Key Points:
- Gold’s reputation as a hedge against inflation is inconsistent, with its value fluctuating significantly over different decades.
- While sometimes promoted as a safe haven, gold’s price can be volatile and has fallen during periods of economic disruption.
- The argument that gold protects against a collapsing dollar is questionable, as its price has not always correlated with such predictions.
- For long-term retirement planning, a broadly diversified portfolio of stocks and high-quality bonds is suggested for more reliable stability and growth.
Q. Dan, I’m 70 and will never earn another paycheck. That is both wonderful and a little scary. I keep hearing that I should buy gold to protect my retirement portfolio. How much gold do I need to buy to do that? — Tom in Palm Bay
A. Tom, the answer depends on which risks you want gold to offset. The three most often cited are inflation, political upheaval, and a collapsing dollar.
Gold’s inflation-fighting reputation rests largely on its surge in the 1970s, after President Nixon ended the dollar’s convertibility to gold. Gold more than doubled in price in 1979. That spike capped both a brutal inflationary stretch and a stellar decade for gold.
The next decade told a different story: gold trailed inflation cumulatively by more than 53%. The 1990s were not much better. The 2000s included some strong years, but inflation was low, so those gains probably should not be credited to gold’s supposed value as an inflation hedge.
Most arguments tying gold to political upheaval depend on a fuzzy definition of “political upheaval.” When the U.S. attacked Iran in early March, plenty of gold-touting pundits called it upheaval, even a crisis. They urged investors to “buy gold,” arguing the war would cause massive economic disruptions and could even escalate into World War III.
Gold has risen during periods of turmoil but ‘record is spotty’
Since the war started, there has been a massive disruption to the world economy, yet gold has fallen from nearly $5,300 per ounce to barely $4,000 as of this writing. Inflation, meanwhile, has increased, largely because of rising fuel prices. Something that can drop more than 22% in four months is probably not what you had in mind for protecting your portfolio from such events.
In the 35 years I have been doing this, no one who lacked gold ever had a problem because they did not own it. Several people who owned gold, however, did have a problem: higher stress. The gold did not cause the stress. Their desire to own it came from the belief that tough times were coming and gold would be a safe haven. When that did not happen, their stress got worse. Of course, gold has risen during some periods of turmoil, but the record is spotty.
The other commonly cited risk is a collapsing dollar. The pitch is usually tied to the national debt and budget deficits. Those are real issues, but gold is unlikely to be the solution. The clearest proof is built into the dollar-collapse pitch itself.
The ads are everywhere and usually say something like, “The debt and deficit are out of control and could cause the dollar to fall, so buy gold now!”
I do not dispute that there may well be a day of reckoning on the debt. It is the word “now” and the urgency of the pitch that stand out as red flags. If the collapse of the dollar is truly inevitable and imminent, there is no gold owner on earth who would trade their wonderful gold for your crappy dollars.
I’m not saying you should avoid gold altogether. If you want some, buy some. But treat it as a preference, not a proven shield. At 70, if you are healthy, your retirement could last two decades or more. Stocks have the strongest long-term record against inflation, but if their ups and downs bother you, gold is no smoother ride. Since 1980, gold’s price volatility has been about the same as diversified stocks, yet its return has been less than half as much, even after gold’s more than 50% rise in 2025. If you equate safety with stability, gold has been a poor fit. High-quality diversified bonds have provided more reliable stability.
Risk comes in many forms beyond the three discussed here. The best protection for your retirement is a well-built, broadly diversified portfolio, managed with discipline and patience. Done right, no single risk is likely to do too much damage.
Dan Moisand, CFP® has been featured as one of America’s top independent fee-only financial planners by at least 10 financial planning publications and practices at one of America’s most decorated independent firms. For more info, e-mail him at dan@moisandfitzgerald.com, visit moisandfitzgerald.com or call Dan at 321-253-5400, ext. 101.
Originally published on FloridaToday. Read the original article here.