With properties ranging from malleability to being resistant to corrosion — and a limited overall supply in existence — gold has been a coveted asset for thousands of years.
A few mistaken beliefs, however, have somehow persisted about the precious metal. Here are three of the most frequent fallacies, courtesy of Gainesville Coins experts.
Misconception No. 1: Gold Is a Sketchy Investment
“Some people think gold is very risky or volatile,” says Everett Millman, a precious metals specialist at Gainesville Coins. “The data show that’s not true. Gold is actually a rather safe asset.”
While equities’ performance tends to be less favorable during financial upsets, gold has historically generated returns during both positive and negative economic periods, according to the World Gold Council.
A number of investors, Millman says, may just not be familiar with gold’s track record.
“Gold actually is one of the more steady assets, in terms of price stability,” Millman says. “If we have an economic downturn, recession or an escalation in a war — reasons why the world might become more unstable [and] financial markets might become more unpredictable — gold is [an] answer to all of those concerns. Having a little bit as a safety valve is an extremely smart thing to do.”
Misconception No. 2: Gold Can’t Provide Decent Returns
Conversely, some investors may think of gold as being almost too safe — an element that can potentially help diversify their portfolio and make it more resilient to economic issues like inflation, but not necessarily contribute much toward their savings’ growth.
“People buy insurance for disaster scenarios they can’t predict or control,” Millman notes. “That’s what gold is as an investment. [Some] people’s inherent bias [is], ‘Gold is boring. Why would I invest in gold if there are more attractive opportunities out there?’”
The precious metal, however, has outperformed most major asset classes in the past 20 years, according to the World Gold Council, and allocating a portion of your portfolio to it may help position you to weather future challenges.
“Gold has steadily climbed in value and kept pace with inflation for thousands of years,” Millman points out. “If the economy falls 20% and we have a recession, or the value of the dollar loses 10%, getting [a] 3% to 5% return on your gold is actually very, very good.”
Misconception No. 3: It’s Not a Good Time To Buy Gold
Gold prices have hit record highs in recent months — reaching a new level of $2,135 an ounce in December 2023, and after arriving at multiple other pinnacles in March and April of this year, as Gainesville Coins’ price charts show, climbing to a new high point of more than $2,400 an ounce on April 12.
That doesn’t necessarily mean, however, that it’s too late to enter the market.
Central banks have been accumulating gold at a growing pace in recent years — purchasing 152% more in 2022 than in 2021 and close to that level in 2023, according to the World Gold Council — indicating there’s an ongoing demand for the precious metal.
At the same time, individual investors, wealth management firms, and other investment industry members haven’t become involved en masse in the market, according to Millman.
“The tide really hasn’t turned yet,” he says. “There’s still an opportunity here because it’s not like everybody’s jumping on this train — they’re not.”
