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In recent years, there’s been an uptick in gold investing interest. In just the past year, gold prices jumped dramatically as investors sought safer places to put their money. This surge came as inflation stayed stubbornly high and geopolitical tensions increased.
Gold’s rapid rise has changed how some investors think about this precious metal. While many still view it as a long-term strategy for preserving wealth, others see opportunities for quick profits. As financial analysts and major banks predict higher gold prices in 2025, more people are questioning traditional approaches.
Right now, is it wise to buy gold for short-term gains or stick to the traditional long-term approach? We turned to three investment professionals for answers. Their insights show that both can work — but your personal goals and risk tolerance determine the best strategy.
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Is gold a better short- or long-term investment now?
Gold’s track record demonstrates its strength as a long-term investment. From 1971 to the end of 2019, gold delivered average annual returns of 10.6%, according to Brett Elliott, director of marketing at American Precious Metals Exchange (APMEX).
But recent market conditions have opened new possibilities. “The price volatility [lately] has sparked more interest in short-term strategies,” says Brandon Thor, CEO of Thor Metals Group. “Investors who can track market trends and adjust quickly may benefit from this approach.”
Here’s what you should know about both:
The case for (and risks of) short-term gold investing
“Gold tends to remain stable for long periods, but when it begins a rally, it tends to move fast,” explains Elliott. This pattern, combined with predictions of higher market volatility in 2025, could create opportunities to buy low and sell high.
If you’re interested in short-term gold investing, gold exchange-traded funds (ETFs) and mining stocks offer the most accessible entry points, liquidity and the ability to capitalize on price movements quickly. While gold futures are another option, they often require special trading approvals and larger account balances that put them out of reach for many retail investors. The short-term strategy comes with risks, however:
- Price slippage: Not all gold investment options offer ideal trading volumes, meaning you might not get the exact price you want when buying or selling.
- Market volatility: Thor cautions that rapid price swings can be stressful for unprepared investors.
- Tax implications: Henry Yoshida, co-founder and CEO of Rocket Dollar, warns that short-term trading can trigger tax liabilities through capital gains.
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The case for (and drawbacks of) long-term gold investing
Overall, “gold is better suited for investors with a long-term investment horizon,” emphasizes Yoshida. He notes that recent pullbacks present good opportunities to enter the gold market gradually over the next one to two years.
This long-term approach aligns with gold’s historical strengths. “[It] has repeatedly proven to be a hedge against inflation, currency devaluation and market instability,” explains Thor. When held as part of a diversified portfolio, gold protects against economic turbulence while smoothing out market fluctuations over time. But before committing to long-term gold investing, consider these potential drawbacks:
- Annual fees: Gold ETFs offer convenience but charge ongoing fees that compound over time.
- Storage needs: Physical gold will require storage, which can increase costs.
- Limited growth: Elliott says that gold’s primary purpose is stability and insurance rather than aggressive growth.
Smart gold investing strategies
Industry professionals recommend the following strategies for successful gold investing:
- Consider opening a gold IRA: “Holding positions within [a gold] IRA offers significant tax advantages,” Yoshida says. This route allows you to defer taxes on any gains until you withdraw from the account.
- Choose the right investment vehicle: Your timeline should guide your choice. For short-term trading, ETFs and mining stocks offer quick entry and exit. Physical bullion (e.g., gold bars and coins) doesn’t have the same liquidity advantage but gives a sense of security as it’s a tangible asset. If you’re holding long-term, you may prefer the latter.
- Match strategy to risk tolerance: Your gold allocation should reflect your comfort with market swings. Experts suggest that while 5% to 10% is typical, your sweet spot percentage depends on how much risk you can stomach.
The bottom line
Whether you’re considering gold for quick gains or long-term stability, your strategy must align with your financial situation. Before jumping into gold investing, evaluate your goals and risk appetite. It may help to speak with a financial advisor who can suggest the best gold investment types based on your needs. They can also help you develop a smart entry strategy to build your gold position over time.
