The attendant holds a 1 kilogram of gold bar on February 17, 2025.
Akos Stiller/Bloomberg via Getty Images
Gold prices are popping out. But investors should avoid the temptation to chase shiny objects, investment experts said.
The SPDR Gold Equity Fund (GLD), which tracks gold bullion prices, has risen about 11% in 2025 as of 2pm on Tuesday. Returns have risen by around 42% over the past year. (Prices fell more than 1% on Tuesday.)
Gold futures prices have risen about 10% year-on-year, and are now 36% higher than the price they were a year ago.
By comparison, the S&P 500 US stock index has risen by about 1.5% in 2025 and 17% over the past year.
Lee Baker, a certified financial planner, said a year ago he had not received a client call about money. Now he regularly puts them in the field.
He thinks it’s wise for investors to remember Warren Buffett’s classic rules.
“We are a great leader in our advisory council,” said Baker, owner and president of Atlanta-based Clarice Financial Advisor and a member of CNBC’s Advisor Council.
A typical investor should not have an allocation to gold above 3% of a diversified portfolio, Baker said.
Enchanted by the lofty returns, investors may have a knee-hung reaction and buy a large chunk of gold (literally or figuratively). And in the process, he says, he makes common investment mistakes with high purchases and low sales.
“If you’re going to make money with money, you need to sell it and sell it, and hopefully sell it at the right time,” Baker said. “And if you’re in now, are you buying at Peak? I don’t know.”
Why is the price of gold rising?
Investors often recognize gold as a safe haven in times of chaos and buy assets when there is high levels of uncertainty, and are a senior global market strategist at Wells Fargo Investment Institute, and global Samana, who is responsible for stocks and real assets, explained.
“I think we can check that box right now,” he said.
It said, “In a true time of crisis, bonds shine brighter than gold.”
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Plus, many investors buy gold because they think it’s a good inflation hedge, Samana said. (The data doesn’t always support that investment paper.) Investors are concerned about recent data suggesting that progress in lowering inflation may have stagnated, he said. .
US sanctions over Russia in 2022 have been a “turbocharger” of gold returns for more than a year, Samana said.
Sanctions have resulted in some central banks in China replacing the US Treasury Department, particularly in order to avoid the potential difficulty for Chinese central banks to access assets derived in the US dollar during future geopolitical disputes. He started buying more gold to the company, Samana said.
It values gold demand compared to its price a year ago.
“Don’t chase,” Gold returned, Samana said: “You probably want to hold back precious metals in [current] level. ”
Experts don’t expect gold to continue to shine.
“In my mind, gold will not continue to have a significant upward trend.
How to invest in gold
On January 17th, 2025, the San San Dao Mine was located on Lights Island in Shandong Province, China.
Future Publishing via CFOTO/Getty Images
Baker exposes gold to invest, for example, through funds such as funds traded on exchanges, or by investing in stocks in gold mining companies, instead of purchasing physical gold. Recommended.
When investors need to sell assets, capital and stocks are generally more liquid, Baker said. Many physical gold investors are likely going to have the extra effort of storing them somewhere and guaranteeing them, Baker said. Insurance can cost investors more than 1% to 2% of the annual gold value.
Like Baker, Samana believes it might be okay for investors to hold 1% to 2% of their golden, diversified portfolio.
Investors interested in buying gold should consider it part of a broader product portfolio. This could include allocations to basic metals like energy, agriculture, copper and basic metals like precious metals like gold, Samana said.
Wells Fargo’s investment model has a range of commodity allocations ranging from 2% of conservative investors to 7% for more aggressive growth.
