The reality of precious metals in your portfolio
Few topics come up as consistently in client conversations as this one:
“Where does gold fit in my portfolio — especially with everything going on in the world right now?”
Gold (and other precious metals like silver) has a kind of mythic status. It shows up in conversations about inflation, market crashes, government debt, global instability, and even “doomsday” scenarios.
So is gold a smart investment… or just financial comfort food?
What makes gold different from other investments?
Let’s start with an important acknowledgement:
Gold will almost certainly always have value.
It is a physical, scarce, globally recognized store of value.
Unlike some cryptocurrencies, individual stocks, or even bonds, it is very hard to imagine gold going to zero.
That is part of its appeal. But it’s only half the story.
Gold does not behave like stocks or bonds
Gold is fundamentally different from the core building blocks of most retirement portfolios:
Stocks represent ownership in businesses that can grow, innovate, and pay dividends.
Bonds are loans that pay interest (coupons) and return principal if held to maturity.
Gold is:
A spot-priced asset — its price reflects what the market is willing to pay right now.
Non-productive — it does not generate earnings, dividends, or interest.
One-dimensional — there is no true diversification within gold; it’s essentially one big market with one price.
This means that unlike a diversified mix of stocks and bonds, where thousands of underlying companies and issuers can each perform differently, gold is just… gold.
The appeal: Inflation hedge and “doomsday” asset
There are two main reasons most people bring up gold:
Hedge against inflation
“Just in case” doomsday protection
1. Gold as an inflation hedge
The common belief is:
“When inflation rises, gold protects you.”
There is some truth to this — especially if you zoom out far enough.
Over very long time frames, gold has generally kept up with, and in some periods exceeded, inflation. But the path in between can be extremely painful, with long stretches where gold badly trails even basic inflation.
We will look at that history in a moment.
2. Gold as a “last resort” currency
Some investors are drawn to the idea of holding gold coins or bars as a kind of last-resort currency:
“If the financial system collapses…”
“If currencies fail or markets shut down…”
In that scenario, the thinking goes, gold could be used to barter or transact.
There is a certain logic to this, and for some people, having a small allocation to physical gold as a psychological safety net can be meaningful. But it comes with trade-offs:
Storage and security – physical gold needs to be stored and protected.
Theft risk – unlike a diversified account at a custodian, physical gold can simply be stolen.
No income – while it sits in a safe, it is not generating dividends or interest.
A look back: Gold vs inflation over the decades
To understand where gold realistically fits, we need to look past the headlines and zoom out over full market cycles.
The 1970s and early 1980s: Gold’s big run
In the 1970s:
Inflation was high.
Government spending was elevated.
Investors were nervous about the future.
Gold prices surged as people looked for protection.
Then Paul Volcker, then-chair of the Federal Reserve, aggressively raised interest rates to break inflation. When inflation finally came down, gold prices dropped significantly.
At gold’s peak in 1980, anyone who bought near the top and held on expecting a quick recovery was in for a very long wait.
The long winter: 1980 to 2011
Adjusted for inflation:
Gold did not regain its 1980 peak in real (inflation-adjusted) terms until around July 2011.
That is roughly three decades where, after:
Storage costs
Opportunity cost
Volatility
…gold delivered a negative real return for much of that period.
During those same decades:
Stocks, especially in a diversified mix of large and small companies, often produced returns in the high single to low double digits.
Bonds, particularly Treasuries leading up to the 2008 financial crisis, delivered yields in the 5–7% range historically before dropping to the 2–3% range more recently.
Over the full period from the early 1980s to the mid-2020s:
Gold’s long-run return has generally approximated inflation over the most recent multi-decade stretch.
Over even longer windows, it has sometimes outpaced inflation — but with long periods of underperformance in between.
The bottom line:
Gold can do well in certain environments, but it can also lag basic inflation — sometimes for decades.
There have been spans where a simple short-term CD would have matched or beaten what gold delivered, with less drama.
So… is gold a good investment for retirement?
It depends what you expect it to do.
What gold is not great at
For a retirement portfolio that is meant to:
Replace paychecks
Fund living expenses
Support predictable long-term planning
…gold has some clear limitations:
No income:
No dividends, no interest.
If you need your portfolio to generate ongoing cash flow, gold doesn’t help on its own.
Unpredictable cycles:
Gold can be sharply out of favor (and underwater relative to inflation) for very long stretches.
That is not ideal when you are counting on your portfolio to support you year in, year out.
Limited diversification benefits on its own:
While gold can sometimes move differently than stocks or bonds, it is still one asset class with one price.
You are not spreading risk across industries, business models, or issuers the way you are with a broad stock and bond allocation.
What gold can be used for thoughtfully
All that said, gold is not “bad” or “wrong.” It can make sense in a few specific contexts:
As a small slice of a truly diversified portfolio
For some investors, a modest allocation to precious metals can provide psychological comfort and some diversification benefits.As part of a personal “sleep at night” strategy
If owning some gold coins or bullion gives you peace of mind in a worst-case scenario, it may play a role — as long as it does not derail the broader plan.
The key is proportion. Gold should almost never be the core of a retirement plan designed to reliably replace income and meet long-term goals.
A better way to think about gold in your plan
Rather than asking, “Is gold good or bad?” a more helpful question might be:
“Given my goals, risk tolerance, and time horizon,
how much (if any) gold appropriately fits into a diversified strategy?”
For most retirement-focused investors, that conversation will include:
How much income you need your portfolio to produce
Your comfort with volatility and drawdowns
Your time horizon (both for retirement and for legacy planning)
How gold compares, historically and structurally, to other ways of hedging risks (like inflation, interest rates, or market volatility)
Predictability matters in retirement
The further you move into the “distribution” phase of life — where your portfolio is replacing your paychecks — the more important it becomes to have:
Reliable sources of income
Reasonable expectations about returns
A portfolio design that can weather different environments without depending on any one asset class to save the day
In that context, a well-diversified mix of stocks, bonds, and other thoughtfully chosen asset classes tends to offer far more predictability than making a big bet on gold.
How Hershey Financial Advisers can help you decide
At Hershey Financial Advisers, we regularly field questions like:
“Should I buy gold right now?”
“Is it too late to add precious metals?”
“I already own gold — how much is too much?”
Our role is not to push or dismiss any one asset, but to help you understand how each piece fits into:
Your retirement income plan
Your risk management strategy
Your long-term goals and values
That includes walking you through:
How gold has behaved in different market environments
How it compares to other ways of protecting purchasing power and managing risk
What a balanced, diversified portfolio could look like in your specific situation
For some families, that might mean:
A small, deliberate allocation to gold or other precious metals
Or simply the reassurance that their goals are well-supported without needing gold at all
Summary
Gold and other precious metals can feel reassuring when the world feels uncertain, but they are not a cure-all for a retirement portfolio. Over time, gold has sometimes outpaced inflation and sometimes lagged it badly, with long stretches of no real progress and no income along the way. For most investors, it may play a small supporting role—if it fits at all—but a well-diversified mix of stocks, bonds, and other assets is usually a more reliable way to fund long-term goals and retirement income.
Have questions about gold in your portfolio?
If you are:
Wondering whether to add, keep, or reduce gold in your accounts
Approaching retirement and want more predictability from your portfolio
Curious how your current mix of assets lines up with your goals
…we would be glad to talk.
Reach out to our team at Hershey Financial Advisers, and we can walk through your situation, your questions, and your options in plain language. Together, we will help you decide whether gold has a small, sensible place in your plan — or whether your future is better served by other tools.