Gold As an Investment or Gold As a Holiday Gift?

This time of year, gold often shows up in small boxes under the tree. Coins, jewelry, and heirloom pieces have long been meaningful Christmas gifts: things that are tangible, lasting, and symbolic. Gold makes sense as a gift. But gold as an investment? Not so much.

Seasonal appeal and headline-driven enthusiasm don’t always translate into long-term results. With gold once again in the spotlight, it’s worth separating its role as a holiday tradition from its role, or limitations, within a disciplined investment portfolio.

Why Is Gold So Valuable These Days?

Lately, it seems every financial headline is touting gold as an investment:

“Gold hits a new record.”

“Can the rally continue?”

“Is buying gold the ultimate inflation hedge?”

After an 87% rise from early 2024 through September 2025, the attention is understandable. But as with any investment topic that dominates the news, Buttonwood Wealth encourages clients to pause, step back, and separate the news from the noise.

Gold and the “Inflation Hedge” Myth

Gold has long been described as an inflation hedge, but the data tells a different story. If something truly hedges inflation, its price should move somewhat in line with inflation itself. Yet gold’s volatility has historically been seven times higher than changes in inflation, and even greater than that of the S&P 500. That means gold as an investment often swings far more dramatically than the inflation it’s meant to protect against.

For investors whose goal is to maintain purchasing power, stocks have been far more effective over time. U.S. equities have consistently produced positive, real (i.e., inflation-adjusted) returns, even during periods of higher inflation: without the extreme price swings of gold.

Performance vs. Purpose

From 1970 through mid-2025, the cost of gold rose an average of 8.5% per year, compared to inflation’s 3.9%. That sounds strong, until you compare it to stocks, which averaged 11% annually. Over that same period, $1 invested in buying gold grew to roughly $94, while $1 invested in the S&P 500 grew to about $322.

In other words, the difference between 8% and 11% compounds dramatically over time.

Gold also lacks one key ingredient of long-term growth: an earnings stream. Stocks represent ownership in companies that produce goods, services, and cash flow. Gold simply sits there; its return depends solely on someone paying more for it in the future.

Investing in gold is ultimately a hope strategy; you hope it rises in price, but it doesn’t generate income, dividends, or productivity, the way a stock does. Over the long term, that makes it a speculative asset, not a compounding one.

The Allure of Gold: More Than Economics

There’s no denying the human connection to gold. It’s been treasured for thousands of years, worn as jewelry, and used as a store of value across cultures. There’s nothing wrong with owning gold for sentimental or emotional reasons. But when it comes to financial planning, it’s important to ask what role gold truly plays in helping you meet your long-term goals.

The Real Cost of Gold

Gold will always capture the attention of investors … when it shines. But history reminds us that what glitters isn’t always what grows. For investors seeking to build and preserve wealth, staying diversified and disciplined remains far more powerful than chasing the latest headline.

At Buttonwood Wealth, our advice is consistent: Understand what you’re trying to accomplish, then choose evidence-based tools that give you the best chance of accomplishing it. For the holidays, we suggest buying gold jewelry for your significant other. It covers the gold hedge and will likely pay a better dividend.