How Should We Think About Gold Investing?
Written by a human (me), not Ai.
Gold has rallied more than 60% this year, hitting new highs on multiple occasions.
Inside our investment community we’ve been keen buyers – I’ve been highlighting it for more than a year.
It’s not all about stocks. We help people own a diversified portfolio that includes Stocks, ETFs, Bonds, REITs, Money Market Funds, Gold and Options.
Gold is a key part of the Protection pot in our GPI Portfolio: Growth, Protection, Income.
And Gold was my top pick in April’s Rodcast Investment Mastermind – you can listen to that episode here.
Btw: For more insights like this – straight to your inbox – leave your details in the box at top of this page ☝🏼
My community has generated great returns. And some have asked: What Now?
Here’s what I’ve been saying …
1. Gold is an insurance policy, not an investment
It’s there to protect and hedge against your other assets. You don’t own it for gains – just like you don’t buy insurance hoping you’ll need to make a claim.
Historically, Gold has performed well in periods of Recessions/Crises, Pandemics, Global Conflicts and Uncertainty (like now, with Trump’s policies).
So, regardless of the current rally, you might still consider owning gold to diversify and protect your portfolio.
So why isn’t Gold an Investment? A real investment generates income – like Stocks, Options. Companies, and Property.
However, we can create income from gold – with options.
2. Record Highs … But does it matter?
Gold tends to appreciate (and depreciate) over extended periods – often years – see chart below. So short term moves aren’t so meaningful.
In fact, most people interpret ‘record highs’ incorrectly. For instance, in 2024, the stockmarket reached 57 record highs. Yet, the market still returned 17%.
3. Should you go all-in?
Since we don’t have a crystal ball (at least not one that predicts short term moves), you might consider drip-feeding in – or Pound-Cost-Averaging.
That creates a risk-controlled way of investing, limiting the impact of short term declines and benefiting from them.
4. HOW to invest in gold (and make income from it) …
Gold can be owned in your personal name, your Ltd Company, in ISAs, and in a pension. It can be owned in various forms:
- ETFs. Gold ETFs are easy, low-cost, and can be owned in tax-free wrappers such as ISAs and pensions.
- Options on Gold. You can buy gold ETFs via Options with the added benefit of earning monthly premium income. This works by using “Covered Call” options which enable you to own gold and “rent it out”, thereby earning monthly income. Such income generation can be done with shares or gold. My video explainer here explains this in a step-by-step way.
- Shares in Gold mining companies. Gold miners benefit from a rise in gold via higher profits. You can buy individual gold mining companies or an ETF that owns different gold miners. Take care to do extra DD when buying individual companies.
- Physical Gold. Not my preferred way, but you can buy coins or gold bars. Be aware that you may need storage which costs. And when selling, you won’t get the full market price. And physical gold may incur tax on gains.
5. What are the risks ?
- Gold usually moves inversely to the US dollar. So if the dollar moved up meaningfully, Gold could come under pressure.
- Gold doesn’t pay income, in the usual way. So it can ‘afford’ to do nothing for long periods of time. It can also go down for long time periods – like for 21 years between 1980-2001.
- Know that Gold is not an inflation hedge. That’s a big myth – see the evidence why.
In Summary …
Gold works well during periods of global stress – economically or politically.
That’s the big reason to consider owning it – i.e. for insurance to protect your portfolio during turbulent times.
You own gold to sleep well, not necessarily to eat well.
When it appreciates (like now) consider that as a bonus.
If gold doesn’t do well, see that as paying a premium for an insurance policy.
Know that gold is not an inflation-hedge. Nor does it produce income (in the traditional sense).
But gold can also make significant gains for periods of time.
Finally, when done through Options, we can create monthly income from gold.
Always Remember:
- Time in the Markets always beats timing the markets
- Stay Diversified
- Minimise those leakages: Fees, Inflation, and Taxes
- Financial Markets are a great source of recurring income
- ETFs, Balanced Funds and Options achieve all the above
- Being educated helps you outperform 99% of the population
… to ensure your investments work for YOUR financial freedom (not someone else’s)
And …
For more guidance, our Investment Academy will help you implement all of this in a step-by-step way.
Thousands of people have learnt how to diversify and pound-cost-average into low-cost, set-and-forget ETFs & Funds for inflation-beating growth. And Options to create recurring income.
Click here to learn about our Investment Academy
Finally …
– Don’t take the above as advice as it may not apply to you personally
– Your Capital is at Risk
– You may not be covered by the FSCS
– Anything mentioned in a podcast or in a previous article was valid at that time and may not continue to be now
