Owning small amounts of gold alongside stocks and bonds can help diversify your investment portfolio
If you are the type of investor who likes assets with a long track record, there is a certain yellow metal that might fit the bill.
Gold is not a smooth ride, since its attractiveness can depend on what is happening to other asset classes. For example, its price gained 25% in 2020, fell 4.5% in 2021, and was flat in 2022. So far in 2023, gold is up about 6%—compared with about 13% for U.S. stocks. To be sure, in 2023 gold returns haven’t been worth writing home about. Gold has endured the “headwind” of a rising-rate environment, says Joe Cavatoni, the World Gold Council’s market strategist. The strength of the U.S. dollar, along with bonds paying out high interest rates, tends to “put gold on the back burner,” he says.
Also of note is SPDR Gold MiniShares , which doesn’t have the size and liquidity of its bigger cousin—each share represents a smaller amount of the precious metal, a tenth of an ounce—but offers a rock-bottom fees of 0.1% that can appeal to cost-conscious investors.While owning the physical asset can appeal to some, it is a fairly static investment—a gold bar sitting in a vault, for example.
To spread out your risk and diversification beyond individual gold mining stocks, you can look to a fund that holds a basket of them. One good example is VanEck Vectors Gold Miners ETF , which has produced one-year returns of 14% and a five-year annual average of 8.9%. Beyond Newmont and Barrick, its top holdings include names like Franco-Nevada, Agnico Eagle Mines, and Wheaton Precious Metals.For some investors, ownership of shares of a stock or fund might seem a little abstract.
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