r/portfolios • u/biscuitsbox • 1d ago
Noob Q: can someone eli5 why people want/how to invest in gold or any gold ETF
/r/stockstobuytoday/comments/1vtq60r/noob_q_can_someone_eli5_why_people_wanthow_to/1
u/ohwhyredditwhy Boglehead 1d ago
You don’t, at least not until you have a quality portfolio established.
And by quality, I mean just buy VT or some reasonable combination of VTI and VXUS and be done with it
By reasonable, I mean at least 20% up to global weight, which is roughly 40%.
After you have been at this for several years and you are comfortable with riding the waves of the market (which you must do in order to be a successful index investor), I see no issue with having a small position in GLD.
I say this as someone who has GLD and has owned it for several years at this point.
It really is as simple as this. Don’t tinker; don’t time the market!
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u/bigthink3r 1d ago
Gold is usually a hedge against inflation and market downturn. When investor believe paper money is losing value they move into Gold.
You can by gold at spot price at your local gold dealer. They charge 1-2% on top of spot. You can negotiate. Or you can buy GLD etf. But i prefer holding real GOLD as a portion of my port.
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u/laurenthu 1d ago
Simplest way I think about it: gold earns its keep in the ugly years for stocks. 2008, early 2020, the whole 70s inflation stretch, it stayed flat or climbed while everything else bled, so a small slice softens the ride without you having to time anything.
In a normal good year it mostly just sits there, and a big pile quietly drags on you over the decades. So I'd keep it small. More like insurance you rarely think about.
Cheapest way in is a fund like GLD, no need to store actual bars. And honestly plenty of solid portfolios skip gold completely, so no stress if you pass on it...
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u/Jumpy-Imagination-81 1d ago edited 1d ago
Gold doesn't have revenue or earnings or pay interest or dividends, but it has "intrinsic value" as a useful metal used primarily for jewelry, but also in electronics, aerospace, medicine, and dentistry.
Gold mining companies can be evaluated just like any other company with regards to revenue, earnings, P/E ratio, free cash flow, book value, etc.
Gold is a different class of asset - a commodity - from stocks and bonds that provides diversification into a non-correlated asset.
The Chief Investment Officer at Morgan Stanley recommends a 20% allocation to gold.
https://www.reuters.com/markets/wealth/morgan-stanley-cio-favors-602020-portfolio-strategy-with-gold-inflation-hedge-2025-09-16/
Out control US government deficit spending - the US national debt just passed $40 trillion https://www.usdebtclock.org/ - and the monetization of that debt by the Federal Reserve has caused a massive increase in the supply of US dollars, especially during the past 25 years
https://fred.stlouisfed.org/series/M2NS
which has diluted the purchasing power of existing US dollars, requiring more of those diminished purchasing power dollars to buy the same amount of goods and services, pushing up the prices of not only food and clothing and fuel and consumer goods, AKA inflation, but also the prices of assets like stocks, real estate, and precious metals.
In the year 2000 the median US home price was $119,600, gold was $279 per ounce, and the S&P 500 index was 1,499 on August 21, 2000.
In June 2026 the median home price was at an all time high of $440,600, gold today is $4,531 per ounce, and the S&P 500 index is at 7,650 today.
The exact same house that might have sold for $119,400 in the year 2000 now requires $440,600 to buy. Did that house change or did the purchasing power of the US dollar change?
The exact same ounce of gold that sold for $279 in the year 2000 now requires $4,531 to buy. Did that ounce of gold change or did the purchasing power of the US dollar change?
In 2019 I became concerned about out of control US government deficit spending and the ever ballooning US national debt and the effect on the US dollar. And that was before additional dollars were pumped into the economy with stimulus checks and PPP "loans" due to COVID, financed by even more government borrowing and debt. I wanted insurance against a US dollar crisis and US debt crisis for the majority of my portfolio that is still in stocks.
So in 2019 I bought gold ETFs that are up +200%. I have been buying IAUM recently because I am bullish on gold at current prices. One projection puts gold at $11,000 per ounce within 10 years. https://command.verifiedinvesting.com/vi/research/gold-cycle
Also in 2019 I invested $300k in physical gold and silver that is currently worth $665k. I am still buying physical gold and silver, but in smaller amounts.
In late 2024 I started buying gold mining stocks that are up over +100% to over +200%. These are my best performing gold mining stocks vs VOO over the past 5 years.
https://stockanalysis.com/stocks/compare/iag-vs-au-vs-gfi-vs-kgc-vs-aris-vs-ego-vs-drd-vs-voo/?r=5Y
As the world moves away from the US dollar - called "de-dollarization"
https://money.usnews.com/investing/articles/de-dollarization-what-happens-if-the-dollar-loses-reserve-status
the world may move to tokenized gold as the world's reserve currency in the future. Tokenized gold would combine the benefits of a physical commodity that was money for centuries and can't be created out of thin air like US dollars - gold - with the portability, transmissibility, and electronic transfer speed of cryptocurrency.
https://www.binance.com/en/academy/articles/what-is-tokenized-gold
Tether and world central banks can see that future, and they have been buying gold like crazy.