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Can you make money by investing in gold?

Investing in gold is often beneficial, particularly during times of inflation. Getty Images/iStockphoto

Another year is in the books, and many Americans are starting 2023 by reviewing their finances and reevaluating their investments. Amid stock market volatility, international unrest, and a potential recession, some investors are turning to gold as a safe haven for their investments.

Historically, a common investment strategy is to regard gold as a store of value during turbulent times. But can you make money investing in gold? While investors typically invest in gold to help diversify and stabilize their portfolios, it is possible to make money through gold investments.

If you think you could benefit from investing in gold then start by requesting a free wealth protection kit to learn more about this unique opportunity. 

How you can make money investing in gold

One of the simplest ways to invest in gold is to buy gold bars and coins, which can rise in value due to inflation or world unrest. During the financial crisis of the late 2000s, a heavy push of gold investment spurred an increase in the price of gold from $800 an ounce in 2009 to $1,900 in 2011, according to Financial Post.

Similarly, gold investment soared during the pandemic, driving gold prices from an average price of $1,393.34 in 2019 to a $1,798.89 average in 2021, according to MacroTrends.

If you'd rather not deal with the hassle of storing physical gold, you could choose to own gold stocks, whose prices fluctuate with the price of gold. Like companies in other sectors that perform well regardless of industry trends, some gold mining companies are well-managed and profit even when the gold prices fall. Additionally, a slight upturn in the price of gold may result in substantial gains with some gold stocks, delivering a higher return on investment for their shareholders than owners of physical gold may experience.

Gold exchange-traded funds (ETFs), a collection of gold mining stocks, are another option to potentially profit from gold. Many investors prefer ETFs over individual gold stocks to spread out their investment risk. 

Of course, investing in gold stocks and ETFs subject you to the same fluctuations as the stock market. That means your investments could fall during a stock market crash, even if gold prices remain unchanged.

Learn more about making money by investing in gold with a free wealth protection kit from Goldco!

How you may not make money investing in gold

As with other assets, gold investments carry the potential to decline in value, so it's important to understand the risks before investing your money. One way to reduce the likelihood of losses is to avoid riskier types of investments. For example, some experts caution against buying:

  • Proof coins: These are special edition coins designed for collectors that the United States Mint states are the finest quality coin it produces. Prices for these coins may be overpriced due to collector demand, and their gold value could vanish depending on market conditions. Buying standard gold coins from a reputable dealer may be a safer bet.
  • Fractional coins: As its name suggests, fractional coins are available in fractions of an ounce, such as a half-ounce or quarter-ounce. While these coins are an affordable way for many to invest in gold, they come with a higher markup than one-ounce coins, ranging from up to nine to 15%.
  • Gold futures and options: Futures and options contracts represent the riskiest form of gold investment. These speculative investment options have the potential for both higher rewards and catastrophic losses. Because the risk is so significant, many online brokerages require you to sign additional forms acknowledging the potential danger these derivatives present.

Other considerations

While it's possible to make money from gold investments, proponents of the yellow metal typically view it as a tool for wealth preservation rather than growth. Traditionally, the stock market tends to deliver higher returns than gold. From 1990 to 2020, the price of gold increased roughly 462% from an average closing price of $383.73 to $1,773.73, according to MacroTrends. During the same 30-year period, the Dow Jones Industrial Average (DJIA) increased by about 1003% from an average price of $2,679.45 in 1990 to $26,890.67 in 2020.

Over shorter periods, gold may outperform the stock market as investors react to inflation, world turmoil and other factors which drive investors to gold. But over the long haul, the stock market delivers a substantially higher ROI. As such, it may be best to view gold as a safe haven and a way to diversify your portfolio.

Learn more via a free wealth protection kit from Goldco now

The bottom line

It's possible to make money with gold, though wealth preservation may be a more appropriate goal. As with any investment, weigh the pros and cons of buying gold and how gold may help you achieve your financial goals. For example, senior citizens looking for an income-producing asset can likely find better options than gold. However, if you're looking for a hedge against inflation, investing in gold may make sense. You can start reviewing your gold investment options by reviewing companies in the table below.

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