Gold's Glitter Fades: Financial Advisors Reassess Metal's Investment Value

Gold has experienced significant price increases in recent years, rising over 60% in 2025 and fluctuating throughout 2026. Central banks are accumulating gold reserves, and retail investors are buying in droves.

As a result, financial advisors are fielding questions from clients about the metal's potential role in their portfolios.

However, according to Sam Instone of AES International, gold does not offer the long-term benefits that many people believe it does. In fact, over the last four decades, gold has returned only 2.8% per year on an annualized basis, while the S&P 500 has returned 11.7%.

Instone argues that the majority of gold's price appreciation in recent years is due to a phenomenon known as recency bias, where investors overestimate the importance of short-term performance.

The article also debunks two other common myths about gold: its ability to protect against market crashes and inflation. In reality, gold has been outperformed by US government bonds during times of crisis, and it does not reliably correlate with short-term inflation shocks.