amid persistent inflation and economic uncertainty, gold remains a valuable component for portfolio diversification and inflation protection. As the Federal Reserve maintains elevated interest rates, investors should approach gold with clear objectives, an understanding of tax consequences, and knowledge of the various investment forms available.
Whether through physical gold, ETFs, mining stocks, or gold IRAs, a strategic approach tailored to individual goals and risk tolerance is essential to maximizing gold’s benefits in today’s complex market landscape.
