Why investors hold gold

Gold has held value across centuries and civilizations in a way almost nothing else has, which is why investors still turn to it today as a store of value, something that preserves purchasing power over long stretches of time rather than growing it. Unlike a currency, no government can simply print more gold into existence, and that scarcity is a big part of its appeal.

That scarcity also makes gold a popular hedge against inflation and currency weakness. When prices are rising fast or a currency like the peso is losing value against the dollar, gold has historically tended to hold its worth better than cash sitting in a bank account, since its price is set globally rather than tied to any one country's money supply.

Gold is also known as a 'fear asset,' because during market crises, wars, or periods of panic, investors often rush toward it as a safe haven, which can make it rise even as stocks fall. The honest caveat is that gold produces no income and no earnings growth: it pays no dividend, no interest, and doesn't expand a business. Its return comes entirely from its price changing, which makes it fundamentally different from owning a share of a growing company.

During a sharp global stock market selloff, an investor's stock portfolio drops 15% in a month, but the small slice of gold they hold barely moves, and even rises slightly, as other investors around the world rush toward it out of fear. The gold didn't grow the investor's wealth that month, but it cushioned the overall blow.