Important takeaways
-
When stock markets sink and investors worry about inflation, the price of gold tends to rise.
-
Gold has historically held its value and increased in price over time, making it a useful long-term investment tool.
-
Investors can use gold as a safe haven by buying physical gold coins or bars, gold exchange-traded funds (ETFs), or gold mining stocks.
Gold is a safe-haven investment, meaning its value remains stable or even rises during times of economic uncertainty. Unlike stocks, the price of gold is not tied to a single country or company, and gold has been a valuable asset for centuries.
When the economy is unstable, such as during inflation or inflationary periods, investors turn to gold. Over time, the value of gold has gradually increased. In 2016, the price of gold was $1,250 per ounce. As of June 2026, the price of gold was over $4,000 – its price has tripled in 10 years.
What is a safe haven investment?
Safe-haven investments tend to hold their value or even appreciate during recessions. Common safe investments include gold, government bonds, and cash accounts.
The goal of investing in a safe place does not generate high returns. Instead, these investments provide protection against market downturns and inflation. Investing in a safe haven provides a financial anchor and helps investors preserve wealth.
A safe investment is risk-free. All investments, including gold, carry some risk. But, compared to other investment options, investments in safe havens tend to offer more stability.
Why is gold a safe investment?
Gold’s reputation as a safe-haven investment is based on several factors: its limited supply, usage, and historical performance. These properties make gold perform differently from other assets.
There is limited gold
Gold is limited. According to the National Gold Council, approximately 220,000 tons of gold have been mined, and there are about 54,000 tons of gold in unmined gold reserves.
As a result, there is a natural scarcity of gold, which gives it a natural value. Since gold cannot be printed as currency, it tends to hold its value better than cash.
The value of gold is not limited to one government or company
When you invest in stocks or bonds, your investment has some risk tied to a particular company or government. The performance of your investment depends on the performance of that one company.
Gold works differently. It is not tied to one country or company, and is valued by many cultures. Therefore, it is especially attractive in times of national crisis.
Historically, gold has held its value
For centuries, gold has been known as a way to store wealth. Despite wars, recessions, and revolutions, the value of gold has steadily increased.
For example, even during the Great Depression—the global economic depression that occurred from 1929 to 1939—gold performed well. While the stock market struggled during this period, the price of gold rose from $20.63 in 1929 to $34.42 in 1939—an increase of 67%.
Gold forecast and tracker: How much will gold rise in 2026?
How did gold perform during times of economic instability?
A safe-haven investment retains its value in times of volatility. Over the past 50 years, gold has faced several major challenges:
Big Inflation
The Federal Reserve defines the Great Inflation as the period from 1965 to 1982, when inflation rates rose, exceeding 14% in 1980.
With inflation rates so high and purchasing power eroded, investors are turning to gold to preserve their wealth, causing demand to increase. In 1965, the price of gold was $35.12 per ounce. But in 1982, its value was more than ten times that amount, reaching $376. Investors who chose to invest in gold benefited greatly from the high demand.
The Great Depression
Between 2007 and 2009, the US economy experienced a deep, sustained recession. During this time, home prices fell, the stock market fell, and the unemployment rate increased.
But gold continued to deliver results for investors. In 2007, its price was $695.39. In 2009, its price was $972.35 – up nearly $300 per ounce.
The covid-19 pandemic
The onset of the COVID-19 pandemic has caused a sharp drop in the stock market. The market fell nearly 35% between February and March 2020. In contrast, gold was resilient. Although the price of gold fell slightly – it fell from $1,687 per ounce on March 6, 2020, to $1,472 on March 17, 2020 – its decline was much smaller than that of the stock market, and the price of gold quickly recovered. At the end of 2020, the price of gold was around $1,800 per ounce.
Today’s inflation worries
In 2026, inflation remains a major concern for investors. As of June 2026, the inflation rate was 4.25%, above the Federal Reserve’s target of 2%. Rising inflation has pushed more investors into gold, helping to drive up the price.
How does gold compare to other safe-haven assets?
Gold is a popular safe-haven investment, but how does it compare to other assets such as US Treasury securities or bonds? Here’s how gold fits.
Gold vs. US Treasury I bonds
US Treasury Securities are issued by the US Treasury Department, and are backed by the full faith and credit of the US government.
One of the most popular safe assets from US Treasury bonds are Series I savings bonds (I bonds).
Unlike gold, my bonds produce interest. However, bond yields may lag behind gold growth, and they only earn interest for 30 years.
Gold versus bonds
Investment-grade bonds are less volatile than stocks, and unlike gold, they may generate regular dividend or interest income. When interest rates are falling and conditions are relatively stable, bonds may outperform gold, but gold tends to hold its value better when inflation is high.
The importance of diversifying your portfolio
Although gold has historically held its value, it should be consistent with your broader portfolio. Unlike other currencies, gold does not generate income or compound over time. And over the long term, gold’s performance can underperform the stock market, so it’s great as a stabilizing factor in your portfolio.
In general, experts recommend that you don’t put more than 15% of your portfolio in precious metals like gold, but the exact allocation depends on your age, investment goals, and risk tolerance.
Frequently Asked Questions
Is gold always a safe investment?
Gold is generally a safe investment because historically it has held its value. However, its value can fluctuate in the short term, so it’s best to think of gold as a safe, long-term investment that’s part of a broader portfolio.
How to invest in gold in 7 steps
Why do investors buy gold when the stock market falls?
When the stock market declines, many investors turn to gold because they view precious metals as stable. It gives investors confidence when they lose confidence in the stock market.
Is gold better than cash in times of inflation?
In general, yes, gold is better than cash in times of inflation. Although inflation erodes the purchasing power of money, gold has historically maintained or even increased its value.
How much gold should I have in a diversified portfolio?
In general, financial experts recommend allocating between 5% and 15% of your portfolio. That allocation provides a hedge against inflation and market volatility while still allowing your portfolio to grow and generate income.
Can you retire on gold alone?
Can I have physical gold in my retirement account?
You can have physical gold in a retirement account by opening a self-directed retirement account (IRA). Self-directed IRAs, also known as gold IRAs, allow you to invest in gold, but you must keep your gold in an approved custodian.
