Gold prices have been climbing steadily, reaching a series of record highs as investors have piled in amid uncertainties that ൲could affect other markets. While gold could add shine to your portfolio, advisors cau🔯tion against going all in.

In September, U.S. investors poured a net $1.91 billion into gold exchange-traded funds (ETFs), according to CFRA data. “It is important to note that while both gold commodity and equity ETFs flows have been negative overꦚall in 2024, we have seen a turn in flows recently,” C🐭FRA said in a recent research report.

Meanwhile, gold bars have been flying off the virtual shelves at Costco Wholesale (COST) since last year. The company said gold and silver bullion was one of its top digital sales categories for the quarter that ended on Sept. 1.

Gold Handily Outpacing Stocks This Year

Gold is traditionally seen as a hedge or a safe haven asset when investors worry abo൩ut stocks. And this year, so far, has offered a number of reasons for investors to be concerned—uncertainty around a U.S. recession, when the Federal Reserve wouܫld begin cutting rates, the presidential election and geopolitical risks.

Through the close of trading Monday, gold prices are up 32% since the start of the year, trading at around $2,700 an ounce, whereas the S&P 500—a broad barometer of U.S. stock markets🃏—has returned 23%.

Anytime an asset sees that kind of growth, investor interest surges, said Brandon Angotti, VP, Financial Planning & Trust Officer at the Wealth Group Union Savings Bank. "You just want to make sure you're very careful, so that you're not buying at the peak when everyone else is sort of chasing [it]," he said.

Taxes, Insurꦉance and Other Factors to Kꩵeep in Mind

Financial advꦆisors recommend some amount of gold in your portfolio for the sake of diversification, but there are some factors you should keep in mind before in💛vesting.

Clients should 𝕴hold no more than 5% to 10% of their portfolios in an alternative investment like gold for diversification, accord🦄ing to Angotti. 

He also urges investors to read the fine print on tax rates. Gold ETFs, for example, can be taxed at a long-term capital gains 澳洲幸运5官方开奖结果体彩网:rate of up to 28% as opposed to a maximum🐲 of 20%𝔍 tax for equity ETFs.

On top of that, said MaryAnne Gucciardi, a certified financial planner (CFP) at Wealthmind Financial Planning, if you own phys🐽ical gold in the form of bars or jewelry, there is a cost of holding it safely. That could mean additional insurance costs, as well as dealer premiums you have to pay when purchasing or selling gold,

Scott Van Den Berg, President of Century Management, recommends his clients have gold exposure of 6%-7% via bullion rather than through a goꦉld ETF or an ETF that invests in gold mi𒅌ning stocks, to hedge against rising prices in the future.

“While inflation has come down, we don’t think it’s going to stay down,” he said, adding he𒁃 believes elevated government spending will stoke inflation ag♊ain, which could make gold more appealing. 

Important to Exercise Caution

David Flores Wilson, a managing partne𓆉r at꧃ Sincerus Advisory, however, cautions investors to not make the mistake of believing that gold has intrinsic value and will continue to have intrinsic value.

“Investors should be mindful that there have been recent periods of over 10 years where gold's return has been nearly flat prior to its run-up over the last year," Flores Wilson said.

Wealthmind's Gucciardi also believes it's difficult to ascertain where the price of gold might be headed, especially in the near term.

"For short-term investors, gold often comes down to timing the market, which is tricky and not based on research-backed strategies,” she said.