Gold is one of the most misunderstood assets in the modern financial world. Misconceptions about its purpose, behavior, and value are common — even among seasoned investors. Below, we break down seven of the most persistent myths and explain the real role gold plays in a diversified portfolio.

1. “Gold goes up when the stock market goes down.”

This is one of the most common myths. While gold can rise during market volatility, it’s not simply an inverse of the stock market. In fact, gold has outperformed the S&P 500 since the last time the U.S. had a balanced budget.

If you had invested $100,000 in the S&P 500 in the year 2000, reinvested dividends, and held through December 14, 2024, you’d have $721,547.84. That same $100,000 in gold would have grown to $912,831.55.

The key takeaway: Gold and stocks are driven by different forces. Stocks respond to corporate earnings growth (or expectation thereof). Gold responds to the devaluation of the dollar. They don’t need to move in opposite directions — but they serve different roles in a portfolio.

2. “You can’t eat gold.”

Of course not — but we don’t “eat” stocks, bonds, real estate, or crypto either. Gold isn’t a consumption item; it’s a store of value, like other capital assets. You don’t spend your gold — you sell it for cash when needed. The real purpose of gold is to preserve purchasing power over time, not act as day-to-day currency.

3. “It costs too much to store gold.”

Physical storage does come with a cost — but so does every investment. A standard safe deposit box costs around $75 per year and can hold up to $1 million worth of gold. In an IRA, insured storage typically runs $100–$125 per year.

Compare that to the average actively managed equities fund, which charges 0.65% per year in operating expenses. A $30,000 position in such a fund costs more annually than securely storing 30x more gold.

4. “Gold doesn’t pay interest or a dividend.”

That’s true — and it’s also true of unimproved real estate, cryptocurrencies, and even many growth-oriented tech stocks. Gold isn’t designed to generate income; it’s designed to preserve wealth. If your goal is income, you’ll need other vehicles. If your goal is stability and protection, gold has a vital role to play.

5. “GLD is the same thing as owning physical gold.”

The SPDR Gold Trust (GLD) gives you exposure to gold prices, but you don’t own any physical metal. You own a share of a trust that holds gold — and the trust owns the gold, not you.

Physical gold is different. There are no counterparties, no 50-page prospectus, and no dependency on a financial institution to access your investment.

6. “Gold is too high.”

This myth comes from looking at gold in dollar terms, without considering that the dollar is constantly losing value. When gold makes new highs, it isn’t necessarily because gold is stronger — it’s because the dollar is weaker.

As long as we continue to run massive deficits, expand the money supply, and avoid fiscal discipline, the dollar will lose purchasing power — and gold will reflect that.

7. “Gold only goes up during a crisis.”

A lot of people assume gold is a “panic asset” — something that only spikes during disasters, geopolitical tension, or financial meltdowns. You’ll often hear headlines like, “Gold rises on war fears” or “Gold jumps on recession concerns.”

But let’s unpack that.

Gold was trading around $280/oz when 9/11 happened. If terrorism caused gold to rise, it should’ve fallen once the war was under control. It didn’t. During the 2008 housing crisis, gold climbed as fear spread — but it didn’t fall back once the panic faded. The same thing happened during COVID — fear surged, gold surged… and yet, it never “corrected” back to pre-COVID levels.

Why?

Because it’s not the event itself that moves gold — it’s the policy response to the event. Every time there’s a major crisis, we respond by printing money, expanding the money supply, running deficits, and devaluing the dollar.

Gold doesn’t respond to fear — it responds to the dilution of purchasing power that happens when governments try to “stimulate” their way out of trouble.

Gold has never returned to pre-9/11 levels because the money supply never did, the national debt never did, and the dollar never did. Until those get reversed — and there’s no sign they will — gold isn’t “high.” It’s reflecting the new reality of the currency.

This is a crucial distinction. Gold isn’t a panic asset — it’s a dollar hedge. And it’s not going away.

Conclusion

These myths persist because people are trained to think in terms of stocks, income, and Wall Street financial instruments. But gold isn’t part of that system — and that’s exactly what makes it powerful. It exists outside of the counterparty risk, leverage, and debt that define the modern financial system.

Understanding gold correctly isn’t just about having the right asset — it’s about having the right perspective.