Is gold still a good investment?
The quote “Gold is money. Everything else is credit.” by J.P. Morgan reflects a time when gold was the foundation of the global monetary system. While the world has since shifted to fiat currencies—money issued by governments that isn’t backed by a physical commodity like gold—gold remains a unique and valuable asset in today’s market. This blog explores gold’s role today, including its benefits and risks, to provide a balanced view for investors.
Why gold still shines in modern portfolios
- A time-tested store of wealth: Gold has long been seen as a safe-haven asset—something investors turn to during times of economic uncertainty. Its value tends to hold up when traditional currencies lose purchasing power, making it a useful store of wealth across generations.
- A hedge against inflation and volatility: Gold often performs well during periods of high inflation and geopolitical tension. As living costs rise or markets become more volatile, investors tend to shift towards gold to protect their wealth. Its low correlation with stocks also makes it a popular diversification tool.
- Inverse relationship with the US dollar and shares: Gold typically moves in the opposite direction of equities and the US dollar. When markets dip or the dollar weakens, gold can act as a buffer in your portfolio, potentially helping reduce overall risk.
Gold’s limited supply and lasting appeal
Unlike paper money, gold can’t just be printed—it has to be mined. That scarcity underpins its value over time. With global supply growing slowly and demand often spiking in uncertain times, many investors see gold as a long-term hedge against economic shifts.
The potential risks of investing in gold
While gold can play a valuable role in a diversified portfolio, it’s important to understand the trade-offs:
- Price swings: Gold can be volatile in the short term, reacting to global sentiment and macroeconomic trends.
- No income: Gold does not generate dividends or interest; you only make money if the price goes up.
- Storage costs: If you’re investing in physical gold, insurance and safekeeping can add to your expenses.
As with any investment, consider your investment goals and risk appetite before adding gold to your portfolio.
Investing in gold with Raiz
If you’re looking to add gold to your Raiz portfolio, you can do so through a customised Raiz Plus portfolio. Gold isn’t included in any of Raiz’s standard or prebuilt portfolios (like Conservative, Emerald, or Moderately Aggressive), but it is possible to gain exposure to gold through Raiz Plus as it gives you the flexibility to build your own customised mix of ETFs.
At Raiz, we currently offer the following two gold-themed ETFs:
- Betashares Gold Bullion ETF – Currency Hedged (ASX: QAU): Tracks gold prices while hedging against AUD/USD currency fluctuations.
- Global X Physical Gold ETF (ASX: GOLD): Holds physical gold bullion and tracks its price in Australian dollars.
To invest, simply search for QAU or GOLD in the ‘Explore’ section of the ETFs menu when building your Plus portfolio. It’s a simple way to gain exposure to gold—no vaults or bullion required.
For more details on the ETFs, visit the BetaShares and Global X websites.
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