Can Gold Counter Inflation in Your Retirement Portfolio? What Retirees Should Know

In recent years, inflation has soared to levels not seen in decades. Today, it is running at its fastest pace in three years. When prices rise, retirees and other investors often turn to gold as a hedge. Gold hit record highs in early 2026, and the metal's 2025 performance was the best on record since 1979.

Find out whether investing in gold during retirement is a fool's errand or one of the signs of financial success.

The history of gold

For thousands of years, people have coveted gold as a store of value. More recently, gold served as the standard for currency equivalents in countries around the world.

The U.S. divorced itself from the gold standard in the early 1970s, and no major country today ties its currency to gold. However, the lure of this precious metal has never really gone away.

Today, many investors continue to turn to gold as a hedge against price inflation or currency devaluation.

The case for holding gold

Historically, there has been little correlation between the direction of gold prices and stock prices. In fact, when global markets and economies wobble, gold often soars in value.

For this reason, many investors turn to gold as a hedge against bad economic times and runaway inflation. They take comfort in the knowledge that if their stock holdings crumble, their stake in gold is likely to increase in value.

The case against holding gold

Although gold sometimes outperforms stocks, historically, the metal has badly underperformed the overall stock market over long periods.

For example, in just the past three decades, the Standard & Poor's 500 index has trounced gold by more than 700 percentage points, according to the Motley Fool.

Warren Buffett — arguably the best investor of all time — has said that he does not see gold as a store of value.

"Forget about whether it's worked well the last 100 years, or the last 50 years, or the last 10 years," Buffett has said. "I see no reason why it would work well in the future."

How much gold is wise to hold?

If you decide to take the plunge and invest in gold, how much is wise to hold?

There is no sure answer to this question. Each individual has to decide the proper amount for themselves based on their financial goals and risk tolerance.

However, many experts who favor investing in gold recommend a modest allocation of 5% to 10% of their portfolio.

How to invest in gold

Some people buy gold directly in the form of physical bullion, such as bars or coins. However, others become nervous at the thought of holding and protecting physical gold.

For this reason, investors often turn to alternative methods of holding gold, such as through a gold ETF.

Is now a good time to invest in gold?

Gold's recent performance has been impressive. But as with any other investment, there is no way to know what the future holds for gold.

History shows that an investment with a recent history of outstanding returns often goes through a phase of correction where it loses some or even a lot of its value.

This is known as reversion to the mean, where an asset's price tends to return to something close to its historical value.

Should you invest in gold?

So, will gold continue to soar, or is it due for a sharp correction? Nobody knows.

All investing involves taking on some risk, and investing in gold is no different. Even those who strongly believe that gold has a place in everyone's portfolio are unlikely to recommend investing too heavily in the metal.

Instead, they might suggest using it as merely a small buffer that is not correlated to the stock market, with the majority of your cash going into other income-generating assets such as stocks, bonds, and even savings accounts.

Looking to others for help

Many people struggle to decide whether gold is a good investment. As with investing in cryptocurrency, opinions are sharply divided about the wisdom of sinking money into precious metals.

If you are unsure of whether gold makes sense in your portfolio, it might be wise to sit with a financial advisor who can offer some guidance.

Bottom line

There is a longstanding debate over the wisdom of investing in gold.

"Gold bugs" tout the metal's role as a hedge against inflation and economic calamity. On the other hand, gold skeptics point to its history of underperforming the stock market.

At the end of the day, only you can decide whether investing in gold is a good way to put extra cash in your pocket or an ill-advised move that might rob you of a more secure financial future.