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Market Update

Beware the Hype on Gold

It looks good this year, but its longer-term track record is mixed.

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Gold has been one of the hottest performers so far in 2020. With the price of gold rising nearly 17% for the first six months of the year, precious metals and commodities funds focusing on gold and other metals have been among the best performers in 2020’s turbulent market. In response, money has flooded into gold funds. SPDR Gold Shares (GLD), an exchange-traded fund that ranks as by far the largest precious metals fund, has scooped up $20.4 billion in estimated net inflows over the past 12 months, increasing its asset base by roughly 30%.

In this article, I’ll take a look at the role gold can play in a portfolio and explain why it deserves a more skeptical look than the current hype might suggest.

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Amy C. Arnott does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.