Gold hasn't been this hot since prospectors rushed to California with picks and shovels to seek a fortune. Convinced that the runup will continue, investors have flocked to buy gold, which has never been easier.

You can buy gold bars at Costco or add exchange-traded funds that invest in physical gold to your retirement portfolio. And if you have gold jewelry or coins you no longer want, a “We Buy Cash for Gold” retailer will pay you a healthy sum for your shiny objects.

But whether you're buying or selling gold, it's important to understand how you'll be taxed on your profits. The IRS classifies gold — along with other precious metals — as a collectible, which means it's taxed at a higher rate than stocks, bonds and real estate.

The price of gold in U.S. dollars over the past 10 years

The top long-term tax rate for collectibles is 28%, versus 20% for long-term capital gains on securities. If you're subject to the 3.1% surtax on net investment income, which applies to taxpayers who have investment income and modified adjusted gross income of more than $200,000 ($250,000 for married filers who file jointly), you could pay up to 31.8% on your long-term gains.

As is the case with other investments, short-term gains on gold are taxed at your ordinary income tax rate.

Rates on ETFs backed by precious metals vs mining companies

The higher rate isn't limited to gold bars and other physical assets. Long-term gains from exchange-traded funds that are backed by physical gold are also subject to the tax rate for collectibles, says Marianela Collado, a financial planner in Fort Lauderdale, Fla.

This often comes as a surprise to investors who assume their profits are taxed at the same rate as those from other ETFs, she says.

However, if you invest in a gold mining company or fund that invests in mining concerns, you'll pay the capital gains rate that applies to securities, says Mark Stancato, a planner in Decatur, Ga.

There are strategies you can use to soften the tax hit on your gold investments. Gold prices have been extremely volatile in recent months, and you can use that to your advantage.

If you bought a gold ETF during a recent runup and have since seen the price decline, you could sell shares and use the loss to offset some of your gains.

While investors who bought gold several years ago may not have any losses, “for people who got in more recently, volatility presents a great option for some tax loss harvesting,” says Mike Casey, a planner in McLean, Va.

Just be aware of the wash sale rule, Collado notes. If you sell an ETF (or other investment) at a loss and buy it back within 30 days before or after the sale, the loss isn't deductible.

Tax on sales of jewelry and other keepsakes

If you took advantage of the runup in gold prices to sell jewelry, gold coins or other items, the top 28% rate on collectibles applies to those profits, too.

Dealers are required to report sales of gold bars and coins to the IRS on Form 1099-B if certain conditions related to purity and quantity are met.

Even if the dealer doesn't file a 1099-B, the IRS expects you to report the sale on your tax return and pay taxes on the difference between the amount you paid for the items — known as the basis — and the amount you received in the sale.

If you received a gold item as a gift, the basis is the amount the donor paid for it; for inherited collectibles, the basis is the fair market value of the item on the date of the donor's death. Tracking down the basis is critical because otherwise, the entire amount of proceeds from the sale is considered taxable.

Dealers typically gauge the purity of items they buy and pay sellers the meltdown value, minus their own discount. But before you consign your grandfather's cufflinks to the furnace, make sure their intrinsic value doesn't exceed their scrap price, which could be the case if you own a vintage piece that was created by a sought-after designer. A jewelry appraiser can help you determine whether the item is worth more than the sum of its golden parts.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

Read More

• What Is Your Collection Worth? How to Value and Protect Your Assets
• Should I Sell My Old Silverware and Gold Jewelry Now That Prices Are So High, or Should I Hand Them Down?
• Decluttering and Selling Your Stuff? What You Need to Know About Taxes

Each week, in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week she's looking at five questions on how to file a tax return for someone who died. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Filing a joint return with a deceased spouse

Question: My husband died last year. Can I file a joint 2025 Form 1040 even though he's no longer with us?

Joy Taylor: When someone is deceased, the decedent's personal representative is generally required to file any final tax returns for the deceased person. That includes federal income tax returns that the decedent would have been required to file for the year of his or her death. A personal representative can be an executor, administrator, or anyone else who oversees the decedent’s property.

Since you were married in 2025, you would mark “married filing jointly” for the filing status and write your deceased spouse’s name and your name and address. If filing by paper, write “deceased” at the top of the 1040. If using tax preparation software, the software will automatically do this for you.

If there is a court-appointed representative, that person must also sign the 1040. If not, you would sign and write “filing as surviving spouse” in the decedent’s signature box.

If the return shows a refund due, there’s nothing you need to do to receive the refund.

2. Filing a return for a deceased sibling

Question: My brother died last year. He was not married. I am the executor of his estate. How do I file his final 2025 federal tax return?

Joy Taylor: Since your brother wasn't married, here are the rules for filing a tax return for an unmarried decedent. Mark his filing status as single or head of household. Write his name on the name line and your name and address in the remaining name and address field (since you are the executor of your brother's estate).

If filing a paper return, put “deceased” at the top of the Form 1040 and your brother's name and date of death. Tax preparation software will do this once you let it know the filer is deceased.

If you are a court-appointed or court-certified personal representative, then you should sign the return. As executor of your brother's estate, you would sign as the personal representative.

If your brother is due a refund, you may have to complete and attach Form 1310 to the return. This rule doesn't apply if you are a court-appointed or court-certified personal representative. Instead, you would have to attach to the return a copy of the court document showing the appointment.

3. Filing status after loss of a spouse

Question: My wife of 48 years died last September. When she was alive, we always filed joint returns. But now I want to file a separate return for 2025. Can I do this?

Joy Taylor: Yes. You, as the surviving spouse, can file your deceased wife's final return either as married filing joint or married filing separate. If you file a 2025 joint return with your deceased spouse, you would follow the instructions set forth in the answer to question 1 above. If you file a separate return for yourself for 2025, be sure to also file your deceased wife's separate 2025 return.

4. Filing a return for a widow with young kids

Question: My husband died suddenly last year. We have three young children under the age of 18. I know that I can file a joint tax return for 2025. But what about for 2026? What filing status should I use on my 2026 tax return?

Joy Taylor: You are correct that you can file a joint federal tax return for 2025. You would follow the instructions set forth in the answer to question 1.

For your 2026 return, it might benefit you to use the qualifying widow filing status. This lets surviving spouses with dependent children use the income tax brackets and standard deductions for joint filers for two years after the decedent’s death.

This means that if you remain unmarried, you can use the qualifying widow status on your 2026 and 2027 federal tax returns.

5. Other resources to find help

Question: A good friend of mine passed away last year. Are there any IRS resources I can turn to in figuring out how to file her final 2025 tax return?

Answer: Yes. The IRS has an online tool to help you file a deceased person's tax return. It's an interactive tax assistant. You will need to enter some basic information, and it will give you an answer. The tool is called "How do I file a deceased person's tax return?"

Note that the IRS's interactive tax assistant will also help answer questions on nearly 60 other topics, including who qualifies as a dependent, filing an amended return and much more. Go to www.irs.gov/help/ita to access the IRS tax assistant and to see a list of topics.

Additionally, you can find helpful information in IRS Publication 559, Survivors, Executors, and Administrators, and in the instructions to Form 1040.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

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• Ask the Editor: Questions on Inherited IRAs
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Economic uncertainty and market volatility fueled a surge in gold demand in 2025. According to the World Gold Council, global gold demand surpassed 5,000 tons for the first time as investors sought ways to diversify portfolios and protect their wealth.

But the sharp rise in gold’s popularity has also created new opportunities for criminals. Law enforcement agencies are warning about a growing gold bar scam that exploits investor fears and economic uncertainty. International fraud rings are using call centers and courier networks to impersonate federal officials and pressure victims into handing over gold.

Recent investigations show these schemes have caused tens of millions of dollars in losses worldwide. As scammers grow more sophisticated, awareness and education remain key to helping consumers avoid becoming victims.

How the gold bar scam typically works

Victims typically receive unsolicited contact claiming there is an urgent issue that requires immediate action. The scammer may say the victim’s bank account, Social Security number or computer has been compromised, or claim the victim is connected to criminal activity or theft.

Scammers often impersonate federal agencies, such as the FBI, Treasury, FTC or Social Security Administration. In some cases, they may pose as representatives from a technology company or financial institution, claiming they can help resolve the problem.

They pressure victims to act quickly and keep the situation confidential. Targets are instructed to withdraw money, purchase gold bars from a legitimate dealer and then hand over the gold or cash to a courier who is part of the scheme, often under the pretense of safekeeping.

These scams rely heavily on fear and urgency to override rational decision-making. When victims feel frightened or rushed to resolve a supposed threat, they are more likely to overlook warning signs they might otherwise recognize.

Who is most often targeted

Older Americans are disproportionately affected by gold bar scams, and victims are often financially stable or at or near retirement age. Scammers frequently assume older adults have substantial savings or retirement funds that can be used to purchase gold bars.

Some victims may also feel embarrassed about being targeted, which can make them less likely to report the crime, according to the National Council on Aging.

Scammers often exploit trust in government and authority figures by impersonating officials and presenting themselves as helpers. They rely on sophisticated scripts and multi-step schemes that can make the fraud difficult for victims to recognize.

Why gold is attractive to criminals

Gold is not only attractive to investors during economic uncertainty, it is also appealing to criminals. Gold is highly portable and, once transferred, can be difficult to trace. Scammers can quickly melt or resell gold, while electronic transfers or large amounts of cash are often easier for authorities to track.

When scammers convince victims to pay with gold, the payment is typically less reversible than a bank transfer or credit card transaction, increasing the likelihood that the scam will succeed. Criminals are also increasingly combining gold with cryptocurrency and wire transfers, since these payment methods are fast and difficult to trace.

Warning signs consumers should never ignore

If you ever receive communication pressuring you to quickly resolve an issue, stop and carefully review the situation.

These are warning signs you should never ignore, no matter how urgent the individual contacting you says the matter is:

• Claiming your money is unsafe in your bank: Scammers may say your bank account has been compromised and insist you withdraw your money immediately to protect it.
• Requesting you move money to a secure government account: You may be told to transfer a large amount of money to a supposed government account for safekeeping.
• Instructing you to buy precious metals: Scammers may direct you to withdraw cash and use it to purchase precious metals, such as gold bars, from a legitimate retailer.
• Demanding secrecy: Scammers often claim it is critical that you keep the situation confidential. They may threaten arrest or legal consequences if you speak with family members, financial institutions or law enforcement.
• Requesting delivery of valuables: After persuading you to buy gold, scammers may instruct you to hand over the valuables or meet with a courier who will take them for safekeeping.

What to do if you’re contacted or targeted

If you are contacted or believe you are being targeted, hang up immediately and stop all communication with the suspected scammer. Then contact law enforcement or your financial institution as soon as possible.

Always verify contact information independently before reaching out. Use official websites or trusted sources to find phone numbers and email addresses, and never rely on contact details provided by the caller.

You should also report suspected scams to the FBI or the FBI Internet Crime Complaint Center. Provide as much detail as possible, including the caller’s phone number, the date and time of contact and what the scammer asked you to do.

Before making any financial decisions, consider speaking with a family member or trusted financial adviser. Scammers often rely on fear and urgency to pressure victims into acting quickly. A trusted second opinion can help you identify warning signs you may overlook when feeling stressed or rushed.

The broader rise of impersonation and investment scams

Government and technology impersonation scams are among the fastest-growing types of fraud. According to the Federal Trade Commission, adults age 60 and older reported losing millions of dollars in 2024 to scammers posing as government agencies and businesses.

Among older adults who lost more than $100,000 in these schemes, total losses reached $445 million in 2024, compared with $55 million in 2020.

These scams are becoming more widespread and are expanding beyond digital theft to include physical assets, such as gold bars. Awareness remains one of the most effective ways to protect yourself from becoming a victim.

Never assume that unsolicited communication is legitimate, and always watch for red flags and warning signs. Most importantly, avoid making rushed financial decisions under pressure. Instead, contact the government agency or business directly using verified contact information to confirm whether the communication is valid.

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• Is Investing In Gold Worth It? How Gold Prices Have Changed
• Buying Gold as an Investment: What to Watch For

Gold is having a moment, and so is Costco. The precious metal rallied at the beginning of the year, as the classic "safe haven" asset gained in popularity amid economic and geopolitical uncertainty. Despite a temporary dip, multiple analysts expect gold prices to surge to $6,000 or more per ounce by the end of this year.

With price forecasts like that, Costco's glittering 1-ounce gold bars have been selling out consistently online. Curious investors and everyday members alike are clamoring for access. Costco now offers 24-karat gold, silver and platinum options through its website (and occasionally in warehouses).

Some shoppers are picking up bullion the same way they stock up on paper towels and bottled water.

But what makes Costco’s gold bars even more intriguing isn’t just the price or the brand. It’s the potential to earn up to 4% in rewards through Costco’s membership and credit card programs.

For savvy shoppers, this bonus can help soften the blow of premiums over spot price, which is especially valuable in today’s fluctuating gold market. Here’s how Costco’s bullion program works, how to stack your rewards strategically and when it might (or might not) make sense for investors.

How Costco's bullion program works

Costco sells 1-ounce, 24-karat gold bars online and occasionally in select warehouses. Offerings often include bars from respected refiners such as PAMP Suisse and Rand Refinery, both featuring assay cards for authenticity. The bars are non-refundable and subject to purchase limits (typically two bars per membership).

Prices update in real-time based on the spot market and demand, and since gold purchases can’t be returned, this isn't a decision to take lightly.

Yet that hasn’t deterred customers: Costco CFO Richard Galanti noted that the retailer is selling “several hundred million dollars” in gold monthly, and the bars usually sell out within hours.

Costco’s current bullion offerings also include options for investing in silver and platinum coins, but gold remains the headliner.

Understanding the rewards and membership tier angle

What truly sets Costco’s bullion program apart isn’t just the access to physical gold. It’s the layered reward strategy. Here's how it works:

• Executive Membership (annual fee: $120) gives members 2% cash back annually on eligible purchases, up to $1,000.
• Costco Anywhere Visa® Card by Citi offers up to 2% cash back on Costco.com purchases (plus more on categories like gas and travel).

When combined, members using both the Executive Membership and Costco Anywhere Visa can earn up to 4% back on their gold purchase.

For example, a gold bar priced at $4,000 with a 4% combined reward yields $160 in cash back, lowering your effective cost to $3,840. If Costco’s gold was priced at just 2% over spot, the rewards could essentially eliminate the premium altogether.

It’s worth running your own numbers with Costco’s bullion rewards calculator to estimate how much you might earn based on your membership and payment method.

Pricing dynamics and investor benefits

Costco’s pricing tends to be fairly competitive in the physical bullion space at usually just 1% to 2% above the spot price, which is lower than many traditional dealers. However, the exact premium varies depending on market volatility, supply and brand.

For investors, the appeal is twofold. First, you gain physical ownership of bullion. You’re holding a tangible asset rather than paper or indirect exposure. Second, you benefit from Costco’s strong brand reputation, which means bar authenticity and packaging are handled by a trusted retailer, helping reduce concerns many first‑time bullion buyers face.

Third, compared to many online bullion sellers, Costco’s premium is relatively modest, which means your effective cost (especially when paired with reward incentives) may be more attractive.

Risks, downsides and what to watch

Despite the appeal, there are several risks and caveats to consider:

• Premiums fluctuate: While Costco often has lower premiums than competitors, it’s not always the cheapest option.
• Storage and security: Owning physical gold means you’ll need a safe or other secure storage. Insurance may be necessary too.
• Limited resale liquidity: Unlike gold ETFs, physical bars may be harder to sell quickly and might fetch below spot value due to dealer margins.
• Non-refundable: Once you buy a gold bar from Costco, there’s no returning it, even if the price drops tomorrow.

How to get the best deal if you go this route

If you decide to buy Costco gold, plan ahead so you capture the rewards and avoid surprises. Upgrade to an Executive Costco Membership before you buy so the 2% annual reward will apply. The upgrade timing matters because that rebate is applied to qualifying purchases made while you hold Executive status.

Pair that membership with the Costco Anywhere Visa® Card by Citi for Costco.com purchases to stack card cash back on top of the 2% Executive benefit. Always run the numbers first (Costco’s bullion rewards calculator is a helpful tool) and compare the after‑rebate cost with other reputable dealers.

Inventory and pricing move fast, so monitor Costco’s bullion listings early in the morning when new inventory often appears, and be prepared to complete checkout quickly: bars frequently sell out within hours.

Remember that Costco’s gold is nonrefundable and subject to purchase limits, so confirm the SKU, refiner and assay card before you pay, and keep all documentation in case you sell later.

Also factor in storage, insurance and potential shipping costs; home safes, bank safe deposit boxes and third-party insured vaults all carry different price and accessibility tradeoffs.

When it makes sense and when it doesn’t

A Costco gold buy might make sense if:

• You’re already an Executive Member or plan to upgrade.
• You have the Costco Anywhere Visa or another cash-back credit card.
• You prefer owning physical gold and are okay with storage logistics.
• You’re holding mid-to-long term and want to reduce your cost with rewards.
• You value Costco’s brand trust and straightforward buying process.

It may not make sense if:

• You’re seeking short-term gains or plan to actively trade gold.
• You’d rather invest via ETFs or gold IRAs for better liquidity and convenience.
• You’re uncomfortable with the idea of storing physical bullion.
• You want exposure to gold without paying any premium over spot.

When a Costco gold buy makes sense

In the right context, Costco’s bullion program offers an attractive option for retail investors. The combo of physical gold, competitive pricing and up to 4% in rewards makes the purchase more financially savvy than it might initially seem.

But gold is still a commodity with market risks, and rewards don’t negate those risks. They just help lower your entry cost. Before buying gold, compare options, run the math using Costco’s rewards calculator, and ensure your gold-buying goals align with the realities of owning physical metal.

Related Content

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• Should You Get Home or Car Insurance Through Costco?
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Most kitchens are well-stocked with pantry staples, the foundation of all recipes. But every good chef knows that the best meals feature a variety of flavors, including some spice. Technique is important: Too much or too little of any single ingredient can make a big difference.

The same approach applies to portfolios. Earlier this year, many U.S. investors learned that their mix was off after foreign stocks significantly outpaced U.S. shares … just as the S&P 500 stumbled badly. It quickly became clear that many investors were underexposed to foreign markets and overexposed to the United States.

In a June survey, Schwab Asset Management found that moderate-risk individual investors held just 10% of their portfolios in foreign shares; U.S. stocks, by contrast, made up 61%. In short, investor portfolios weren't diversified.

It was a comeuppance long in the making. For nearly 15 years, U.S. stocks have been the place to be. Why bother to diversify — break up your investments across a variety of stocks, bonds and other assets — when the S&P 500 is beating everything?

"It can be easy to forget the benefits of diversification in a very sharp upward-moving market," says Andrew Altfest, a certified financial planner with Altfest Personal Wealth Management in New York City.

But over time, you'll find that a mix of investments can smooth your returns, strengthen your resolve as an investor, dampen risk in your portfolio and keep you exposed to whichever corner of the market is working at the moment — no crystal ball necessary.

In a truly diversified portfolio, some investments will be in favor while others are on the outs. "You will never own only winners, but you won't get stuck with only the laggards, either," says Jeff DeMaso, editor of The Independent Vanguard Adviser.

A smoother ride

A diversified portfolio can deliver less-volatile returns, which may help you stay the course during turbulent times — and arguably, that's half the battle in achieving your investment goals.

Moderate-allocation funds, also called balanced funds because they stabilize a 60% allocation of assets to stocks with a 40% stake in bonds, have been about one-third less volatile than an all-stock portfolio over the past 10 years.

"When the stock market sells off, investors tend to sell and move into cash. The problem there is, they've divested. So, we always say, stay invested and diversify," says Alessio de Longis, senior portfolio manager and head of asset allocation at Invesco Solutions.

Indeed, diversification isn't a strategy you turn on during rough markets and switch off in roaring bull markets. "It's something you should always have in your portfolio,” says Kristy Akullian, head of iShares investment strategy for the Americas at BlackRock.

Diversification can help ward against risk, too, of which there's no shortage these days. U.S. stocks are trading at high valuations. The economy looks to be slowing. Inflation remains sticky. And uncertainty lingers about the impact of new government policies and geopolitical risks. All of these challenges are chipping away at investor confidence.

Some advisers zero in on risks as a guiding principle for diversifying their clients' portfolios. Worried about a decline in the dollar? Add non-dollar assets — foreign stocks or bonds — to your portfolio. Concerned about an inflationary shock? Fold in a stake in commodities or real estate. A recession? Insert a slug of high-quality bonds or beef up on cash.

"Since I think all of these are potential sources of risk to the stock market, I put a lot of these diversified eggs into my clients' portfolio baskets," says Paul Winter, a certified financial planner at Five Seasons Financial Planning in Salt Lake City, Utah.

Another reason to diversify is that it's impossible to predict which investment will outperform in any given year — so it pays to own a mix of several. "The point of diversification is that you don't know what is going to happen," says Thomas Martin, of Globalt Investments, an Atlanta-based investment firm, but you can be prepared just the same.

The fact is, market leadership can shift dramatically from year to year. Though large-company stocks have topped the charts in many years recently, the winning asset class in any given year is often anybody's guess.

According to the Callan Periodic Table of Investment Returns, a colorful depiction of how asset returns can vary from year to year, small-cap stocks fared best in 2020. In 2018 and 2022, cash prevailed. And emerging markets stocks were the best-performing asset class in 2017; the next calendar year, they were the worst.

While there are rules of thumb to follow, a well-diversified portfolio is "very much an art, not a science," says Winter. For example, you want to own multiple kinds of assets, but that does not mean you own everything in equal measure. "Depending on your overall allocation, you might not need to go super-deep on every category," says Roger Young, a CFP at T. Rowe Price.

The good news: This is a great time to diversify. If, like many American investors, your portfolio is heavily weighted toward U.S. stocks, it's not too late to lighten the load and find opportunities in less-expensive pockets of the market.

"U.S. stocks are near their all-time highs, and that's a lot better time to diversify than, say, back in March 2009," the market's nadir during the Global Financial Crisis, says Winter.

Stocks, bonds and alternative assets are the main elements of a diversified portfolio. But you'll want to make sure you're diversified within those types of investments, too.

In this article, we'll walk you through the ingredients of a good diversification plan, with some timely moves to make now and tips on how to maintain your portfolio. Prices, returns and other data are as of August 31.

Stocks

Stocks can be risky but also rewarding. Over the past 10 years, the S&P 500, which represents more than 80% of the total U.S. stock market, has returned a whopping 15% a year.

But the stock market doesn't move as a monolith — and within your stock holdings, you should assemble a broad mix, considering a number of factors.

Company size

The market can favor companies of a particular size — sometimes for years — depending on economic factors, industry innovations or even just market sentiment.

Over the past decade, thanks to globalization, large companies have ruled, ranking as the top-performing asset class in five of the past 10 years and among the top three performers in eight of the past 10, according to the Callan table.

"The big just got bigger," says Jake Schurmeier, a portfolio manager at Harbor Capital. That makes exchange-traded funds (ETFs) that invest in small and midsize companies, such as the iShares Core S&P Mid-Cap (IJH) and the iShares Core S&P Small-Cap (IJR) — members of the Kip ETF 20, our favorite exchange-traded funds — good diversifiers for the large-cap S&P 500.

Some strategists see an opportunity in midsize-company stocks, especially these days. The middle tier of the U.S. stock market "is uniquely positioned to capitalize on growing demand for American-made goods and infrastructure solutions in a reshoring and energy-independent economic landscape," says Dina Ting, head of global index portfolio management at Franklin Templeton.

Plus, on a price-to-earnings basis, mid-cap stocks now trade at an atypical discount to large caps.

Concentration

Large-company stocks' recent run has included the meteoric rise of tech stocks in general and anything related to artificial intelligence (AI) in particular.

A group that includes Nvidia (NVDA), Microsoft (MSFT) and Apple (AAPL), known as the Magnificent Seven, accounts for one-third of the value of the S&P 500 Index. Thus, what might look like a diversified collection of U.S. stocks is in reality an outsize bet on a dazzling few.

A simple way to mitigate such overconcentration is the Invesco S&P 500 Equal Weight ETF (RSP). In this fund, every company gets an equal share of assets. So, while Nvidia accounts for 8% of the traditional market-cap-weighted index, it makes up just 0.24% of the Equal Weight fund.

Investment style

Professional investors typically hew to a certain methodology. These approaches break down into two broad styles: value and growth. Value managers favor stocks that trade at a discount to various metrics; growth managers prefer companies that are growing faster than average.

The two styles wax and wane at different times, and the cycles tend to last for long stretches. Value won the period from the start of 2000 to 2009. But since then, growth has dominated, though it's worth noting that value stocks held up better during the most recent bear market from January to October 2022.

Because it's difficult to predict when one style is going to outperform the other, even in a bear market, it's important to maintain a toehold in both growth and value strategies.

Chances are, however, that you've got plenty of exposure to growth stocks these days. Consider adding a value-driven fund such as Dodge & Cox Stock (DODGX), a mutual fund that has outpaced the S&P 500 over the past five years, or Capital Group Dividend Value (CGDV), an ETF that has beaten the S&P 500 over the past three years.

Both are actively managed, but index-fund lovers could look at the Vanguard S&P 500 Value ETF (VOOV). The ETF holds its own among a peer group of value-oriented large-company stock funds.

Geography

You need both U.S. and non-U.S. stocks in your portfolio, although many years of U.S. out-performance made that idea unpalatable. That changed in 2025: After lagging the U.S. stock market for nine of the past 11 calendar years, the MSCI EAFE Index, a popular international-stock benchmark, is up nearly 23% so far this year, beating the S&P 500 by more than 12 percentage points.

Most strategists agree that U.S. investors need to boost their exposure to international stocks. The timing is good. A weakening dollar tends to magnify gains in foreign shares (because they translate into more dollars stateside). And foreign stocks are still cheap relative to U.S. stocks on a price-to-earnings basis, even after a strong run so far this year.

Foreign stocks include those in both developed and emerging markets. You can zoom in on a region — Europe, Asia, Latin America, say — or a single country, such as Japan, India, Germany or China. And of course, at every level, you can focus on company size or value or growth approaches.

Start with the Vanguard Total International Stock ETF (VXUS). It's an inexpensive way to get instant exposure to nearly every foreign stock in developed and emerging markets. Morningstar analyst Zachary Evens calls it "wall-to-wall foreign-stock exposure." The fund has gained 23% since the start of the year.

Add an emerging-markets index fund. The iShares Core MSCI Emerging Markets ETF (IEMG) tracks an index of 20-odd developing markets. "A weaker dollar is good for EM stocks," says Richard Cook, a portfolio manager of Cook & Bynum fund. A recent rebound in Chinese stocks — 27% of the index — has helped the fund return 18% over the past 12 months.

Baron Emerging Markets (BEXFX) — a member of the Kiplinger 25, our favorite no-load mutual funds — is actively managed, growth focused, and has gained 19% over the same period.

These days, many strategists, including T. Rowe Price's Charles Shriver, see opportunity in small, foreign companies. They typically trade at a premium to their larger brethren, but not now. And "small-cap international stocks will benefit from domestic economic growth in home countries and are less sensitive to tariffs," he says.

We have our eyes on the Avantis International Small Cap Equity ETF (AVDS) and the Dimensional International Small Cap Value ETF (DISV). The Avantis fund invests in a mix of growth and value small companies, with a focus on valuation and profitability. Over the past 12 months, it has gained 23%. The Dimensional exchange-traded fund focuses on bargain-priced small stocks in developed countries and has returned 25% over the past 12 months.

Bonds

Bonds provide ballast to the stock side of any portfolio, generally speaking, because when stocks fall, bond values tend to rise. That didn't happen in 2022, when a precipitous rise in interest rates pushed both stocks and bonds down (bond prices and yields move in opposite directions). The S&P 500 fell 18%, and the Bloomberg U.S. Aggregate Bond index sank 13%.

It was the worst year ever for bonds, but a few fixed-income sectors held up better. Bank-loan funds, for instance, lost 2% on average; short-term bond funds dipped just 5%. Ergo, in 2022, a diversified bond portfolio would have outperformed the Agg index.

Broadly speaking, there are four major bond sectors: government, corporate, securitized debt (bundled IOUs such as mortgages or auto loans, say, that are sold as a single security), and municipal bonds, which pay income that's exempt from federal and sometimes state taxes.

A diversified bond portfolio will include a mix of sectors. The Agg index, for instance, is diversified as far as sectors go: Government bonds make up just less than half of the index, corporate and securitized debt combined are another 50%, and the rest sits in cash and muni IOUs. But there are more layers of bond diversification to consider.

Credit quality

Credit ratings reflect a borrower's financial ability to repay debts. The higher the rating, the more creditworthy the issuer is, and vice versa. That's why investment-grade bonds, rated between triple-A and triple-B, are considered high quality — there's little risk of default. Debt rated between double-B and triple-C is often called junk or high yield — there's a higher risk of default, and therefore yields are higher to attract investors.

Bond portfolios should hold mostly high-quality debt at their core. The Vanguard Total Bond Market ETF (BND) and the iShares Core U.S. Aggregate Bond ETF (AGG) are the biggest index-based high-quality bond ETFs. But we prefer active strategies, such as Baird Aggregate Bond (BAGSX) and Dodge & Cox Income (DODIX). Both mutual funds are members of the Kiplinger 25.

Then consider adding lower-quality debt, which can boost the overall yield of a bond portfolio. In late August, for instance, U.S. high-yield corporate debt yielded 6.7%, and bank loans, issued by companies with low credit ratings, yielded 8.6%.

Our favorite high-yield corporate fund, Vanguard High-Yield Corporate (VWEHX), favors higher-quality, double-B junk bonds. But with economic uncertainty ahead, we're partial these days to short-term high-yield bond funds such as the Pimco 0-5 Year High Yield Corporate Bond Index ETF (HYS). Its short-term focus can help dampen default risk, a concern if the economy slows.

Duration and maturity

Investors often confuse duration, a measure of a bond's sensitivity to interest rate moves, with maturity, the length of time a bond will pay interest before it repays the principal. They're not the same, but they are connected.

Maturity plays a part in the calculation of duration. The longer the maturity, the longer the duration and the more sensitive a security is to interest rate shifts.

The typical long-term government bond fund, for example, has an average maturity of 20 years and a 16-year duration. That implies if rates were to rise by one percentage point, the net asset value of long-term government funds would decline 16%, and vice versa. Short-term government bonds have an average maturity of three years and a duration of 2.6 years.

Generally, low-duration bonds are a defensive bet when interest rates are rising, and high-duration bonds stand to benefit most when rates fall. These days, however, even though cuts in short-term rates are on the docket, a fall in long-term rates isn’t guaranteed, says Akullian, the iShares strategist. That's why she favors intermediate-maturity bonds for now.

The iShares 3-7 Year Treasury Bond ETF (IEI) sports a 4.3-year duration. Since the start of the year, it has returned more than 5%. The actively managed Vanguard Intermediate-Term Bond ETF (BIV) favors bonds with maturities of five to 10 years and has a duration of 6.1 years. Its portfolio holds government and corporate debt of medium maturities. So far this year, it has gained 6.4%.

Finally, the Fidelity Investment Grade Securities ETF (FSEC) holds mostly triple-A-rated securitized debt and has a duration of 5.5 years. Its return so far this year is 5.3%.

Geography

For much of the 2010s, foreign bonds sported negative yields. "That's a hard sell," says Schurmeier, the Harbor Capital portfolio manager. But now, foreign bonds offer positive yields, as well as a potential return boost from a weakening dollar. The Vanguard Total International Bond ETF (BNDX) holds high-quality, foreign corporate and government bonds.

Emerging-markets debt offers fatter yields, but these IOUs tend to be more volatile, too, so buyer beware. Our favorite emerging-markets bond fund, Vanguard Emerging Markets Bond (VEMBX), invests in dollar-denominated debt, which becomes easier for developing countries to repay as the dollar weakens.

Alternatives

This catch-all category includes nontraditional strategies that seek to hedge stock and bond market returns, or at least to generate returns that don't move in lockstep with them.

Alternative strategies might focus on gold, commodities, cryptocurrencies, or the debt or equity of private companies. They might employ techniques to limit losses in a downturn but crimp bull market gains. Others balance bets on undervalued stocks by short-selling overpriced names.

"Many alternative strategies weren't even a thing 10 years ago, but they are today," says Winter, the Salt Lake City CFP.

Consider carving out a small slice from the bond side of your portfolio to devote to alternative assets — no more than 5% to 10% of your overall portfolio, says de Longis. One approach to choosing an alternative strategy is to figure out what kind of risk you're trying to hedge against, such as those listed below, and invest accordingly.

Inflation

To hedge inflation, for instance, beyond the protection the stock side of your portfolio may offer, consider commodities. These funds proved their mettle in 2022, returning 16%, on average.

The First Trust Global Tactical Commodity Strategy Fund (FTGC) has outperformed its peers in four of the past five calendar years, with below-average volatility. Neuberger Berman Commodity Strategy ETF (NBCM) boasts above-average returns with below-average volatility, and its expense ratio is below average, too.

Instability

To ward against uncertainty, consider gold. "Gold is a safety net for chaos," says Schurmeier. Trade-war fears have fueled 29% gains in the iShares Gold Trust Micro (IAUM) and the SPDR Gold MiniShares Trust (GLDM, $68, 0.10%) so far this year.

Volatility

To smooth out your returns, consider one of a new breed of ETFs called defined-outcome funds.

One we're eying is the Innovator Defined Wealth Shield ETF (BALT). Using options, the fund provides a 20% buffer on losses in the S&P 500 every three months in exchange for a cap on gains. You can hold the ETF indefinitely. The 20% buffer and cap on gains resets quarterly, in January, April, July and October. The cap set in early July was 2.2% after expenses. Over the past three years, Defined Wealth Shield has returned 7% annualized with less volatility than the Agg index.

Bear in mind that diversified portfolios, in contrast to Tolstoy's happy families, are not all alike. As always, everything depends on your time horizon and your risk tolerance.

"If you're relatively young and are primarily invested in stocks, you might want to make sure your diversification is robust on the stock side, but on the bond side, your small piece in bonds could be a straightforward U.S. investment-grade type of bond fund portfolio," says T. Rowe Price's Young. Similarly, those who are nearing retirement or already retired will want to pay special attention to some inflation hedges.

Over time, your portfolio will need some fine-tuning. Some tweaks are related to age or life stage, says Christine Benz, director of personal finance and retirement planning for Morningstar.

At age 50, for instance, you'll want to de-risk your portfolio a bit around the edges. Tilt toward high-quality, large-company stocks over small-cap fare, for instance. Or favor dividend payers. By your late fifties or early sixties, start shoring up your portfolio with safer assets. On the bond side, for instance, lean into high-quality short and intermediate-term bonds and build up your cash position.

Other adjustments may be tactical, such as investing more in large and midsize companies than in small firms if a recession looms, or favoring short-term bonds over long-maturity debt when interest rates are climbing. Keep the tactical moves to no more than five to 10 percentage points up or down from your overall portfolio targets, says Invesco's de Longis. Any bigger, and you risk derailing your asset-allocation plan.

Finally, review your portfolio asset mix and rebalance, if necessary, once a year. "The more diversified your portfolio, the greater the potential benefits of rebalancing," says Winter. Just don't go overboard. Think of your portfolio like a bar of soap, suggests Benz: "The more you touch it, the smaller it's going to get."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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• Should You Buy Gold as It Tops $4,000? Here's What the Experts Say

Gold has been one of the hottest trades of 2025. The precious metal is up more than 50% for the year to date, and on October 7, it surpassed the psychologically significant $4,000 mark for the first time.

This rally has come as investors have poured billions into gold exchange-traded funds. According to the World Gold Council, U.S.-listed gold ETFs saw inflows of $32.7 billion through late September, while inflows into global gold ETFs topped $57 billion.

This has global assets for gold exchange-traded funds nearing half a trillion dollars, "a milestone that would highlight their role in one of the most dramatic rallies in the metal's history," writes Sumit Roy, senior ETF analyst for ETF.com.

"Gold's run toward $4,000 has been driven by a perfect storm — falling real yields, a softening dollar, relentless central bank buying, and global unease that never seems to fade," says Dean Lyulkin, founder of registered investment adviser The Dean's List and CEO of Cardiff, a California-based small business lender.

Amid this red-hot run, many investors might be wondering if it's too late to buy gold … or if now's the right time to strike.

Does gold have more room to run?

That depends, says Lyulkin, on whether "the four horsemen" — falling real yields, global central bank purchases, a weakening U.S. dollar and macro uncertainty — "have real staying power."

He calls the cooler greenback a "real but temporary" tailwind for dollar-denominated gold, but adds that "the U.S. still runs the world's deepest markets and remains the reserve currency of choice."

Roukaya Ibrahim, chief strategist of Commodity & Energy Strategy at BCA Research, says gold's outperformance "likely hinges on whether inflows into gold ETFs continue to accelerate. In the past decade, gold's performance relative to the S&P 500 moved in step with changes in gold ETF holdings."

Douglas Beath, global investment strategist, and Mason Mendez, investment strategy analyst at Wells Fargo Investment Institute, recently raised their year-end gold targets for both 2025 and 2026 based on their expectations for lower interest rates.

"Fed easing combined with still elevated inflation indicates lower short-term real rates, which historically has been bullish for gold prices," the strategists say. "In addition, we lowered our 2025 and 2026 year-end targets for the U.S. dollar, another positive factor for gold prices."

Should investors buy gold?

"Hold some gold, but don't chase it," says Lyulkin. "The easy money's been made. Gold did its job protecting portfolios when the world looked uncertain; it doesn't need to be your growth engine now."

In the long term, investors should remember that gold has underperformed the broader market.

"From 1984 through 2024, the S&P 500, with dividends reinvested, returned an annualized 11.6% before inflation. Adjusted for inflation, the market's annualized total return came to 8.6%," writes Kiplinger contributor Dan Burrows in his feature "Is Investing In Gold Worth It? How Gold Prices Have Changed."

Gold, over that same time frame, generated an annualized return of 4.3% before inflation — and a measly 1.5% when adjusted for inflation.

"It's insurance, not alpha," says Lyulkin. He recommends that investors allocate 5% to 10% of their portfolios to the precious metal.

As for when to buy, Adam Turnquist, chief technical strategist for LPL Financial, recommends "adding exposure on weakness, given the degree of overbought conditions."

Investors looking to gain exposure to gold have several options. If you want to purchase physical bullion, you can buy gold bars at Costco.

But, as Kiplinger contributor Tony Dong notes in his feature "The Cheapest Gold ETFs to Buy Now," once you buy a gold bar or coin, you now have to decide where to store it.

"A safe deposit box at a bank comes with annual fees and counterparty risk. Self-storage in a home safe can work but adds personal security risk," Dong writes.

Selling it comes with its own set of hassles. As such, gold ETFs provide "the simplest and most accessible option" for investors to add gold exposure to a portfolio.

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When the stock market seas get choppy, investors often flock to gold. The "safe-haven" asset is seen as a reliable store of value during times of market turbulence.

Chuck Czajka, founder of Macro Money Concepts, calls it "wealth insurance" because of its ability to hedge against "inflation and economic uncertainty like we are currently experiencing."

Today, you have three primary ways to invest in gold: the traditional route through physical bullion, the stock market route through gold stocks or funds, or the hybrid approach using digital gold investment platforms. Each approach has its benefits and drawbacks that can affect which is best for you.

Investing in physical gold: Traditional security with logistical challenges

Owning physical gold — whether it's a U.S. Mint-issued American Gold Eagle coin or a hefty bar — is the classic way to invest. It’s tangible, and for some, that's the ultimate security, but this security can come at a cost.

"Often, when investing in physical gold, purchase price premiums and sell-back spreads — which occur when a gold purchaser pays below market price — can significantly reduce final return," says Scott Hefty, co-founder of Serae Wealth. "These costs can be in addition to custodial holding fees, a service that is required when investing in physical gold inside a qualified retirement account."

You'll likely need substantial capital to cover the cost of a single coin or bar. You also need to find a secure storage solution, like a home safe, bank safe deposit box or gold storage service. Each method incurs additional costs or security risks.

When you're ready to liquidate, selling physical cold can be a hassle, too. You need to find a reputable dealer and may end up selling for a price below the current market price.

The stock market route: Trading stability for convenience

Investors looking to avoid the liquidity and storage challenges of physical gold ownership may turn to the stock market for relief. Gold ETFs, mutual funds or mining stocks make it possible to add the precious metal to your portfolio without ever touching a single piece of bullion.

"Gold-backed ETFs can be a way to efficiently create diversification within an overall investment account, allowing you to use gold’s non-correlated nature to bring more balanced returns," Hefty says. "They typically have much lower ongoing expense and transaction costs compared to their physical counterpart" and "provide the security of large institutional management."

All you need to invest in gold funds or stocks is a brokerage account. Best of all, selling involves a click of a button. Assuming there is a counterparty to your trade, this can be a far more liquid approach than buying physical gold.

That counterparty risk can be a significant drawback. If no one is willing to buy what you have to sell, you may be stuck with the asset or forced to accept a lower price. You also don't own the physical metal when you invest this way, and the value may be impacted by broader market events.

Digital gold investment platforms: Where physical ownership meets digital convenience

As often occurs, modernization has developed a Goldilocks alternative to the previous two options. Digital gold platforms allow you to own a claim to physical gold that is securely stored in a professional, third-party vault.

Your ownership is represented either by a digital token on a blockchain or by a share of a commingled gold pool. This makes it possible to invest whatever dollar amount suits you.

These platforms also solve the liquidity issue of traditional physical gold ownership. Many allow 24 hours a day, seven days a week access, so you can monitor, buy, and sell at your convenience. You can sell your share for cash or possibly have the physical metal shipped to you.

This convenience isn't free, however. Digital gold platforms charge a fee for their service to cover storage and transaction costs. These fees vary, but may be less than the expense ratio on a gold ETF or mutual fund, or finding your own storage solution.

There may also be a fee at the time of sale. For example, you may pay 0.3% of the redemption value at the time of sale.

Trust is paramount here, as well. Your investment is only as secure as the platform through which you invest and its chosen storage partner.

What to watch for: A head-to-head comparison

There are key elements to watch for when buying gold as an investment, regardless of the method you use. Here’s what to look for when evaluating each approach:

Ultimately, the best way to invest in gold depends on your personal goals and risk tolerance. If you want a tangible asset you can hold, physical bullion is for you.

If you want the convenience and familiarity of the stock market, gold funds or mining stocks are a solid route. If you want a physical asset with digital conveniences, consider a digital gold investment platform.

Regardless of the investment method you choose, be aware that while gold does tend to perform better during market uncertainty, it is not always a smooth ride. "Gold can be extremely volatile and can often experience periods of double-digit declines like the stock market," Hefty says.

It's best to keep your allocation to no more than 5% to 10%, according to Czajka and Hefty.

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Once upon a time, if you wanted to invest in gold, you'd need to find a reputable dealer, verify the authenticity of the product, arrange payment and then secure transportation and storage of the physical bouillon all on your own.

For many, the result was the most expensive headache you'd ever endured. The time-consuming process made investing in gold feel like a luxury reserved for the ultra-wealthy or most dedicated of hobbyists.

Today, digital platforms are rewriting the gold investing story. You can buy gold while handing logistical headaches over to someone else. This modernization has not only streamlined the investing process but also democratized access, enhanced transparency, and fundamentally transformed gold from a cumbersome physical asset into a liquid, digital one.

Democratizing access: Gold for everyone

One of the biggest barriers to buying gold used to be the sheer cost of the endeavor. Traditionally, investing in gold would require significant upfront capital to cover the full cost of a coin or bar. Prices could be thousands of dollars. This high entry point prevented many would-be investors from adding the precious metal to their portfolios.

Digital platforms are dismantling this barrier and making gold as accessible as a low-cost ETF. Through them, you can start investing at nearly any amount using fractional ounces.

You own an interest in the metals held by the platform’s custodian through "pooled metal positions." This model is essentially the physical asset version of fractional share investing for stocks, where you can buy a piece of an asset that would otherwise be too expensive to own.

This reduced cost to invest means almost anyone can add gold to their portfolio. Some companies are even offering credit cards that invest points earned directly into digital gold. So, all you need to do is buy a cup of coffee to start investing in gold.

The age of convenience: Buy, sell, track 24/7

Alongside lower financial hurdles to investing, digital platforms are streamlining the entire gold investing process. Gone are the days of needing to navigate suppliers, authenticators, and transportation and storage providers. You can now buy and sell gold online around the clock with a few clicks of your mouse or taps on your smartphone.

Desktop sites and mobile apps for gold investing allow you to effectively keep your gold portfolio in your pocket. You can track your gold's value and trade from any place at any time. This has turned a notoriously illiquid asset into one with access even ETF investors would envy.

Digital platforms provide a blend of direct ownership and digital convenience that not even gold ETFs can achieve. Since you own the asset directly, you can always redeem your gold instead of selling it online, and have the physical metal delivered to your address.

A clearer view: Transparency and trust

Trust is paramount in any financial transaction, especially when dealing in physical goods you may never see in person. Digital platforms are enhancing industry trust through heightened levels of transparency.

These platforms may back every unit of digital gold investment with an equivalent amount of the physical metal. This is audited by a third party, and many services provide public reports that verify their inventory against all outstanding customer holdings.

Other platforms are taking this a step further by leveraging blockchain technology through gold tokenization. Each digital token represents a specific weight of physical gold, and every transaction is recorded on the blockchain to create a transparent and immutable, auditable trail.

The ultimate lockbox: Cost-effective and simplified storage

When you own physical gold, the question becomes where to keep it. You're responsible for finding a secure storage location, be it a home safe or insured vault, and covering the associated storage and transportation costs. With digital gold platforms, this is all handled for you.

Many platforms partner with trusted, third-party storage companies where your gold is stored in high-security vaults. You may have your choice of domestic and international custodians, including top names in the industry like Brinks and APMEX.

The storage fees are typically bundled with insurance and auditing services in a single annual fee. This is often calculated as a percentage of your gold's value, much like the expense ratio you'd pay on an ETF.

What's more, that price may be even lower than the expense ratio you'll find on many gold ETFs, although minimums may apply. For small balances, this approach is often considerably less expensive than managing private storage.

Not a perfect picture: Understanding the risks

While digital gold investing has much to offer, it’s important to acknowledge the risks before investing. The primary risk with digital gold is counterparty risk. You're counting on the platform and its custodian to maintain security and honor your claim to the gold you own if and when you want to sell or redeem. This makes performing your due diligence before investing essential.

To help you identify trusted partners in the industry, look for platforms that:

• Use reputable, third-party depositories.
• Provide regular, independent audits of their holdings.
• Offer clear and transparent fee structures, including the transaction costs and those applied to storage, transportation and redemption.
• Have strong cybersecurity measures, including multi-factor authentication.

By choosing a reputable and well-regulated provider, you can minimize the biggest risks while taking full advantage of the revolution that digital platforms are bringing to gold investing.

The best platforms pair gold’s time-tested value with modern tech’s speed and transparency. The result is a simpler, more appealing option for a new generation of gold investors.

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If there’s one word to describe investment markets today, it’s “uncertain.” And if there’s one asset that people turn to in times of uncertainty, it’s gold. No wonder the shiny metal has spent most of 2025 hitting all-time highs.

But not all gold investments are the same. And if you’re not aware of a relatively obscure but strong-performing corner of the gold investment universe, it could be costing you.

Investors tend to approach investing in gold in one of two ways. One is by owning bullion like gold coins or bars.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

Whether you take direct possession of the metal yourself or hold securities that represent bullion, this type of investment involves the ownership of physical gold. The stuff that’s been dug out of the ground, refined, poured and likely stamped with a weight, purity and, in the case of bars, a serial number.

The price of bullion consists of the spot gold price plus the gold premium. Why is there a premium? Because there are extra costs associated with acquiring physical gold, like distribution and dealer markups.

Why invest in gold miners?

Then there are gold miners. Instead of buying the end product, you’re investing in the companies that dig this valuable stuff out of the ground.

The gold mining business can be a headache. Exploration is risky. Machinery is expensive. Workers go on strike. Local governments can be challenging to work with.

So why expose yourself to the risks these companies face? Operating leverage. When the price of gold is high, mining companies typically see their revenue, earnings and profitability rise.

After all, it costs them the same amount to recover the gold whether prices are up or down. Any increase in price is practically pure profit that drops straight to the bottom line.

Because of this phenomenon, gold mining stocks can potentially outperform the physical metal by a wide margin during a gold bull market.

How should you invest in gold?

A lot of it boils down to your preferences. We’re not going to tell you there is a single best way for everyone — that doesn’t exist.

In fact, we want to encourage you to think beyond bullion and miners. There’s another way to invest in gold. It provides leveraged upside like the miners, but without most of the headaches.

And it’s performed better than both physical gold and gold miners over the past several years. We’re referring to a unique group of businesses called gold royalty companies.

When you hear the word “royalty,” you might think of the royalties a musician receives when someone buys their album, or an actor’s cut when their movie plays on TV.

Gold royalty companies are similar, only their payment comes from taking a portion of the gold production from a specific mine. This is their return for providing financing to mining companies for their exploration and production projects.

In that sense, gold royalty companies act like venture capitalists.

Three favorite characteristics of gold royalty companies

What’s so great about gold royalty companies? Plenty. But here are our three favorite characteristics:

They’re diversified. Even the largest gold miners in the world typically have fewer than a dozen active mining operations going at any given time. Contrast that with gold royalty companies, who often have royalties on hundreds of mining assets.

One of the largest, Franco-Nevada Corporation (FNV), has 118 cash-flowing assets and an additional 314 in various stages of exploration. This diversification reduces risk and provides a pipeline for future sources of revenue.

They’re sturdy. Like gold miners, royalty companies benefit when the price of gold goes up. But unlike miners, the royalty business is immune from many of the headaches that come with operating a mine.

Remember, owning a royalty means getting paid a portion of the production of the mine. Production — not profits. Labor and machinery costs going up? Not the royalty company’s problem. Local government needs a kickback for the miner to get their concession renewed? Not the royalty company’s problem.

They’re profitable. At the end of the day, these are companies that operate extremely lean — typically with just a few dozen employees and minimal overhead — and that means keeping a lot of their revenue as profit.

Think net profit margins in the 40%-plus neighborhood. That compares favorably to just about any company you could think of, including some of the most profitable companies in the world, like Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT) and Meta Platforms (META).

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With traits like these, it’s no wonder royalty companies have been spectacular performers. You can see for yourself in the table below, which compares the “Big Three” royalty companies to ETFs focused on gold miners (GDX) and gold bullion (GLD). We chose to start the analysis at the beginning of 2008 because Franco-Nevada went public late in the prior year.

Does this mean that you should invest only in royalty companies for your gold exposure? We don’t believe so. For one thing, while we remain optimistic when it comes to royalty companies, it is far from certain that this level of outperformance will continue.

Also, there are times when miners do better and times when physical gold does best. And, of course, there are times when royalty companies shine brightest.

Owning them in combination, like we do in our gold strategy at Stansberry Asset Management (SAM), reduces volatility. We’re able to add or reduce exposure depending on the opportunities available, while avoiding the risk of going all in on any one category.

Still, we’d encourage you to keep gold royalty companies in mind as a valuable tool in your gold investing toolkit.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

While much of the media is concentrated on bitcoin’s price and whether the U.S. will create its own bitcoin strategic reserve, that old reliable commodity called gold has been making its own moves. Gold hit a record high of $2,956.15 on February 24, 2025; it also outperformed the S&P 500 index in 2024.

Unlike cryptocurrency and other digital assets, there is less controversy about owning gold. In fact, much of the public owns it in some form, whether as jewelry, embedded in some of their electronic devices or even mixed into some specialty cakes. More sophisticated investors might choose to dabble instead in financial instruments like futures, options, certificates or other means to own or speculate on it.

That said, there are certainly caveats when it comes to investing in gold; some even say "Investing in Gold is Dumb." As just one example, as of this writing, gold is currently worth just below $3,000 per ounce, or 0.0625 pounds. I've heard an ounce in bar form described as being like a thick military dog tag. If you wanted to pay someone a million dollars in gold, that would be roughly 334 of those small bars (ounces). That's pretty hard to transport safely, is attractive to thieves and would probably set off security alarms everywhere.

Over the past few decades since the Nixon administration lifted the gold standard to back the U.S. dollar, the U.S. has basically financed its spending through a combination of tax and tariff revenues from the national gross domestic product (GDP), with the deficit being funded by debt through the sale of Treasuries, both short- and long-dated.

Unfortunately, spending for social programs, military and defense, Medicare, Social Security, disaster relief and other government expenditures has outrun the GDP to the point where the deficit is significant. The official figure from the U.S. Treasury for the national debt as of March 3, 2025, was $36.22 trillion, with a debt-to-GDP ratio of around 123% for 2024. All the debt the U.S. has sold through its Treasury bills and bonds has to be returned at some point to the holders when they redeem the principal.

However, CNBC reports that for 2024 alone, the U.S. paid about $1 trillion just for the interest on the debt, and not the principal, largely due to higher yields on newer bonds. This was driven in large part due to somewhat lukewarm interest in buying U.S. bonds in light of the growing national debt. This is somewhat similar to a credit card warning a user about termination beyond the spending limit when payments are not made on time.

The higher coupon rate is the enticement but also comes back as a higher interest payment for the U.S. Basically, if potential bond buyers are skeptical that a government's financial situation is a bit risky, they will want a higher return on the money they lend when they buy bonds at auction. The coupon rate (or interest rate) is what the government bond issuer agrees to pay as interest to the lender. For the U.S., this is a large part of the interest payments it has to make on its debt.

So where would gold fit into all this? Some investors are starting to realize that governments worldwide are saddled with huge deficits and mounting debts, and while we are still far from a 1923 Germany hyperinflation scenario, some of the conditions are there. One potential cause is that without gold-backed money, some governments can be easily tempted to print more money by fiat (by decree), with only the “full faith and confidence in the government” to back that money.

Investors, corporate treasuries and the general public at large are starting to realize that the cycle of excessive borrowing to finance government expenditures, grants and aid of all kinds beyond taxable GDP and productivity might not end well. Overspending beyond GDP and tax collections is one way to get into a hyperinflation situation. Bond and currency holders then begin to wonder what it is they are holding.

Some are starting to realize the value of investing in commodities like gold, silver and oil that are constrained in supply. This is because commodities hold intrinsic value and do not derive their worth from the promises of debtors and institutions. For these investors, the choice of where to store value is the same as it often was during ancient times: They often default to that shiny, rare commodity metal called gold.

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The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

A gold IRA or ETF may be just the inflation hedge you need in your retirement plan. In fact, many investors are flocking to safe-haven investments like commodities to protect their portfolios. Such moves may counter market volatility as well as inflation. One asset class that has shone through some of the darkest economic times is gold.

Gold has held steady against periods of high inflation by many accounts. It has outperformed inflation by 3% on average annually over the past four decades, according to data from the World Gold Council.

In addition, Goldman Sachs analysts expect gold to reach $5,400 per ounce by the end of 2026, citing sustained demand for countries around the world to increase their gold reserves, as reported by Trading Key.

But do precious metals like gold belong in your retirement portfolio? The answer to that depends on several variables. Those interested in incorporating gold into their retirement savings can consider a gold IRA.

What is a gold IRA?

A gold IRA is a self-directed individual retirement account (SDIRA) that holds precious metals like gold, silver and platinum.

SDIRAs work differently from IRAs from major brokers that invest in traditional assets like stocks and bonds. SDIRAs allow you to create a retirement nest egg through alternative investments such as precious metals, real estate, and crypto.

However, SDIRAs operate on a buyer-beware basis. Custodians or providers of SDIRAs are not obligated to evaluate the quality or legitimacy of investments in your SDIRA.

SDIRA custodians also don’t sell investment products or provide financial advice. Many are not registered investment advisors (RIAs). So, they don’t fall under the regulatory scrutiny that major firms like Vanguard or Schwab do.

Still, gold IRAs have all the bells and whistles of more common IRAs. This means contribution limits, tax advantages, and RMD rules remain intact.

Contribution limits

For 2026, you can contribute up to $7,500 worth of precious metals to a gold IRA. Those aged 50 or older can contribute an additional $1,100 for a total of $8,600.

Tax advantages of a gold IRA

You can open a gold IRA as a traditional IRA or Roth IRA. With traditional IRAs, your contributions are tax-deductible. However, you’d owe taxes on qualified withdrawals when you reach age 59½.

Roth IRAs don’t allow you to make tax-deductible contributions. But you can make withdrawals tax-free as long as you’re at least 59½-years-old and you’ve been contributing to the account for at least five years.

Moreover, you can withdraw your contributions penalty-and-tax-free from a Roth IRA at any time. That’s because, unlike traditional IRAs funded with pre-tax dollars, Roth IRAs are funded with after-tax dollars. In other words, you’ve already paid income tax on your contributions to Roth IRAs.

However, withdrawing earnings from a traditional or Roth IRA before reaching age 59½ would generally hit you with taxes and a 10% early withdrawal penalty.

Required minimum distributions (RMDs)

If you have a traditional gold IRA, you generally need to make withdrawals or required minimum distributions (RMDs) by a certain age, depending on your birthday. Here’s how it breaks down based on birthdays.

• Age 70 1/2: if born on or before 6/30/1949
• Age 72: if born on 7/1/1949 through 12/31/1950:
• Age 73: if born on 1/1/1951 through 12/31/1959:
• Age 75: if born on or after 1/1/1960:

The amount is based on factors like your life expectancy. You can calculate these using IRS RMD tables.

When it comes time to take a distribution, your custodian can help you liquidate the physical gold and transfer cash to you, or it can send you the physical precious metal. The latter may be best if you intend to sell the physical gold at a later time.

But before you commit, make sure you ask your gold IRA custodian how they handle RMDs. The process isn’t as simple as having your broker sell the stocks in your IRA. So you need to make sure the custodian has a reliable process in place to satisfy your RMDs and avoid any trouble with the IRS.

How to open a gold IRA

Before you open a gold IRA, you typically need to find a gold broker to help you purchase the physical metal. Moreover, gold in an SDIRA must meet specific IRA fineness requirements.

The gold must have a fineness of at least 99.5%. This gold must also be stored in an IRS-approved depository. In most cases, the gold broker can help you find an approved depository. The company can also help you find a gold IRA custodian to open an account and handle all the administrative work.

Risks of gold IRAs

As you can see, there are many players involved in running a gold IRA. With that can come various fees like the following.

• Gold seller’s mark-up fee
• Storage fee for depository
• Account set-up fee
• Ongoing custodian administrative fees
• Transaction fees

And remember, gold IRA custodians don’t undergo the same regulatory oversight as traditional brokerage firms. They won’t evaluate the legitimacy or reliability of the investments you put into your SDIRA. They merely handle the administrative work regarding your account. It’s entirely your responsibility to evaluate your investments, custodian, depository and everything that comes into play.

But there are other risks you should know about gold. For one, it’s not always a solid inflation hedge. In fact, between 1987 and 2001, when inflation hovered around 3% a year, the price of gold declined.

In addition, gold doesn’t always outperform other asset classes and has shown little in the way of long-term potential.

Between June 1986 and June 2026, the S&P 500, with dividends reinvested, returned an inflation-adjusted annualized total return of 8.18%. In the same time frame, gold generated an inflation-adjusted annualized return of 3.628%.

Gold ETFs

You could avoid high fees and other hassles that come with investing in physical gold by investing in gold ETFs (exchange-traded funds).

A gold ETF tracks the gold markets and aims to mimic their performance. But you can buy shares of a gold ETF through a standard brokerage account in the same way you’d purchase shares of a company’s stock. Plus, you won’t have to hold any physical gold. This would allow you to bypass the costs associated with purchasing and storing gold, as well as the extra legwork of evaluating an SDIRA custodian and other providers.

ETFs have long been known for their instant diversification and low fees. In fact, the iShares Gold Trust has an expense ratio (management fee) of 0.4%, or $40 for every $10,000 invested. The typical annual maintenance fee for a gold IRA alone ranges from $75 to $250.

However, investors should know that paying taxes on gold and other commodity ETFs can be complicated. Depending on how the ETF is structured, you may owe taxes even if you haven't sold shares. Be sure to consult a financial adviser or tax expert before you purchase a gold ETF.

Is gold for you?

Gold has historically stood strong against inflation and other periods of economic and geopolitical turmoil. This precious metal could add a layer of diversification to your portfolio and protect you from downside risk.

However, investing in gold as a retirement asset is different from building a nest egg with stocks and bonds. Gold IRA providers aren’t subject to the same rules and regulations as traditional brokers. It’s up to you to do your due diligence when it comes to vetting a custodian as well as the actual gold you’re investing in. The process can also involve high fees. So, you must ensure gold aligns with your risk tolerance and long-term financial goals.

Read More

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• Yes, You Can Buy Gold at Costco

Costco shoppers have been clearing shelves of the retailer's one-ounce gold bars. U.S. investors have poured almost $2 billion over the past 12 months into exchange-traded funds (ETFs) that hold gold bullion. And central bankers around the world have been snapping up 67% more gold bricks so far this year than they did as recently as 2021.

There are plenty of reasons investors should include at least a little gold in their portfolios. Although gold prices can be volatile, over the long sweep of history, the precious metal has maintained value.

Giovanni Staunovo, a commodities analyst at UBS Securities, says persistent inflation in the U.S. and wars in Ukraine and the Middle East have been key reasons gold prices have more than doubled in the past decade, to more than $2,600 an ounce.

He expects gold prices to reach $2,900 in 2025 thanks to continuing demand from central banks and interest-rate cuts that are likely to weaken the U.S. dollar, which typically moves inversely to gold prices. For many investors, a 5% allocation to gold strikes the right balance of risk and return, he says.

It may be fun to jingle an ounce of gold in your pocket, but ETFs have other advantages. You don't have to worry about storage, and you can turn your gold fund into money with the click of a button.

The SPDR Gold MiniShares (GLDM) is one of the largest and fastest-growing gold ETFs. The fund has garnered more than $1 billion in net inflows over the past year, bringing assets to $9.1 billion. With an expense ratio of 0.1%, it is a lower-priced clone of the SPDR Gold Shares (GLD), which has more than $74 billion in assets and charges 0.4% in annual expenses.

The mini fund has slightly higher returns than its larger counterpart thanks to a lower expense ratio, but because it is smaller, it trades a bit less efficiently.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Gold has been in the headlines lately. Maybe you’ve noticed. I’m specifically talking about the shiny metal being sold by warehouse giant Costco. The bars are selling out within hours, if you can get them at all.

With so much enthusiasm around gold, it begs the question: Should gold be a part of your retirement plan?

Gold prices over the decades

It’s important to recognize how gold behaves. If you pull up a price chart that spans several decades, you’ll notice something. Gold has relatively short periods where it rockets up and then longer periods where it does nothing (or worse).

If you’re an expert market timer, then you can obviously profit from buying during the uptrends and avoiding those long periods of underperformance. Unfortunately, during my time in this business, I’ve noticed something. There are very few investors who have even a remote shot at successfully timing the market. For most of us then, it’s the long term that we should concern ourselves with.

So how does gold do over the long term?

Here is one way to think about gold prices. Two hundred years ago, an ounce of gold could have afforded you one quality men’s suit. Today, that same ounce of gold will also buy you a high-quality men’s suit. In other words, it does a fantastic job of preserving purchasing power over the long term.

Physical gold has its plusses and minuses. There’s nothing quite like holding a bar of gold in your hand. And if we’re ever in some sort of doomsday scenario — the grid has collapsed, paper currency is worthless and so on, you’ll likely want your gold close at hand. Of course, hoarding coins and bars can make you a target for thieves. And since the IRS classifies physical gold as a collectible, you may be taxed at a steeper tax rate (currently as high as 28% on long-term gains) if you ever need to sell your gold.

Investing in gold without buying bars

Fortunately, there is more than one way to invest in gold. At SAM, we take a four-pronged approach. Part of that is owning physical gold, but there are three other categories that can benefit when the price of gold appreciates:

Major miners. Stocks of the largest companies that explore and produce gold, like Newmont Corp. (NEM) and Barrick Gold Corp. (GOLD), can be attractive at the right prices. They have operational leverage, meaning that while the price of gold rises, their costs stay the same, which can result in windfall profits when gold is a hot investment.

Emerging producers. This is the high-risk, high-reward part of the gold universe. Some of these companies don’t even produce gold. Rather, they are valued on their “pounds in the ground.” The lack of an operating history means these stocks carry greater uncertainty, but they can trade at a fraction of the value of their proven gold reserves.

Royalty companies. These are like banks for the mining industry. They provide capital to miners in exchange for a percentage of their production. Royalty companies have few employees and low overhead costs. When they’re not hunting for deals, they pretty much sit back and collect money. This superior business model has resulted in high profit margins and outstanding returns over time.

Is gold for you?

Whether you should own gold, how you should own it, and how much you should own ultimately depends on you and your financial goals. If capital preservation over the long term is a top priority for you, that argues for a larger allocation. But if you are growth- or income-driven, perhaps a small bit of exposure makes more sense for you. This sort of planning can be done on your own or with the assistance of a financial adviser.

Just know that if Costco is yet again out of stock or limits how many gold bars you can buy, you have many other options.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

As the market value of gold continues to increase, this is not just a good time to consider diversifying your portfolio, but an opportune time to consider jewelry made of the precious metal. In 2020, the value of one ounce of gold surpassed $2,000 for the first time ever; today’s price is hovering above $2,400.

Jewelry is not as liquid as gold bullion and bars, but its value does rise in a commensurate fashion, and the longer you hold on to it, the greater the profit. The bonus is the joy of shopping for unique pieces, learning their history, and then wearing your antique and vintage finds.

Qualities that determine value range from purity of the metal and weight to condition and craftsmanship. Spot prices of platinum (approaching $1,000) and sterling silver (near $30), also precious metals, fluctuate at unprecedented highs. 

Here, we look at what to watch out for in jewelry, how to find the goods, and how to have some fun with jewelry investments.

What makes jewelry valuable

Value is very dependent on age – antique is reserved for pieces that are at least 100 years old – and number of karats. Not only is 24-karat gold the purest, it’s also the softest and most easily scratched – the traditional photo op of Olympic athletes biting their medals leads back to the 1800s gold rush when that was the way to test metal's purity. Generally, jewelers recommend 14- and 18-karat (58.5% and 75% pure gold) for everyday wear. 

A small jeweler's magnifying loupe enables one to study stamps, karat and dates. Quality silver is usually marked with the number 925, country of origin and the word “Sterling.”

The number of carats applies to gemstone size. Expensive diamond jewelry likely includes grading reports from the Gemological Institute of America documenting carat weight. The GIA’s gem encyclopedia explains “play-of-color,” where certain stones are found (lapis in Afghanistan; opals in Australia), and how tourmalines (mineral deposits that resemble gemstones) are identified by color or locale.

Semi-precious gemstones are highly collectible and wearable, while diamonds, emeralds, sapphires, jadeite, garnets and rubies are more coveted. There's a wealth of difference between synthetic and natural stones; small seed, seawater, freshwater and cultured pearls. Gemstones are graded according to the 4 Cs: Cut, color, clarity and carat weight.

Jewelry is also classified by its type and design. For instance, significant differences in necklace styles described at Spruce Crafts range from rope-like bayaderes to bibs (popular during Greek and Roman times), chokers, collars, festoons and lavallieres (named for a mistress of Louis XIV).

The history of jewelry trends

Knowing the history of jewelry also helps to understand what has value. Ornate Georgian jewelry dates from 1714 to 1830; the Victorian era, 1837-1901, reflects Queen Victoria’s reign; and Edwardian, 1901-1910, refers to King Edward VII. The 1920s and 1930s are the heyday of Art Deco followed by Art Deco Revival, Mid-Century and contemporary.

If you are looking to gain appreciation and knowledge of jewelry (or just look at some beautiful items) fine arts museums are excellent venues to study how historic periods, politics, wars, aristocracy and trends have transformed jewelry-making.

This context shows how what's considered valuable or trendy changes, too. For instance, one of the more dramatic forms of Victorian jewelry was hairwork, which enabled a family member to memorialize their beloved by weaving, framing and gilding strands of their hair. 

Visitors at London's Victoria and Albert Museum can observe Bronze Age artifacts and medieval jewelry that illuminate times when lower classes wore copper and pewter. You can also see how in the Renaissance period, different stones were thought to protect people from various illnesses, and you can see the work of avant-garde artists who push the limits with cutting-edge technology and materials.

Custom-made jewelry has been a statement of extreme wealth and triumph for centuries, extending into the modern era. Over-the-top, one-of-a-kind pieces displayed at the American Museum of Natural History's Ice Cold: An Exhibition of Hip-Hop Jewelry (open until January 2025) include shiny signs of success created for Run-DMC, exemplified by Adidas’ 14-karat gold sneaker-shaped pendants.

Where you can find jewelry to invest in

People acquire gold in myriad forms and from unexpected places; Costco sells bars, and according to the New York Times, golden “beans” are popular in China. And between sites like Ruby Lane, Etsy, eBay, 1stDibs and TheRealReal, the internet is a 24/7 emporium for jewelry at every price point conceivable, bombarding followers with seductive images of bespoke, pre-owned and sought-after jewelry. 

Before buying online, be sure to read sellers' reviews and check return and exchange policies. You should also look out for charges for resizing, engraving, converting (i.e. earrings into charms, a pendant into a brooch and vice versa), shipping costs, insurance and tracking.

Second-generation jeweler Elizabeth Henry, who oversees six stores in Massachusetts, New Hampshire and Maine, said Instagram helped Market Square Jewelers survive the pandemic. Their frequent live shows have created a loyal community of "jewelry nerds" who can comment, ask questions, and then purchase by writing "mine" plus a price. 

You can also shop at auction houses. Bonhams has 89 live and online jewelry auctions in 2024 worldwide, according to their jewelry global director Jean Ghika. Bonhams does valuations for auction and enables interested parties to preview and bid online and onsite. Items from a June auction, which I saw at New York City’s Madison Avenue location, included intricate designs by Piaget, Chopard, David Webb, Van Cleef & Arpels, Bulgari, and a pair of diamond bracelets owned by the late Barbara Walters. 

Ghika wrote in an email that “some makers have enduring appeal regardless of time period." She added: "Style-wise we have seen a renewed interest in jewels from the second half of the 20th century, namely the 1950s and 1960s; equally, there is also an emerging interest in the jewels from the 1980s which often focus on bold designs and strong use of color."

Additionally, check out estate sales (estatesales.net is state-specific), stoop sales, garage sales, flea markets, thrift shops and events that could be opportunities for finding valuable jewelry. For example, at the bustling Manhattan Vintage Show, held four times a year in New York City, one can try on distinctive pieces and interact with dealers from all over the country. The three-day event boasts a kaleidoscopic array of clothing, accessories and baubles, all under Metropolitan Pavilion's roof. 

Approximately a quarter of the 100 vendors sell jewelry, and if you look carefully, you’ll unearth gems that will appreciate in value, such as a silver ring designed by esteemed architect Frank Gehry in collaboration with Tiffany’s, or modernist pins by Danish silversmith Georg Jensen, founded in 1904 in Copenhagen. Fashionistas love rifling through racks of Gucci and Pucci, pairing bright, still in-vogue patterns with bakelite, turquoise, cameos, coral and Austro-Hungarian crystals, stacking rings and bracelets, and layering necklaces.

At the Jewelry and Object Show (held in New York City, Las Vegas and Miami), dealers explain the provenance and cultural significance of hat and collar pins, ear clips, money clips, tennis bracelets, bangle bracelets, retro charms, and chains of all types (serpentine, Cuban, cable, curb, Figaro, herringbone, mariners, trace, paperclip, ball, belcher, box) and lengths (princess, matinee and opera). There are classic cufflinks, lockets, fine watches, old-fashioned and mourning brooches and pendants for sale.

One piece de resistance at a recent Jewelry and Object Show in the Metropolitan Pavilion was a radiant gold bracelet, circa 1840, designed by Italy's legendary House of Castellani for sale by DK Bressler. While many sellers connect with customers via websites and social media, Bressler’s owner Ron Kawitzky, who has been operating out of New York’s famous diamond district for almost 40 years, said the best way to assess fine jewelry is to see it in person, handle it and observe makers' marks. I suggest scheduling an appointment first. 

You could have valuable pieces already without knowing it. Look through your own jewelry box for signed silver pieces, high karatage gold, rare gems, and anything from Cartier, Hermes, Harry Winston, Faberge and Fred Leighton. Watches by Rolex, Montblanc, Piaget, Patek Philippe, Longines and Verdure also have high value as investments.

Be on the lookout for Paloma Picasso’s graffiti X’s and olive leaves; Elsa Peretti's signature waves, open hearts, bone cuffs and bean-shaped pendants. Peretti’s first jewelry design was a sterling bud vase on a leather string inspired by a flea market find. 

How to consider jewelry investments

Much like collecting art that will hang on your walls for years, experts encourage investing in high-quality jewelry that resonates on an emotional level. Learn as much as you can and decide how much you’re willing to spend. You should also determine if you’re buying to celebrate a personal milestone, bequeath or sell in the future as the value of gold goes up.

Meghan Dyer, head of sales at EraGem based in Bellevue, Washington, said a beautiful piece of jewelry is viewed as a “future heirloom and long-term investment.” Vis a vis the current precious metal market, Dyer was one of several dealers whose price tags on older stock remain unchanged but, she said, newly listed items will reflect an uptick in troy ounce prices. 

When it comes to selling your jewelry, she suggests paying for an independent appraisal. Not one source I spoke to for this story was in favor of melting old jewelry; in fact, they said banishing pieces of history to the furnace was criminal.

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These days, it feels like there's not a lot Americans agree with each other on. But we do seem to have one consistent belief: that real estate is a great long-term investment. 

Americans voted real estate as the best long-term investment, according to a new Gallup poll. And in fact, real estate has come out on top of this poll every year since 2014, beating out stocks or mutual funds, gold, and savings accounts or CDs. 

This year, 36% of Americans put real estate on top. Next up was stocks, at 22%, followed by gold, 18%, and savings accounts or CDs, 13%. Coming in at the bottom of the list was bonds, at 4%, and cryptocurrency, at just 3% — not a huge surprise, considering many people are still trying to figure out what cryptocurrency is. 

That real estate has been such a consistent winner this past decade is interesting, though. Now, don't get me wrong: Both real estate and the stock market have historically been great long-term investments. They have both exceeded the rate of inflation, meaning that if you were invested, you saw some great returns in the long-term. They also both generally have higher rates of return than safer vehicles like savings accounts, CDs (even with the high CD rates these days) or bonds. 

But lately, stocks have given a better return than real estate, and those returns have come as investing has gotten increasingly accessible thanks to tools like online brokers and trading platforms. Real estate, meanwhile, has only gotten less accessible, if you're not already a homeowner, as prices have been rising and down payments are a bigger barrier to entry than, say, throwing $100 into a Vanguard account. (That's particularly true now, when people like myself are arguing it is the worst time to buy a house between high mortgage rates and prices.)

If you're an older homeowner or real estate investor, though, it's easy to understand why you'd say real estate is a better investment than the stock market. From 1990 to 2006, returns on housing were higher than stocks, according to Investopedia. 

But since 2006, stock market growth has exceeded housing. Using the S&P 500 vs the Vanguard Real Estate Index, Sean Ross at Investopedia found that from December 2013 to December 2023, the real estate index had a 37% total return — while the S&P 500 had a 155% total return. 

Even so, again, I can understand why people stick with real estate. It's a simple idea, really, which is that real estate feels safer. The stock market has bumps and volatility in short-term segments, while housing generally keeps a more slow but steady climb. And you can't disagree that on a rainy day, a roof over your head feels like a better investment than a GOOGL share in your Robinhood account. 

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In early December 2023, gold hit a record price of $2,147 an ounce. Investors are paying attention. With inflation running hot for three years in a row, is now the time to put gold in your portfolio?

Over the years, I have been a leading disparager. Consider just a few of the things I have written about gold in Kiplinger and elsewhere: "I am not a fan of gold" (1999). "Stay away from gold. It is a barbaric relic" (2002). "Let me put my prejudices on the table: I loathe gold" (2014). But is this time different? Let's begin with gold's biggest liability: With the exception of a single decade, it has not been a good long-term investment. 

Forget Barrick Gold (GOLD), Newmont Mining (NEM) and Agnico Eagle (AEM), the large gold-mining companies. They have been terrible performers and are unlikely to get any better. 

The most convenient way to own the metal itself is via an exchange-traded fund (ETF) such as the SPDR Gold Shares (GLD), whose value is linked to the price of bullion. Over the past 10 years, Gold Shares has returned a paltry 5.1% annualized, compared with 11.9% for the SPDR S&P 500 (SPY), the ETF linked to the popular large-stock index. 

An investment of $10,000 in the gold fund became $16,445 over that time; the same amount in large-capitalization stocks became $30,782. The gold ETF was volatile, too. It lost money in five of the past 10 calendar years and beat the S&P ETF in only three.  

The 1970s were an outlier decade for gold 

Gold's history isn't inspiring. After President Nixon ended the government's promise to convert dollars to gold at a fixed price, an ounce soared from an average of $36 in 1970 to $615 in 1980. But that amazing rise was an anomaly, driven by pent-up demand from price controls and a crazy decade of slow growth and high inflation because of poor fiscal and monetary stewardship. 

In February 1981, I wrote an article for The Atlantic about the fears of gold enthusiasts ("goldbugs," as they were called) that the newly elected president, Ronald Reagan, and his Federal Reserve chief, Paul Volcker, would set America's economic house in order, thus crushing gold. Those fears were realized, and it took 27 years for the price of gold to get back to its 1980 level. 

Gold tripled over the next five years, then stagnated and fell again. In 2016, gold seemed to anticipate the return of inflation – or maybe it just got too cheap, or investors got nervous about what the surprising new president would do. The Gold Shares ETF jumped just over a total of 50% during the Trump years, then flattened out from 2021 to 2023. 

Since 1990, gold has gone from $386 an ounce to that recent record of $2,147. Sound good? That's an increase of a factor of a little less than six. Over the same period, the Dow Jones Industrial Average rose by a factor of 14. Gold increased at less than 5% annually; stocks, 8%. Obviously, such calculations depend on where you start, but any post-1980 analysis has gold rising at a far lower rate than stocks. 

Here's the kicker: Gold doesn't pay dividends. Stocks do – and I am not even counting their dividends in the analysis above. In fact, if you hold physical gold, you have to pay a fee for the storage. 

Fundamentals favor stocks over gold by a mile

As a commodity with no significant industrial use, gold increases mainly with the cheapening of the dollars used to purchase it (that is, the effect of inflation), plus the emotions – mostly fear – of the buyers. 

Gold also benefits from the rising wealth of the world, which drives the demand for jewelry, but that demand is counterbalanced with increasing supply through better mining. Production has risen 50% since 1997, which is one reason Barrick Gold's stock is cheaper today than it was then. 

Stocks, by contrast, increase because the value of the underlying companies is determined by the imagination and diligence of the humans who manage and work for them. When you buy stocks, you buy brains and hard work. You get to ride along on the dream train with the inventors of a phone that can tell you everything about the world and lets you video chat with relatives 10,000 miles away, the engineers who figured out how to drill for oil sideways, the scientists who developed treatments to put cancer into remission and medicine to make you thin, the builders of cruise ships that carry 8,000 passengers, the fashion designers who make yoga wear, and the streaming-media providers who make it possible to watch a TV series whenever and wherever you please. 

Gold certainly has a mystique as a haven. But in times of catastrophe, gold's record is mixed. Yes, during the financial crisis of 2008, gold rose 5% as stocks dropped 38%. And when COVID struck in early 2020, the S&P 500 index fell 34% in just over five weeks while gold held nearly all its value. But after the attacks of 9/11, for example, gold and stocks performed about the same. Plus, when it comes to safe havens, U.S. Treasury bonds have typically been a better bet. 

Isn't gold a hedge against inflation?  

The rate of growth in the Consumer Price Index zoomed from 1.2% in November 2020 to a peak of 9.1% in 2022 – one of the steepest increases in U.S. history. During that time, stock prices rose, then fell, and wound up being flat overall. Gold was flat, too. In fact, gold didn't take off until the inflation rate peaked and started falling. 

The reason that gold isn't an unmitigated delight during inflationary times is that when consumer prices rise, interest rates go up as well. Gold typically suffers when interest rates are high because it doesn't pay interest or dividends, so its relative position declines against bonds yielding 5% and stocks yielding 2%. 

Who should buy gold?

And stocks, of course, rise briskly over time—not every month or every year, but almost always over a decade and more. Gold does not. The case for gold, in my view, is short term only, and it goes something like this: Currently, investors have become relaxed about inflation, with the Fed signaling that cuts in interest rates may be on the way. Having been far too pessimistic, Mr. Market may have gone overboard in the other direction.

Meanwhile, look at the world. The war in Ukraine could easily spread to other parts of Europe. The war in Gaza could ignite a conflagration not just with Hezbollah but with Iran itself. And what about North Korea? Taiwan? Some even say that democracy in the U.S. itself is in jeopardy and that the debt of the richest nation in the world is getting shaky. 

I'm not an alarmist, and I am aware of gold's spotty record in crises. But, for all its deficiencies, gold remains the best prospective hedge against disaster. I am definitely not buying gold as an insurance policy, but, for investors with apocalyptic views, there is probably nothing better.

James K. Glassman chairs Glassman Advisory, a public-affairs consulting firm. He does not write about his clients. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence. You can reach him at JKGlassman@gmail.com.

Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Investors are regularly searching for ways to maximize returns while minimizing risk. One often overlooked avenue for achieving this balance is investing in commodities. In my opinion, maintaining a certain percentage of a portfolio in commodities can increase diversification and reduce the risk of the overall portfolio. Let's explore the reasons why investing in commodities should not be ignored.

What are commodities?

Commodities are tangible assets of raw materials or agricultural products that can be bought and sold in standardized quantities. Commodities range from precious metals to energy resources like oil and natural gas and even include agricultural products like corn and wheat. While we are still likely buying stocks (“paper”), investing in commodities means buying an interest in companies that mine or manufacture or grow tangible goods.

Whether it’s food, minerals or lumber, all these goods are commodities that trade on the market. So, when we are investing in a company that supplies a commodity, we not only want to study that company’s fundamentals, but we also want to understand the supply and demand characteristics of the underlying commodity.

We can likely agree on the continued demand for electric vehicles and the movement toward electrification as the world progresses toward a more renewable energy base and away from fossil fuels. Of course, this will not happen overnight — it will take time — but there is an undeniable demand for goods that support the electrification theme.

Well, what metal is crucial in all things electric? Read on to understand the opportunities that exist with commodities and how they allow us to tap into the fundamental drivers of the global economy.

How to invest in commodities

The typical investor cannot just go out and buy a pound of copper, a brick of gold or a bushel of corn or soybeans and trade it, although I suspect some have tried. Luckily, the minds on Wall Street have developed various methods and vehicles that can be utilized by investors to express interest or exposure in a series of commodities or a specific one.

You can invest in commodities through various instruments such as funds, ETFs or futures contracts that allocate the capital under their management to various commodities or companies in the commodity sector. Each method has its own advantages and considerations, and investors should carefully evaluate their risk tolerance, investment objectives and available resources before making a decision.

The revenues and likely prospects for growth of these investments are determined by the price of the underlying commodity. It is important to understand that many commodities are traded on the futures exchange, where there are contracts for purchase at a certain time at a certain price. Given that, there are specific risks that investors need to understand before investing in such vehicles.

Things to be aware of when investing in commodities

While there are numerous advantages to investing in commodities, it's essential to be aware of the associated risks and considerations. Commodities can be highly volatile, and market trends and timing can greatly impact their performance.

Additionally, global events such as geopolitical tensions or natural disasters can impact commodity prices. Careful monitoring and regular analysis are necessary to navigate these complexities successfully. If you work with a financial adviser, this is something they will be doing on your behalf.

Benefits of commodities

Including commodities in an investment portfolio offers several notable benefits. Firstly, commodities have historically exhibited a low correlation with traditional asset classes like stocks and bonds. This means that when other investments decline, commodities may provide a cushion against losses.

Secondly, commodities have the potential to act as a hedge against inflation. As prices rise, the value of commodities often increases, providing a valuable store of wealth.

Lastly, in certain market conditions, commodities can offer attractive returns due to supply and demand dynamics.

Highlighting gold, silver and copper

When considering specific commodities, gold, silver and copper stand out as compelling investment options. Gold has long been regarded as a safe-haven asset, maintaining its value even during times of economic uncertainty. Silver also offers similar hedging benefits and has industrial applications as well. Copper, known colloquially as the “red metal,” is a vital component in infrastructure development, making it an attractive option as economies grow and demand for construction materials rises.

Given its tendency to predict the changing economic winds, copper is the element that is required in all electric functionality. CNBC reported that demand for copper could nearly double by 2035, and mining companies are having a hard time keeping up. Copper’s role in energy transition has led to bullish bets on the metal, but at the same time, multiple forces in politics and the market are making moves that could destroy demand.

Commodities: An alpha-generator

In an inflation-centric economy, having exposure to commodities is likely an alpha-generator, providing further excess returns over time. By including commodities, such as gold, silver and copper, in your portfolio, investors can potentially reduce risk, hedge against inflation and tap into unique market opportunities. However, it's crucial to stay informed, understand the risks involved and continually reassess your investment strategy.

As you explore the world of commodities, remember to speak with your financial adviser about your financial goals and risk tolerance. Investing in commodities should not be overlooked as a viable strategy for diversifying and balancing your investment portfolio.

ALINE Wealth is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC. All information referenced herein is from sources believed to be reliable. ALINE Wealth and Hightower Advisors, LLC have not independently verified the accuracy or completeness of the information contained in this document. ALINE Wealth and Hightower Advisors, LLC or any of its affiliates make no representations or warranties, express or implied, as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Did you know you can buy gold at Costco? It's true. Costco began selling one-ounce gold bars last year and now members of the warehouse club can purchase silver coins as well.

Deciding to add gold and silver to their inventory was a shrewd decision. Analysts at Wells Fargo expect revenue “may now be running at” $100 million to $200 million a month" from gold, according to CNBC.com. 

Gold prices are rising and rose above $2,500/oz for the first time on expectations that the Federal Reserve is inching closer to cutting interest rates, according to seekingalpha.com. The spot price for a troy ounce is fetching $2,525 on the commodities market. That is a 2.63% increase in one week as of August 21, 2024. 

For the silver coins, members have two options: A 20-count of American Eagle Silver coins for $6999.99 or a 25-count of Canada Maple Leaf Silver coins that is currently sold out. Both sets contain one troy ounce coins. They are available online with a limit of five units per member and are not eligible to be returned cost or refunded.

For the gold bars, here are three options — PAMP Suisse Lady Fortuna Veriscan and PAMP American Buffalo or the PAMP American the Free Statue of Liberty.  All varieties are one troy ounce and made of 24-karat gold. They are currently priced at about $2,569.99 and $2,549.99 respectively. 

The gold bars sell out regularly, and when available, can only be purchased online with a limit of two per member and are not eligible to be returned or refunded. Delivery is not available to Nevada or Louisiana.

Costco ships the gold bars and silver coins via UPS insured shipping and a signature is required on delivery.

Membership price hiked in July

When Costco CFO Richard Galanti was asked about this last year during earnings calls, he said it was “a question of when, not if." That day has come and Costco is raising its annual membership fees by $5 for non-executives and by $10 for executives in the United States and Canada. The change is effective September 1. 

The new Costco fee for non-executive memberships in the U.S. and Canada will be $65, up from $60. Executive membership fees will be $130, up from $120, which consists of the $65 primary membership fee plus the $65 Executive upgrade. 

In addition, the maximum annual 2% reward associated with Executive memberships will increase to $1,250 from $1,000. 

One way to save, however, is by taking advantage of online marketplace Stack Social's one-year Costco membership  offer.

• Gold Star Membership: With this plan, you’ll need to pay Costco's $60 per year regular fee but you'll receive a $20 digital Costco Shop Card by email.
• Executive Gold Star Membership: Under this offer, you’ll pay Costco's $120 per year regular fee but receive a $40 digital Costco Shop Card by email.

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When most people think about investing, their mind goes to the most common types of investments, like stocks or bonds, or their investment accounts, like their 401(k) or traditional or Roth IRA. 

However, there is a wide array of investment options that can help you diversify your holdings so you are better prepared in the event of a major market meltdown. Essentially, alternative investments are supplements to traditional long-only positions in stocks, bonds and cash.

Who can invest in alternative assets?

Before diving into the types of alternative assets, it's important to know who is qualified to invest in these asset classes. They're considered alternatives because they aren't included in any of the asset classes that would be considered conventional, which are stocks, bonds and cash. These alternative assets are more complex and may be riskier than conventional ones because they usually aren't registered with regulators. 

As a result, most alternative investments are open only to accredited investors. Accredited investors are those who have a net worth of over $1 million, excluding their primary residence, or earned income of more than $200,000 (or $300,000 for married couples) in each of the last two calendar years. 

Financial professionals can also qualify as accredited investors without satisfying one of those two requirements, but until just recently, they must have had a Series 7, 65, or 82 license to do so. Recently, the House of Representatives passed a new bill that allows people with "professional knowledge through educational or professional experience" to qualify as accredited investors without holding any of those licenses. 

The same day, the House also passed a new bill updating the official definition of an accredited investor. This bill gave the Securities and Exchange Commission discretion to decide which credentials are needed to be considered accredited. It also requires an SEC review every five years with amendments as needed. 

What are the different types of alternative investments?

Broadly speaking, most alternative investments can be separated into two groups: public and private.

Public alternative investments definition

Public investments are those that report their holdings publicly. For example, hedge funds may be considered public investments because they must abide by certain reporting regulations with the SEC. In a hedge fund, your investment is pooled together with others' to be managed by a professional portfolio manager who uses many tools, including some more complex and high-risk methods, with the goal of earning above-average returns. 

Hedge funds are considered public because they must file quarterly reports on their holdings, especially those in publicly traded stocks. Most hedge funds also send monthly or quarterly letters to their investors to share details on their views of the markets and sometimes additional details on their holdings, like what they think about the companies they invest in. 

Hedge funds use an array of strategies to achieve risk-adjusted returns for their investors. Long/short equity funds often get most of the attention. Other strategies include global macro, commodities, risk arbitrage, event-driven, fixed-income arbitrage, relative value, and distressed securities. Today, multi-strategy and multi-manager firms are becoming particularly popular, as are hybrid funds that combine a traditional hedge fund structure with that of a private equity firm.

In some cases, exchange-traded funds (ETFs) might be considered public alternatives because they list their holdings publicly and are traded on exchanges like stocks. This is particularly true of ETFs that utilize structures similar to those of hedge funds, aiming for similar risk-adjusted returns.

Private alternative investments definition

Private alternatives include private equity (PE), which includes venture capital (VC), private credit, and infrastructure. PE and VC are similar to hedge funds in that they buy pieces of businesses, but they are privately held businesses rather than publicly traded ones. 

Private equity and venture capital have become exceedingly popular in recent years because these funds have generated significantly better returns at a time when generating alpha, or excess returns on top of what a benchmark has earned, in the publicly traded markets has been extremely difficult.  

Other types of alternative investments

Finally, some alternative investments aren't really public or private. These include commodities like gold, silver, grains, or oil, real estate, and cryptocurrencies. Non-accredited investors can invest in some of these other asset classes, like cryptocurrencies and real estate. Moving out to the far fringes of alternatives, some other options include art and collectibles, wine, farmland, and peer-to-peer lending.

In some cases, investors can invest in a fund that covers multiple individual assets within one of these other classes. For example, a growing number of crypto funds are providing easier access to multiple cryptocurrencies in one fund for investors who don't want to learn to navigate crypto exchanges. Real estate funds can also bundle multiple properties into one fund. 

However, such funds often require investors to be accredited to invest in them.

The pros and cons of alternative investments

Like anything, there are pros and cons of investing in alternatives. On one hand, they provide diversification for your portfolio and the potential to generate returns or alpha in one area of the market when other areas are falling. On the other hand, alternatives are more complex than conventional assets and usually require investors to be accredited. 

Investors are always advised to consult with an adviser and do their due diligence before investing in anything.

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Unless you're a trader or a tactical investor – and a nimble one at that – you really have no business investing in gold. 

Why? Because history shows that gold has been a terrible place to put your cash, even when inflation is running hot.

But first, let's define our terms. You don't even really "invest" in gold. Since the yellow metal produces no cash flows, holders of gold merely speculate on its future price. And anyone who holds onto gold for any length of time almost invariably learns two things: its returns usually lag those of stocks (often by a lot), and it's a poor hedge against inflation.

I bring this up now because the price of gold is showing signs of life at the end of a week in which it hit three-month lows. Long-term investors would do well to shrug off this news. There's nothing to see here, at least not for them. 

Now, to be fair, as mentioned above, gold ETFs and gold miner stocks can be effective tools in the hands of professional traders and tactical investors. But that means knowing when to get in — and when to get out. 

Stocks, by comparison, tend to be a very good buy-and-hold bet. Allocate capital to a broad-market index such as the S&P 500, keep saving through dollar-cost averaging and – thanks in part to the miracle of compounding – you might just retire comfortably one day.

Gold can't do that for you, but stocks can. Here's why: unlike gold, stocks represent a claim on something dynamic and real. 

When you own equity in a company, your stock represents a claim on the business's assets. But more importantly, your stock represents a claim on the long-term stream of free cash flow generated by that business. That cash can then be distributed to shareholders as dividends or kept on the balance sheet as retained earnings.

Stock entitles a shareholder to a portion of a growing pile of cash. Gold, by comparison, represents a claim on a lump of metal that produces…nothing. As pretty as it might be, gold gets dug out of the ground, refined and then turned into stuff that mostly just sits there. 

In the first quarter of 2023, about half of all global demand for gold came from the jewelry industry. Roughly a third went into producing coins and bars, while a fifth was purchased by central banks. Lastly, industrial buyers and exchange-traded funds (ETFs) formed a marginal source of demand for the so-called barbarous relic.

Apart from demand from these sources, gold has no intrinsic value. The price of gold depends on what you can get someone else to pay for it. 

This fundamental inertia – gold's inability to generate value and its utter dependence on demand – makes it untouchable for someone like Warren Buffett. Here's one of the billionaire investor's many putdowns of gold:

"Gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end."

Gold is garbage long term

The above arguments are well known, yet they fail to dissuade too many people from owning gold. Perhaps some comparative returns will help to change some minds?

True, past performance is not indicative of future results, and you can manipulate historical returns by fussing with their beginning and end points. Nevertheless, I think the following data make some strong points:

The historical returns sort of speak for themselves, don't they? Stocks beat gold over every standardized period going back three decades. It's also interesting that returns from stocks were remarkably stable. 

What's most striking, however, is that over the past three years – a period in which inflation hit 4.7% annually in 2021 and 8.0% in 2022 – gold generated a negative annualized real return.

So can we please dispense with the zombie idea of using gold as a hedge against inflation? It has a very mixed record in that role historically, and it's been an absolute dud over the past few years as U.S. inflation hit a four-decade high.

Sure, things might change going forward, but the record doesn't lie: stocks are far better at generating wealth than gold. And that's been especially true recently when inflation came roaring back. 

Don't be fooled by gold. Those late-night infomercials hawking the benefits of gold coins are based on fear, not reality. Your hard-earned dollars will generate far better returns in a cheap S&P 500 ETF than they will in a bag of magic coins. 

More columns by Dan Burrows

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Wall Street's most prevalent investment strategies looking out toward the rest of 2023 look much, much different than they did this time a year ago.

Around this time last year, the S&P 500 had just entered a bear market, putting an end to the 2020-2022 bull run. 

Additionally, the Federal Reserve was on the cusp of instigating the third of what would become 10 rate hikes between the start of 2022 and today. But no one knew back then just how far or fast these hikes would go, leaving investors to balance on a precarious perch of uncertainty amid a world that was still trying to find its footing in the wake of COVID-19. 

Today, the situation is hardly any more certain, but for different reasons. The Russia-Ukraine war has led to tremendous hardship and global uncertainty. And yet the S&P 500 is up by more than 13% year-to-date and the Nasdaq Composite Index has climbed nearly 30% since January. Spending is on the rise in the U.S. and the unemployment rate has remained low. Inflation, however, remains elevated with at least one more rate hike penciled in for July.

Meanwhile, the word "recession" is getting bandied about in the media, with experts arguing over the possibility of 2023 bringing one upon the U.S. –  if it hasn't already begun.

How, then, should investors go about their business in this evolving environment?

We've asked several fund managers and other industry experts just that – and in turn, they've shared some of the investment strategies they like for the rest of 2023. Read on to see what they have to say.

• Provided by: Roger Aliaga-Diaz
• Position(s): Global head of portfolio construction at Vanguard

"As we approach mid-year, the current market environment continues to be as uncertain as it was at the beginning of the year," Aliaga-Diaz says. While he believes interest rates are reaching a peak and that the Fed will "prevail in its fight against inflation," he says the battle may be won at the expense of a "mild recession later this year." 

Given that, he tells investors to not let continued uncertainty tempt you into making changes to your long-term investment strategies. 

"Research shows that making large changes to your asset allocation to capitalize on short-term market movements is difficult to consistently get right," Aliaga-Diaz says. "The best and worst days for the markets are often clustered close together and maintaining discipline in periods of heightened uncertainty and volatility is crucial."

• Provided by: Karina Funk
• Position(s): Chartered financial analyst, chair of Sustainable Investing at Brown Advisory and portfolio manager of the Brown Advisory Sustainable Growth Fund

"When macroeconomic surprises hit, the equity market tends to be very inefficient, and this creates opportunities that we seek to exploit," Funk says. "As active managers with a long-term investment horizon, we seek to take advantage of short-term dislocations by allocating capital to new and/or existing names that may be trading at a discount relative to our view of their fundamental strengths, downside risk, and forward upside potential."

For example, inflation plus a wind-down of historic COVID demand for vaccine containment solutions caused West Pharmaceutical Services (WST) to miss its earnings expectations at the end of 2022. And yet her team, still believing in the company's leadership and value proposition, added to their allocation during the drop. Since then, it's proven to be even stronger and faster-growing than pre-COVID, she says.

"Current macroeconomic uncertainty, led by changes in monetary policy and inflation, is likely to continue in the second half of the year," Funk says. "While we can and do run scenario analyses of how some of these risks may affect our portfolio holdings or candidates, our focus as bottom-up fundamental managers is to invest in companies that have a lot more that is within their control than outside of it."

For example, rather than just trying to predict how inflation will affect input costs, she also targets companies with demonstrated pricing power and inelastic demand, such as a life sciences firm that provides critical solutions for part of life-saving treatments.

"In terms of sustainable investing, the more compelling the customer value proposition, the more a company can navigate an uncertain macroeconomic environment," she says. 

An example of this is the need for energy efficiency with the increasingly complex processor loads of artificial intelligence, like Monolithic Power's (MPWR) chips, which "provide precise power that reduces wasted energy," she says.

• Provided by: Steve Laipply
• Position(s): Global co-head of iShares Fixed Income at BlackRock

Bond yields are on the rise, with more than 60% of fixed-income sectors yielding 4% or more now. "The front end of the U.S. Treasury curve now yields more than high yield indices did at the end of 2020," Laipply says. "And not only has it been true that yields are back, but the notion of 'bonds as ballast' has begun to reappear after going missing in action during 2022."

He believes that many multi-asset portfolios are under-allocated to fixed income currently, especially given bonds can be a powerful diversifier to riskier assets. Investors should be reallocating to fixed income, he says.

"Given where yields now are, investors are able to reduce equity over-weights, increase credit quality, improve liquidity and lower overall portfolio risk," he says.

As an example, he says to consider stepping into higher quality, medium-term fixed income via funds like the iShares U.S. Treasury Bond ETF (GOVT), the iShares Core US Aggregate Bond ETF (AGG), the iShares MBS ETF (MBB) or the iShares 5-10 Year Investment Grade Corporate Bond ETF (IGIB).

"We believe the new regime of greater macro and market volatility is poised for a long stay and demands a new investment playbook," he says. "For those who have had to look elsewhere for income over the past decade, the great yield reset has transformed the strategic opportunity in fixed income."

• Provided by: Ashok Bhatia
• Position(s): Deputy chief investment officer for fixed income at Neuberger Berman

Bonds may be more appealing in 2023, but not all bonds are to be trusted equally. 

"As companies and individuals need to refinance debt into higher rates, or pay more to finance working capital, we expect that one-off issues in credit markets will continue," Bhatia says. Rather than a broad rise in default rates, he expects the risks to be idiosyncratic, or company-specific.

To invest in such an idiosyncratic environment, he says to "move up in quality, so higher rated credits within sectors and higher rated sectors in general." You should also reduce exposure to cyclical sectors and businesses with high capital needs or a lot of floating-rate debt because the adjustment to interest rates will impact these companies first. Finally, expand your allocations to securitized or non-corporate exposures where you can.

"In terms of investment strategies this would correspond to, it would be things like Core or Global Core fixed income type of strategies," Bhatia says.

He expects that as U.S. and European investors increase their fixed-income allocations over time, higher quality segments such as agency mortgages, high-quality-asset-backed securities and investment-grade corporate bonds will be "key beneficiaries of these flows."

• Provided by: Miles Lewis
• Position(s): Portfolio manager at Royce Investment Partners

"In the wake of recent bank failures, the regional banking industry has seen a significant correction in market values and high volatility throughout the first half of 2023," Lewis says. "This challenging climate is creating highly promising long-term investment opportunities among select small-cap regional players."

Periods of high anxiety tend to be profitable entry points for banking stocks, he says, as was seen in the 2008 Financial Crisis. Many banks are trading below their tangible book value, but the "discounted valuations in most cases are not rooted in fundamentals, which for many banks remain solid, albeit with some near-term pressure on margins and returns."

Additionally, "fears about the long-term viability of the industry and near-term risks are greatly exaggerated." As an example, he points to concerns about office corporate real estate, noting that most regional and community banks don't have exposure to large downtown office buildings that are commonly cited as under distress.

"While smaller regional and community banks are likely to feel some impacts of pending regulation, the current focus of the regulators is on banks with greater than $100 billion in assets, which does not include the majority of U.S. banks," Lewis adds.

Deposit costs are elevated currently, but he says this is largely a function of the inverted yield curve and Fed rate hikes. "If history is a guide, then yield curves do not remain inverted forever – the average since 1970 is about 14 months - and the Fed typically cuts rates when the economy slows."

Finally, he says his recent conversations with dozens of bank CEOs confirm his views that "regional and community bank models are strong and will endure, despite mainstream narrative to the contrary."

• Provided by: Bob Welch
• Position(s): Senior vice president and financial advisor at Wealth Enhancement Group

Despite stronger-than-expected returns on the Nasdaq and S&P 500 so far this year, Welch says that "if you look under the surface of the market, there is cause for concern."

He points to how Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN) and Nvidia (NVDA) account for roughly 80% of the S&P 500's year-to-date returns, saying that "it is not healthy when so few companies are responsible for such a large percentage of the return."

This, coupled with inflation and recession uncertainty, has led him to a more conservative asset allocation in his investment strategies.

"We are less bullish on the broad market, instead favoring sectors that are defensive in nature, namely healthcare and consumer staples," Welch says. "We also like stocks that grow their dividends over time."

Welch is also comfortable holding more cash now that money market funds are yielding close to 5%.

• Provided by: Allison Bonds
• Position(s): Head of private wealth management & independent wealth management, State Street Global Advisors

Stocks have kicked off 2023 with early gains, but Bonds cautions that market leadership has been narrow, with a small number of mega-cap tech stocks driving those gains.

"Full-year estimates for 2023 suggest U.S. earnings will be lower than where they were to start the year," she says. "In contrast, markets outside of the U.S., particularly Europe, present the potential for more positive earnings growth and attractive valuations relative to U.S. equities."

To hedge risks within the U.S., she suggests investment strategies that focus on companies with stable cash flows and strong balance sheets that are trading at favorable valuations.

"Several ETFs including the SPDR S&P Dividend ETF (SDY) and SPDR MSCI USA StrategicFactors ETF (QUS) provide diversified exposure to stocks with these traits," she says. "Outside of the U.S., we suggest allocating to the SPDR Portfolio Developed World ex-US ETF (SPDW) or the SPDR Portfolio Europe ETF (SPEU)."

Given the threat of a recession in the U.S. still looms, she'd also caution investors to diversify beyond stocks and bonds. "Investors might consider adding some gold exposure to their portfolio through an ETF such as SPDR Gold Shares (GLD) or SPDR Gold MiniShares Trust (GLDM), as the precious metal can serve as a hedge against both slowing economic growth and inflationary risks," she says.

• Provided by: Erin Scannell
• Position(s): Private wealth advisor at Ameriprise

Scannell also believes it's prudent to mitigate risks given the fact that leading economic indicators point to a recession. However, he also sees opportunities.

"Machine learning and artificial intelligence (AI) have exploded this year as ChatGPT and others have had exponential user growth," he says, adding that it took Facebook 10 months to get 1 million users and ChatCPT only five days.

"We believe the transformational technology has the potential to disrupt existing industries while at the same time creating new businesses, with most forecasts predicting a 20% to 30% growth rate moving forward," Scannell says.

To take advantage of this, he would overweight the following AI stocks as part of a diversified portfolio: Microsoft, Alphabet, Adobe (ADBE), Synopsys (SNPS), Nvidia and Taiwan Semiconductor (TSM).

When looking at investment strategies on a sector level, Scannell says he'd overweight the software industry, "where the technology is likely to play an increasingly instrumental role in the development of more effective, reliable and personalized software solutions" in the short-term.

Over the long term, he's overweight technology hardware, semiconductors, manufacturing and industrial firms, financial firms and healthcare.

• Provided by: Jason Blackwell
• Position(s): Chartered financial analyst, chief investment strategist and principal at The Colony Group

The U.S. may be heading for a recession, but that doesn't mean the rest of the world is going down with us. 

"There are many great companies that are domiciled outside the United States and other regions are in different phases of their economic cycle," Blackwell says, adding that he particularly likes emerging markets right now.

Liquidity also remains important. For that, he sees private credit as an area of opportunity among investment strategies.

"With regional banks needing to slow down the growth of their loan books, a number of businesses may need more creative forms of financing," he says.

Finally, Blackwell recommends keeping an "all of the above" approach to energy. "With the Inflation Reduction Act making it through the debt ceiling negotiations, there is a tremendous amount of incentive for companies to invest in sustainable projects," he says. "However, traditional energy will continue to have a major role in the economy for decades to come."

• Provided by: Derek Pszenny
• Position(s): Accredited investment fiduciary, co-founder of Carolina Wealth Management

"Right now, there's a divergence between growth stocks and value stocks – growth stocks for the year are up 20%, while value stocks are flat or even down a little bit," Pszenny says. 

This means that if you started the year with a portfolio that was 50% growth and 50% value, there'd be a statistical difference of nearly 10%, he says.

"Generally speaking, a 5% difference is considered statistically significant," Pszenny says. So at this point in the year, it is crucial investors look at the spread between large growth stocks and large value stocks, and rebalance as necessary."

The gold price reached record highs in 2020, a year that will be remembered for its unpredictability. With US election results now confirmed and positive news of a COVID-19 vaccine, how has gold been affected and what does the future hold?

Markets regained a sense of status quo after the result of the US election and assurance that Joe Biden will take the Presidency in January. News of vaccines that work effectively against COVID-19 has also propelled this sentiment: driving demand for risky assets while demand for gold levelled off.

Some of gold’s recent price movements, while large, were not unprecedented. Gold has seen approximately 16 single-day price drops of more than 4% over the last 15 years, the most recent this past August. In a particular case this November, gold’s pullback was primarily driven by positive market sentiment (risk reduction) following Pfizer’s announcement and aided by investor positioning (momentum).

What's next?

The key question facing gold investors now is whether this the start of trend reversal, a temporary move, or perhaps an opportunity to buy.

To understand gold’s performance, it is important to consider its four key drivers:

• Economic expansion: periods of growth are very supportive of jewellery, technology and long-term savings
• Risk and uncertainty: market downturns often boost investment demand for gold as a safe haven
• Opportunity cost: interest rates and relative currency strength influence investor attitudes towards gold
• Momentum: capital flows, positioning and price trends can ignite or dampen gold's performance.

Gold has regained some ground since it’s drop in November and early December, and while price volatility may persist in the short term, we believe this could be seen as a buying opportunity for many strategic investors. The reasons are three-fold:

Consumer demand may start to see signs of recovery. The price correction and slightly more positive economic outlook may revitalise gold’s consumer demand, removing – at least in part – one of the significant headwinds it has faced this year. Historically, Indian and Chinese consumers have often used price dips to buy gold. And we have seen similar behaviour among more strategic Western investors.

Investment demand is not likely going away. While news about the vaccine is definitely positive and rightfully fuelling optimism, there are still challenges ahead. These include further approvals and distribution logistics which may delay its rollout around the globe, thus maintaining a level of uncertainty over the coming months. And some significant risks that existed prior to the COVID-19 pandemic remain as contributors to heightened global uncertainty (for example, Brexit, political gridlock in the US, trade tensions, etc). But perhaps more importantly, the pandemic has already had a significant negative impact on the global economy that will take time – and a lot of stimuli from governments – to overcome.

Loose monetary policy will reshape asset allocation. In addition to the fiscal largesse, interest rates are set to remain very low for a long time. As we discussed in our mid-year outlook, this may not only result in high inflation but is likely to re-shape asset allocation strategies for years to come. Amid such an environment, gold could play an increasingly relevant role as a diversifier and source of returns.

Where do we go from here?

For many of us, this year has been overshadowed by COVID-19 and the US election. Looking ahead to 2021, there are questions over whether the record gold interest we saw in these unprecedented times will fade.

However, we don’t think so. There has been a noticeable shift in how investors see and use gold over the last few years, and with recent debate over the effectiveness of traditional asset allocation models, gold will likely retain its relevance.

Learn more about gold’s role as a strategic investment on Goldhub.

This content was provided by World Gold Council. Kiplinger is not affiliated with and does not endorse the company or products mentioned above.

The year 2020 hasn’t felt like the golden age of anything, except maybe for gold itself. Early August saw the shiny yellow stuff hit an all-time high of more than $2,000 an ounce. Prices have fallen back since then, but it has still been an excellent year for gold investors so far: The price of the metal has risen by 27.5% in 2020, compared with a 21.8% total return for the Nasdaq Composite stock index and a 4.8% total return for the S&P 500. Even longtime gold detractor Warren Buffett recently purchased stock in a gold mining company. (Prices and returns are through September 11.)

Gold’s glow-up has come even though it produces no earnings or income in the form of dividends, as would a stock. Unlike the case with other commodities, such as copper and tungsten, gold’s prices don’t rise and fall along with industrial demand.

So, why the gold rush? For one thing, basement-low interest rates mean that many bond investors currently earn yields lower than the rate of inflation. In such a climate, gold’s lack of yield is much less of a drawback, says Doug Ramsey, chief investment officer at the Leuthold Group. “Any competition gold had from fixed income has vanished,” he says.

Also contributing to gold’s rise: the Fed’s decision to flood the U.S. economy with unprecedented amounts of stimulus money in the wake of the COVID-19 pandemic. Gold is a classic inflation hedge, and investors have snapped up the metal on the premise that the stimulus will eventually drive up prices if the influx of cash causes consumer demand to rise faster than the supply of goods and services.

And because gold has been con­sidered a currency for millennia, investors may believe they can find a “store of value” in the metal when they lose faith in paper currency, says Brian Andrew, chief investment officer at investment firm Johnson Financial. The U.S. dollar has fallen 8% against a basket of other currencies since March due to the Fed’s drastic monetary policies, among other factors, and some market watchers are beginning to question the cur­rency’s pre­eminent status on the world stage. “Real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge,” wrote Goldman Sachs analysts in a recent note.

Finally, investors tend to flock to gold amid periods of uncertainty—in financial markets and in the world at large, says Andrew. To find more than enough uncertainty, consider the geopolitics of the Brexit transition and the U.S. presidential election, as well as the ongoing pandemic and its impact on the global economy.

Mixed track record. But gold has a spotty history when it comes to fulfilling investor expectations. Its record as a hedge against inflation, for instance, is only so-so. In successive 12-month periods from December 1973 through May 2020, gold outpaced the rise in consumer prices only 51% of the time.

And although the metal has proven its mettle in some market downturns, there’s no guarantee that gold will protect your portfolio when markets go bad. In the summer of 2011, when the S&P 500 slid 19% between April and October, gold hit a record high. But when stock returns struggled to crack 1% in 2015, gold prices fell 11%. Had you bought gold at its previous peak, in 2011, you’d have had to wait until July of this year to break even.

Nevertheless, investors looking to diversify their portfolios—a proven strategy to smooth returns over time—should add some of the shiny stuff, says Ramsey. He says investors should hold 2% to 5% of their portfolio in gold as a portfolio diversifier. Moreover, he believes that concerns that the Fed is devaluing the dollar by pumping unprecedented amounts of cash into the economy are justified.

How to buy. There’s more than one way to own gold, and the way you go about buying it should depend on why you’re investing, says Andrew. If, for whatever reason, you’re worried that the money in your wallet may become severely devalued, you’ll want physical gold, he says. The U.S. Mint doesn’t sell bullion coins directly to the public, but it does list authorized buyers of such coins on its website. Reputable sellers typically fold in a 6% to 10% markup over the current gold spot price, which you can find at sites such as www.kitco.com. In addition, you’ll likely have to pay to insure and store your gold, unless you’re comfortable stashing bullion in your sock drawer.

If you’re investing in gold as a portfolio diversifier, consider an exchange-traded fund, which makes trading gold cheap and easy. Funds such as SPDR Gold Shares (symbol GLD, $182) and iShares Gold Trust (IAU, $19) track the price of gold that the trustees hold in vaults and are forbidden from lending out. Though the SPDR fund is older and bigger, the iShares fund comes with lower expenses, charging an annual 0.25% of assets, compared with 0.40% for the SPDR fund. A caveat: Because the IRS treats precious metals as collectibles (the same as a stamp collection), long-term capital gains taxes on these funds are steep—up to 28%. (The same rates apply for physical gold, should you sell it.)

If you’re especially bullish on gold, you may be tempted to wade into stocks of gold mining companies. Because these firms have relatively fixed production costs, a spike in gold prices can supercharge the companies’ profitability, and their stocks often shoot up faster than the price of bullion. (A sharp decline in gold prices has the opposite effect.) Investors looking to gold in order to diversify their ex­posure away from stocks should avoid miners, whose returns are more correlated to the stock market overall than to movements in bullion prices, says Invesco chief global market strategist Kristina Hooper.

Still, miners (which, unlike gold, generate earnings and dividends) have their fans among stock investors, including the Oracle of Omaha. Berkshire Hathaway, Warren Buffett’s holding company, recently bought 21 million shares of miner Barrick Gold (GOLD, $30) for about $563 million. Matthew Miller, an analyst at investment research firm CFRA, also re­commends Barrick, as well as rival Newmont Corporation (NEM, $66). He’s optimistic about the two firms’ recently established joint mining project in Nevada, which he says should help both companies boost earnings for the next several years.

For a broad-based play on miners, consider VanEck Vectors Gold Miners ETF (GDX, $41), which holds stock in 53 companies from across the world that mine gold and other precious metals. The fund, which charges 0.53% in annual expenses, has returned 40% so far this year. A slightly top-heavier option, iShares MSCI Gold Miners (RING, $34), holds 36% of assets in Barrick and Newmont, compared with 26% for the VanEck fund. The iShares fund comes with a cheaper price tag, charging 0.39% of assets in expenses.

The stock market closed out an up-and-down week with another very clear separation of the haves and have-lesses.

Big Tech ruled the day thanks to a trio of mega-cap earnings pops. Apple (AAPL, +10.5%) shot to new all-time highs after its Thursday evening report, where it said quarterly sales jumped 11% year-over-year and announced a 4-for-1 stock split effective in August. It did say, however, that it thinks iPhone supply will be delayed a few weeks this fall.

Amazon.com (AMZN, +3.7%) crushed revenue and profit expectations alike, and its grocery sales tripled year-over-year. Several analysts responded by revising their price targets higher, including Canaccord Genuity's Maria Ripps and Michael Graham. The pair see AMZN shares hitting $3,800 over the next 12 months, up from $3,300 previously.

"With consumer shopping behavior shifting online at an accelerating pace, structural competitive advantages around fulfillment and scale, and a reasonable ~2x multiple on eCommerce GMV driving most of our valuation, we still find AMZN stock very compelling and think much of this strength will persist beyond the current pandemic," they write.

Facebook (FB, +8.2%), meanwhile, reported Q2 revenues that improved by double digits. Also, active user figures grew more than expected, and average revenue per user was better than the Street forecast.

Other areas of the market didn't look so strong. Chevron (CVX, -2.7%) and Exxon Mobil (XOM, +0.5%) both reported quarterly losses, and the Dow finished with a muted 0.4% gain to 26,428 after being in the red much of the day. The S&P 500 was a little better at +0.8% to 3,271, and the small-cap Russell 2000 dropped by 1% to 1,480.

But the tech-laden Nasdaq cruised 1.5% higher to 10,745, where it's flirting yet again with new all-time highs.

Winners and Losers Are Separating Again

"The stock market isn't the economy," you've likely heard in recent months. It's certainly true, but the market is indeed starting to show signs of more accurately reflecting what's going on in the economy, as tech companies positively impacted by COVID-19 continue to climb higher while more economically sensitive stocks sag.

"There's people going on about the bubble in big tech, but my own personal take on that, which was only reinforced by last night (when Apple, Amazon and Facebook reported), is that it's not a bubble in big tech," says Will Rhind, founder and CEO of ETF provider GraniteShares. "It's a bubble in the rest of the market that arguably has been propped up way beyond fundamentals due to the financial intervention of the central banks."

"But these companies at the top, you can argue about whether they should be at the valuations that they are, but these are companies that are making incredible sums of money and been incredible beneficiaries of the coronavirus. I think there's been a dislocation that's happened between the virtual economy, where these companies thrive in, versus the real physical economy, where you have airlines, hotels, things that have been decimated."

If the U.S. recovery is indeed hobbled by extended Washington bickering over a new stimulus package and coronavirus flare-ups, among other headwinds, investors might need to tweak their portfolios to suit.

For instance, more people are clearly favoring gold, which rose another 1% to new highs at $1,985.90 per ounce Friday and extended the 2020 rally in gold-focused funds. Assets under management in larger physical gold funds, such as the SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), have swelled by more than 70% in 2020, according to Ycharts data. Smaller funds, such as the GraniteShares Gold Trust (BAR) and Aberdeen Standard Physical Gold Shares ETF (SGOL), have more than doubled their AUM.

It also might be time to shake loose weaker positions that could sink in a broad-market selloff, such as these 14 vulnerable-looking stocks.

Another way to look for red flags? Short interest. By looking at how heavily Wall Street is betting against a stock, you can get an idea of just how negative the prospects might be for those shares going forward.

The bears don't always get it right, of course, and sometimes their targets are "squeezed" higher on good news, making heavily shorted stocks a playground for opportunistic traders. But if you're looking to play it safe, consider steering clear of these 18 stocks, which are among the most heavily shorted on Wall Street.

Kyle Woodley was long AMZN, BAR and FB as of this writing.

A loaded second-quarter earnings calendar flooded investors with fresh information about a host of blue chips on Tuesday.

3M (MMM, -4.9%) dropped after demand for its N95 facemasks wasn't enough to counter constrained demand elsewhere, leading to a 12% decline in revenues.

"The financial impact of the pandemic remained mixed across 3M during Q2," CEO Michael Roman said on the earnings conference call. "We continue to see strong demand in personal safety along with other areas, such as home improvement, general cleaning, and biopharma filtration.

"At the same time, we experienced steep but expected declines in other end markets, including medical and dental elective procedures, automotive OEM and aftermarket, and general industrial."

McDonald's (MCD, -2.6%) reported a 30% year-over-year plunge in sales, and earnings of 66 cents per share fell below analyst expectations. But Stifel analyst Chris O'Cull (Neutral) raised his price target from $182 per share to $195 on better-than-expected U.S. restaurant margins and expectations for improving same-restaurant sales.

Pfizer (PFE, +4.0%) also reported lower sales, off 11%, but adjusted profits of 78 cents per share handily beat expectations.

Kodak (KODK, +203.1%) set off some non-earnings fireworks Tuesday, more than tripling in price after it announced it has scored a $765 million government loan under the Defense Production Act that will see the diminished photography name produce "starter materials" and "active pharmaceutical ingredients" for generic medicines.

The broader indices didn't move nearly so sharply, but an afternoon selloff sent the Dow 0.8% lower to 26,379. The S&P 500 lost 0.7% to 3,218, the Nasdaq dipped 1.3% to 10,402, and the Russell 2000 declined 1.0% to 1,469.

Gold's 2020 rally continued, however, with August gold futures climbing 0.7% to $1,944.60 per ounce, yet another record settlement.

Can High-Growth Cloud Stocks Keep Rising?

We're sure your nose will be buried in corporate earnings for the next few weeks, but try to keep at least one eye on "the cloud."

Cloud computing, which effectively allows consumers and businesses alike to run powerful software and store virtually limitless information without having to house all the necessary hardware, has been growing like a weed for years, and many of the newer companies that have exploded in 2020 will be updating investors on their expansion stories.

Indeed, a recent Gartner report says the global public cloud services market is expected to grow 6.3% this year to $257.9 billion while many other industries contract. That's because the cloud has been able to address a number of needs that arose as a result of worldwide stay-at-home measures.

"When the COVID-19 pandemic hit, there were a few initial hiccups but cloud ultimately delivered exactly what it was supposed to," says Sid Nag, research vice president at Gartner. "It responded to increased demand and catered to customers' preference of elastic, pay-as-you-go consumption models."

The cloud is seemingly everywhere on Wall Street nowadays – if you've taken an interest in e-commerce stocks, work-from-home plays or artificial intelligence funds, you've come across some connection to the cloud.

But these 10 cloud stocks are the embodiment of just how far the technology has come … and if the pros are right, they'll continue producing robust returns for growth-oriented investors.

Tech stocks took the lead Monday ahead of what will be a busy week for the sector, but most of the day's attention went to gold prices, which settled at new all-time highs.

"This is the busiest week for the 2Q earnings season," Credit Suisse analysts write, "with over 180 companies representing 43% of the S&P 500’s market cap reporting results, including 4 of the top 5 biggest names."

That refers to Apple (AAPL, +2.4%), Amazon.com (AMZN, +1.5%) and Facebook (FB, +1.2%), which all advanced solidly on Monday, and which we preview in this week's earnings calendar. Google parent Alphabet (GOOGL, +1.4%) also will reveal its quarterly results this week.

Investors remain hopeful for new federal stimulus measures, which are expected to be hashed out this week. Senate Republicans plan to release their proposal today, and while it's expected to include $1,200 checks once more, it's also expected to reduce the weekly unemployment "bonus" from $600 to $200.

A strong day for the mega-cap tech stocks above, as well as chipmakers not named Intel (INTC, -2.0%) – including Qualcomm (QCOM, +4.3%), Lam Research (LRCX, +3.6%) and Applied Materials (AMAT, +3.9%) – led the Nasdaq Composite 1.7% higher to 10,536. INTC stock continued to slump in the wake of last week's announcement that its 7-nanometer chips would be delayed by half a year.

The Dow Jones Industrial Average improved a more modest 0.4% to close at 26,584, and the S&P 500 improved by 0.7% to 3,239. The small-cap Russell 2000 gained 1.1% to 1,483.

Gold Is the Star of the Show

Gold futures jumped 1.8% to $1,931 an ounce, its highest settlement in history, to continue a rip-roaring 26% year-to-date rally in the yellow metal.

And gold could continue running, thanks to the possibility for further declines in the U.S. dollar, higher inflation and lower Treasury yields – factors that lead Deutsche Bank analyst Michael Hsueh to write that "the gold rally is far from over" in a recent note.

"Within this bull market cycle, it is only a modest stretch to envision fundamentals falling into place for USD 2,000/oz to be within reach," Hsueh writes. "In fact, we think fundamentals will support a range between USD 2,000-2,100/oz, well before the market begins to anticipate Fed tightening."

If you're new to gold investing, check out our primer of facts you should know about the metal. If you're ready to invest in gold, funds that invest in actual physical bullion or mining companies are your easiest options. You can use ETFs to buy silver, too, which is having itself a ball at roughly 36% YTD gains that have brought it to multiyear highs.

But if you only have eyes for gold, consider these seven funds that easily (and typically cheaply) let investors leverage the world's favorite precious metal.

Kyle Woodley was long AMZN and FB as of this writing.

Gold investing has become a hot topic on Wall Street these days. This is because gold prices (GOLD) recently hit new all-time highs. 

The yellow metal has been trending sharply higher since early October and many are wondering if it can continue this momentum into the new year.

Year-to-date chart of the SPDR Gold Shares ETF (GLD)

Most gold is held in central bank vaults or held as jewelry, so the investable market for gold isn't exceptionally large. Take for instance these two gold ETFs: the SPDR Gold Shares (GLD) and the iShares Gold Trust (IAU). The former is the largest and most liquid gold ETF at $58 billion in assets under management (AUM), while the latter has just $26 billion in AUM. 

For perspective, the three largest S&P 500 Index ETFs have $1.2 trillion dollars in combined assets, and the market cap of the S&P 500 Index itself is around $38 trillion.

So those worried about investing in gold at new highs, take a little heart. Given the relatively small size of the investable gold market, it wouldn't take much in the way of new inflows to send the price of gold sharply higher from here.

But why is gold trending higher, and can it continue?

Gold investing: Why is the gold price trending higher?

Inflation. The Fed flooded the capital markets with virtually unlimited liquidity for nearly two full years during the pandemic, expanding its balance sheet by almost $5 trillion in the process. 

This massive monetary stimulus – along with government assistance and a global supply chain that still isn't fully untangled – helped to push inflation to the highest levels in four decades. Consumer Price Index (CPI) inflation touched 9% in mid-2022.

Remember, gold is traditionally an inflation hedge. While its price is often volatile, gold has done a good job of maintaining purchasing power over the centuries. And while inflation is down from its highs, registering at 3.2% in the most recent report,  it is still a long way from the Fed's target of 2%. All else equal, sticky inflation bodes well for gold.

But gold's rise is not exclusively an inflation phenomenon. If that were the case, we wouldn't have seen gold prices weaken in the summer of 2022, when inflation was the highest. There are other elements at play here.

The weak dollar. The U.S. dollar has been one of the world's stronger currencies over the past decade. The turmoil of the pandemic accelerated the dollar's rise, but that was only the beginning. As the Fed scaled back its asset purchases and started aggressively raising interest rates, the dollar soared to multi-decade highs against many world currencies, including the euro and British pound.

But more recently the dollar's strength has started to fade amid expectations the world's central banks have reached peak rates and will soon start to ease monetary policy. 

You can see this in the performance of the Invesco DB US Dollar Index ETF (UUP), which tracks the performance of the dollar against a basket of major world currencies.

Year-to-date chart of the Invesco DB US Dollar Index ETF (UUP)

Gold's rise started the same time that the dollar's strength started to fade. That's no coincidence. Gold is priced in dollars, so dollar weakness is, by definition, gold strength.

The U.S. dollar has a history of trending higher versus other major world currencies for years or even decades at a time, but these periods of strength are generally followed by comparable stretches of dollar weakness. We may be in the early stages of one of those stretches … and that's bullish for gold.

Geopolitical risk. Gold is often seen as a safe-haven asset class during times of uncertainty. The recent turmoil in the Middle East and the ongoing war between Russia and Ukraine likely contribute to investors seeking out the yellow metal. 

"The reason the price [of gold] can move in different directions is because when things become uncertain in stock markets, investors sell shares and want to buy something with a value that's considered 'safer,'" says Hal Cook, senior investment analyst at Hargreaves Lansdown. Gold, in particular is a popular choice "because it's recognized globally as something of value," the analyst notes, adding that "it can be a useful diversifier in a portfolio, particularly during periods of market stress."

And Cook says that "while the potential for the Israel – Hamas conflict to escalate further may have reduced more recently, fundamentally geopolitical risks are higher now than they were six weeks ago."

Related content

• The Best Gold ETFs with Low Costs
• 9 Best Commodity ETFs to Buy Now
• Best Long-Term Investment Stocks to Buy

Gold had a stellar start to 2026, hitting an all-time high near $5,600 per troy ounce in late January on massive inflows into gold ETFs, central bank buying, a weaker U.S. dollar and macro-uncertainty.

The precious metal has since pulled back as the war in Iran caused the dollar to strengthen and central banks to become net sellers of gold, say Mason Mendez and Awsaf Tamjid Arko, investment strategy analysts at Wells Fargo Investment Institute.

But the analysts maintain a brighter outlook for gold over the next year or so. "Easing oil disruptions should lower energy and inflation pressures, allowing central banks to return as net purchasers — especially as geopolitical risks remain," the two write in a May 11 note. "Despite near-term selling, many countries have continued to slowly accumulate gold — signaling that gold remains in favor with central banks."

Structurally, gold doesn't produce cash flows like stocks or bonds. But it remains one of the few investable assets with persistently low correlation to both.

That's because gold isn't tied to corporate earnings or government creditworthiness. It doesn't carry market risk or credit risk in the traditional sense, and it can't be debased, printed or duplicated, making it especially attractive when trust in fiat currency or financial systems breaks down.

There's no shortage of ways to add gold exposure to a portfolio. You could buy physical bullion, trade futures or invest in gold mining stocks. But, for most investors, the simplest and most accessible option is a gold exchange-traded fund.

Why buy gold ETFs?

While a gold ETF doesn't offer physical ownership in the traditional sense, it comes with a long list of advantages that make it the better choice for most investors.

Buying physical bullion isn't as simple as walking into a store and paying spot price. The hassle often begins at the dealer, where you'll typically face a markup. Dealers build in their profit through the spread between the bid and ask prices. This means you're paying a premium when you buy and likely taking a haircut when you sell. That friction exists on both ends of the transaction.

Once you've got that gold bar or coin, the question becomes where to store it. A safe deposit box at a bank comes with annual fees and counterparty risk. Self-storage in a home safe can work but risks personal security. And, if you're really paranoid, you could bury it in your backyard and hope you remember where.

Then there's the inconvenience when you want to sell. You need to retrieve the bullion, find a dealer, negotiate a price and take the cash.

From there, you still need to deposit the money into your brokerage account and wait for settlement before you can use it to buy other assets.

A gold ETF avoids all of that. You can buy and sell it in your brokerage account just like any stock. When prices rise and you want to rebalance, you can sell instantly and reallocate the proceeds right away. There's no physical handling, no dealer spread, no delays. For convenience, liquidity and ease of use, gold ETFs are the most seamless way to gain exposure to gold.

Our methodology for finding the best gold ETFs to buy

We started by narrowing the field with a few key exclusions. The first was to leave out exchange-traded products that aren't legally structured as ETFs.

A common example is the popular Sprott Physical Gold Trust (PHYS), which is often confused with a gold ETF. In reality, it's a closed-end fund (CEF), meaning it issued a fixed number of shares at its initial public offering (IPO) and can't create or redeem shares the way an ETF can.

As a result, the market price of PHYS often trades at a premium or discount to its net asset value (NAV), which introduces unnecessary complexity for long-term investors looking for clean exposure to gold prices.

We also excluded gold miner ETFs. While they're often correlated with gold prices due to the nature of their business, they come with all the risks of owning equities. Gold mining stocks can be affected by operational issues, management decisions or even environmental mishaps.

Finally, we left out exotic products that offer daily leveraged or inverse exposure to gold. These products tend to be expensive, carry complex tax treatments such as a K-1 form and are highly volatile. They're designed for short-term tactical traders, not long-term investors building a strategic allocation.

Once we made those cuts, we applied a three-part framework focused on fees, liquidity and reputability:

Fees: Gold ETFs used to be expensive, but competition has driven costs down. We set a maximum expense ratio of 0.40%, which works out to $40 annually on a $10,000 investment.

Liquidity: Not all gold ETFs trade efficiently. The best ones have low 30-day median bid-ask spreads that reduce the cost of entering and exiting a position. Compare this to physical bullion, where bid-ask spreads can be much wider.

Reputability: ETFs with low assets under management are more vulnerable to closure, especially those under the $50 million threshold. We raised the bar significantly by only including ETFs with at least $1 billion in AUM to ensure we focused on well-capitalized, stable options.

Here are five low-cost gold ETFs that provide efficient exposure to the precious metal.

Data is as of May 11.

• Assets under management: $157.1 billion
• Expenses: 0.40%, or $40 annually for every $10,000 invested
• 30-day median bid-ask spread: 0.01%

SPDR Gold Shares (GLD), the first U.S.-listed fund to offer physically backed exposure to the metal, is the $157 billion gorilla of the gold ETF market. It’s structured as a grantor trust, a special ETF format commonly used for physical commodities, where each share represents a fractional interest in gold held in vaults.

With GLD's long track record and massive scale come excellent liquidity and a deep options chain, making it easy to trade or hedge with calls and puts. The downside is its relatively high expense ratio.

And with GLD’s dominant position, State Street has little reason to cut fees. Doing so would mean giving up a major source of revenue.

Learn more about GLD at the State Street Investment Management provider site.

• Assets under management: $73.2 billion
• Expenses: 0.25%
• 30-day median bid-ask spread: 0.01%

Before iShares made headlines with its spot bitcoin ETF, it found long-running success with the iShares Gold Trust (IAU), which launched in January 2005 and now manages just over $73 billion in assets. IAU tracks the LBMA Gold Price and currently holds 481.63 tonnes of gold.

It's as straightforward as it gets: a low-cost, physically backed gold ETF that undercuts GLD with a 0.25% expense ratio. While its options chain isn't quite as robust as GLD's, it remains one of the best deals out there for long-term, buy-and-hold investors.

Learn more about IAU at the iShares provider site.

• Assets under management: $2.8 billion
• Expenses: 0.18%
• 30-day median bid-ask spread: 0.02%

Anytime retail investors show a voracious appetite for a particular asset class, you can expect Wall Street to find a way to cash in. The Goldman Sachs Physical Gold ETF (AAAU) is a prime example.

Launched in July 2018, AAAU is Goldman's answer to the growing demand for physically backed gold ETFs. The ticker itself is a clever nod to gold's chemical symbol, "Au."

Otherwise, the fund is pretty no-frills. It tracks the London Gold Fixed Price in U.S. dollars and offers a solid value proposition by undercutting both GLD and IAU with a 0.18% expense ratio.

The trade-off is a slightly wider bid-ask spread, but at 0.02%, it's still negligible unless you're trading frequently or moving large sums.

Learn more about AAAU at the Goldman Sachs provider site.

• Assets under management: $31.9 billion
• Expenses: 0.10%
• 30-day median bid-ask spread: 0.01%

GLD was massively successful, but as lower-cost competitors emerged over the years, State Street needed a way to defend its market share. Lowering GLD's fees would have helped, but it also would have cut into a major revenue stream.

Instead, State Street launched the SPDR Gold MiniShares Trust (GLDM) in June 2018, a companion fund to GLD. The key trade-off is that GLDM doesn't have an options chain, making it less attractive to traders.

But for long-term investors, the appeal is obvious: GLDM charges just 0.10%, a quarter of GLD's fee. That lower cost has translated into slightly better returns. Over the past five years, GLDM posted a 21% annualized NAV return, edging out GLD's 20.7%.

The gap may seem small, but it compounds over time, especially in a large portfolio with a long investment horizon.

Learn more about GLDM at the State Street Investment Management provider site.

• Assets under management: $7.4 billion
• Expenses: 0.09%
• 30-day median bid-ask spread: 0.02%

ETF providers aren't known for originality, and they don't need to be. Often, all it takes is copying a competitor's product and offering it at a slightly lower price.

That's exactly what iShares did when it launched the iShares Gold Trust Micro (IAUM) in June 2021 after seeing the success of GLDM undercutting IAU.

Like IAU, IAUM tracks the LBMA Gold Price and provides the same kind of physically backed gold exposure. It undercuts GLDM by 0.01% on fees, charging just 0.09%.

That said, the advantage is a wash when factoring in trading costs, since IAUM has a slightly wider bid-ask spread than GLDM, coincidently 0.01% higher.

Learn more about IAUM at the iShares provider site.

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Gold has put up blistering returns since early 2024, but ask any veteran goldbug about investing in the precious metal and they'll likely caution you that it will too often break your heart.

True, investing in gold tends to work in times of trouble. For example, gold prices vaulted past $2,000 an ounce in early March 2022 in response to the Russian invasion of Ukraine.

But then that's just the way it goes with gold, experts say.

"If we had to distill the 1970, 1976, 1982, 1985, 2001 and 2018 bull markets in gold down to one driver, the oil crisis, stagflation, rebound trade, Plaza Accord, quantitative easing and COVID, respectively, have been key," writes Michael Widmer, commodity strategist at BofA Securities.

More recently, in January, gold prices topped $5,500 an ounce as the U.S. dollar weakened and demand from investors and central banks ramped up. Prices are down since then, but gold would still appear to have ample support.

"Rather than an inflation hedge, gold can be viewed as a hedge against geopolitical risks, which have risen sharply in the past year," writes Kristy Akullian, head of iShares Investment Strategy for the Americas at BlackRock

Just understand that despite some lustrous returns in the 1970s (thanks to the end of the gold peg), and in the first decade of the 21st century, gold has mostly generated disappointing long-term performance compared to equities.

Between 1971, when convertibility was suspended, to its 1980 peak, gold rose to $840 an ounce from $35, or a compound annual growth rate of more than 40%, notes famed short seller Jim Chanos. Since 1980, however, gold's annualized return has run closer to 6%.

And make no mistake: gold's reputation as an inflation hedge isn't all that great.

Historically, at least, gold returns have only kept up with inflation over the long haul; the metal hasn't outperformed. Over the short and medium term, gold's record as an inflation hedge is generally pretty poor.

To be sure, gold ETFs and gold miner stocks can be effective tools in the hands of traders and tactical investors. But that means knowing when to get in – and when to get out.

As for investing in gold for the long term? Suffice to say, a buy-and-hold approach has too often ended in tears.

Just look at recent events. If any year should have been good for gold, it was 2022. U.S. stocks plunged into a bear market, and bonds got killed too. Investors worried incessantly over the odds of recession or possibility of stagflation. Inflation hit levels not seen in four decades.

And what did gold prices ultimately do? They ended the year almost exactly where they started.

Since investing in gold is obviously not easy, here are some critical nuggets you must know before betting on the precious metal.

Data, prices and returns are courtesy of Kitco, DQYDJ, the Perth Mint, the World Gold Council, YCharts, the U.S. Mint and Morningstar.

Gold? Nope. U.S. bonds? Wrong again. Large-cap stocks traded in the U.S. have easily outperformed those asset classes over the past four decades.

From 1985 through 2025, the S&P 500, with dividends reinvested, generated an annualized total return (price change plus dividends) of 11.9% before inflation. Adjusted for inflation, the market's annualized total return came to 8.9%.

As for bonds, the benchmark 10-year Treasury note delivered an annualized total return of 5.2%. Adjusted for inflation, the 10-year note delivered an annualized total return of 2.3%.

Gold's returns over the same span haven't been quite so brilliant. From 1985 through 2025, the yellow metal generated an annualized return of 6.7% before inflation. After adjusting for inflation, gold produced an annualized return of 3.8%.

Once again, U.S. stocks beat both U.S. bonds and gold.

From 1995 through 2025, the S&P 500 generated an annualized total return of 11.1% before inflation. After inflation, the return came to 8.4%.

The 10-year Treasury note delivered an annualized return of 4% over the same span. Adjusted for inflation, 10-year notes delivered an annualized return of 1.5%.

Gold, meanwhile, generated an annualized return of 8.1% before inflation. On an inflation-adjusted basis, gold's annualized return comes to 5.4%.

The yellow metal trailed stocks, but once again beat bonds.

Note that the price of gold actually dropped about 27% from 1989 to 1999. Gold often loses value in prosperous times, as the 1990s generally were.

The early part of the 21st century was gold's time to shine. From 2005 through 2025, gold generated an annualized return of 11.6%. Adjusted for inflation, that comes to 8.8% annualized.

Stocks, meanwhile, generated a total return of 10.7% annualized, or 7.9% after factoring in inflation. Don't forget that equities fell victim to the bursting of two bubbles – the tech bubble early in the century and the real estate and credit bubbles starting around 2007.

Benchmark Treasury notes came in last during this period, with a 3.2% annualized return, or 0.6% in inflation-adjusted terms.

The price of gold doesn't track inflation, as a general rule. From 1987 to 2001, as inflation fluctuated around 3% a year, the price of gold dropped.

It's true that during periods of extraordinarily high inflation, gold’s price could soar.

That’s what happened from the mid-1970s through the early '80s, when inflation crept from 4.8% in 1976 to 13.3% in 1979 and 12.4% in 1980, before beginning a long descent. The price of gold leapt to more than $800 (then collapsed to $400 by 1981).

The same can't be said of 2022, however, even though inflation spiked around the globe. Heck, in the U.S., inflation hit levels not seen in four decades.

Gold prices climbed about 13% for the year to date (YTD) at one point in the first few months of 2022, but they were also down as much as 10% YTD by November.

By year's end, gold prices were essentially unchanged.

Want a guaranteed inflation hedge? Try Treasury Inflation-Protected Securities (TIPS).

Gold can soar in value during hard times, when fearful and uncertain investors seek safety. Look at the diverging paths that stocks and gold took in 2020 amid the outbreak of COVID-19.

When the pandemic-fueled selloff in stocks finally bottomed out on March 23, the S&P 500 was sitting on a year-to-date loss of more than 30%. Gold prices, however, held firm. By March 23, they were up about 1% for the year-to-date.

Then the real fun began. Gold went on a tear about the next four-plus months, rallying 36% through August 6, when it hit a high of $2,067.20 an ounce.

As noted, the 21st century has given gold several opportunities to shine. The turmoil that followed the September 11, 2001, terrorist attacks and continuing through the 2008-09 economic meltdown was bullish for gold investors.

These days, trade fears and rising government deficits pushed gold to a record high of more than $5,500 an ounce in early 2026. And that was after gaining 65% in the historic rally of 2025.

Bottom line: it's not unusual to see gold's price rise with bad news (such as the global pandemic or a sovereign debt crisis) and drop with good news (such as better-than-expected economic growth).

A longtime argument in favor of investing in gold is that it is a good store of value — that is, its inflation-adjusted price remains relatively stable over long periods.

A store of value implies a steady price, and as we have seen, gold prices are anything but steady. Although gold's correlation to stocks is complicated, suffice to say the precious metal can be volatile. In 2012, for example, the price rose almost 6%. In 2013, it tumbled 28%. In 2017? Up 12.6%. Down 1.2% in 2018.

The same goes for longer time frames. Take the past decade, for example, and cut it in half. During the first five years ended April 15, 2016, gold prices fell about 16.5%. Since then? Gold is up about 50% in the past three years.

Gold is the most popular precious metal for investors, but it's not the most expensive. Contracts for rhodium, iridium, palladium or platinum can top those for gold, depending on market dynamics.

As attractive as coins and bullion might be, funds are the easiest way for retail investors to get exposure to gold.

No wonder: It's much easier to get gold exposure by holding a gold fund electronically in a brokerage account rather than receiving, storing and insuring the physical metal.

It's also incredibly heavy. The gold bars stored in the New York Fed's gold vault weigh 27 pounds each.

SPDR Gold Shares (GLD), the world’s largest gold-backed exchange-traded fund, has about $105 billion in assets. The ETF tracks the price of gold bullion.

If you choose to invest this way, Kiplinger prefers the lower-cost iShares Gold Trust (IAU), which has annual expenses of 0.25%, compared with 0.40% for GLD.

You also can invest in numerous gold mutual funds and ETFs that invest in the stocks of gold-mining companies.

Gold prices can be volatile, but they're nothing compared with silver. The market for silver is smaller than for gold.

Silver has more industrial uses than gold, making the former’s price more sensitive to the ups and downs of the economy. These two factors combine to make silver’s price jumpier than gold’s. In 2025, silver prices rose nearly 150%. Cut to February 2026, and the metal lost about half of its value in the space of a week.

If you want a good night's sleep, go with gold investing, not silver.

The largest legal tender gold coin ever produced was struck by the Perth Mint in Western Australia in 2012.

The 2012 "Australian Kangaroo One Tonne Gold Coin" contains one metric tonne of 99.99% pure gold, and is approximately 80 centimeters in diameter by 12 centimeters thick.

The massive coin has a face value of $1 million Australian dollars (AUD). However, the coin's gold content alone would be worth approximately $120 million USD at today's prices.

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Gold, which did little except glitter for most of the past five years, has seen price gains this year that rival Standard & Poor’s 500-stock index. Gold began the year at $1,279 an ounce, and it is currently trading at $1,498, a 17.1% gain. The S&P 500 is up just a shade more. (Returns and other data are through August 9.)

The price of easy money. The Fed cut its key federal funds rate by a quarter of a percentage point in July, the first rate cut since 2008. Kiplinger expects two more rate cuts this year. The tax reform passed in 2017 is estimated to pump more than $1 trillion into the economy over the next 10 years. At least in theory, such economic stimulus in an expanding economy could lead to rising prices, the result of too much money chasing too few goods and services.

Typically, lower U.S. interest rates also bring down the value of the dollar on the world currency exchanges, and that, too, is positive for gold, which is often viewed as an alternative currency. Money follows yields, such as those from Treasury bills, and when U.S. yields fall, money goes to other markets, denominated in other currencies, to get higher returns. In July, President Trump said he had not ruled out a U.S. intervention in world currency markets to weaken the dollar further.

Gold prices thrive on economic uncertainty, and escalating trade tensions have delivered that in spades. “The wild card is the trade war with China,” says Lindsey Bell, investment strategist at CFRA. “If that intensifies, it’s a great environment for gold.” Worries about the dollar and global trade have prompted foreign central banks to increase their gold reserves. Central banks, mainly those in emerging markets, bought 224.4 tons of gold in the second quarter of 2019.

What could derail the rally in gold? Deflation is one risk, although gold has held up well in past periods of falling prices. A larger threat to gold is a global recession during which consumers, especially in China and India, reduce their jewelry purchases. In the end, gold’s value is largely psychological—after all, it pays no dividends and has no earnings. Nevertheless, psychology can be a powerful price driver.

Many advisers recommend as much as a 5% stake in gold—partly as insurance against financial catastrophe and partly as a portfolio diversifier. Gold typically does not move in tandem with stocks, which can improve your returns, adjusted for risk, over long periods of time.

But because gold is prone to large drops, it isn’t an easy investment for most people to hold. “Gold is useful in a portfolio in the same way an F-35 is useful in national defense,” says William Bernstein, a financial adviser and author of the investing book Deep Risk. “Very few people are trained to use it properly.” For example, gold swooned from $850 an ounce in 1980 to $273 an ounce in 1998—a string of losses that would make many investors abandon a gold strategy. “It’s the hardest asset to hold long term in your portfolio,” Bernstein says.

How to invest. If you want to own the bullion itself, you can buy one-ounce American Gold Eagle coins from a dealer, although you’ll pay a markup of 5% to 8%. (Check the current spot gold rate at websites such as www.kitco.com before you buy to see if you’re getting a good price. It can pay to shop around.) Skip collectible coins, which can carry a big premium for rarity. And take a pass on the proof versions that the U.S. Mint sells: They have a beautiful finish but a high price tag. At the moment, a one-ounce American Eagle will set you back about $1,500.

If you simply want gold as a part of your portfolio, consider a commodity gold exchange-traded fund, such as iShares Gold Trust (symbol IAU, $14). The ETF buys and sells physical gold, held by a third-party custodian, and charges 0.25% in annual expenses. A slightly more expensive choice is SPDR Gold Shares (GLD, $141), which also holds physical gold and charges 0.40%.

You might also buy shares of gold-mining companies. Mining stocks tend to rise and fall more than the metal itself because once the price of gold covers production costs, any increase is pure profit. For example, consider a company that produces gold for $1,000 an ounce. If the price of gold were to rise from $1,100 an ounce to $1,200, a 9% increase, the firm’s earnings would double, from $100 per ounce to $200 an ounce.

Gold’s long-dead period from 2013 to 2018 prompted many gold-mining companies to “repair their balance sheets, buy back stock and create shareholder value,” says Will Nasgovitz, CEO of the Heartland Funds. CFRA analyst Matthew Miller recommends Newmont Goldcorp (NEM, $39), up 16% this year. The company sells at 23 times earnings, compared with 17 for the S&P 500. It produces gold at a cost of $900 an ounce, however, and if gold continues its rise, Newmont earnings should rise with it.

Mutual funds and ETFs that invest in gold-mining stocks tend to have relatively high expense ratios. But one good fund choice is American Century Global Gold (BGEIX), up 38.2% so far this year. It charges just 0.67% a year in expenses. Elizabeth Xie and Yulin Long have been managing the fund since May 2016—not a long time, but Long has been at American Century since 2005, and Xie has been there since 2007.

For those who prefer a lower-cost indexed approach, VanEck Vectors Gold Miners ETF (GDX, $29) gives you exposure to the sector for 0.52%. The fund is up 39.2% this year.

Gold and gold-mining stocks are definitely not core portfolio holdings. But if you’re looking for a bit of protection in uncertain times, adding a dollop of gold could make your portfolio shine a bit more brightly.

The stock market took a gut punch recently as a number of on-again, off-again headwinds started to blow at the same time. Investors quickly turned tail, seeking out more protective positions. Unsurprisingly, this trend led to an influx of inflows into some of the best defensive exchange-traded funds (ETFs).

The Federal Reserve knocked Wall Street off-balance with a recent quarter-point drop in its benchmark Fed funds rate. Yes, it was the first such cut since the Great Recession. But some investors were hoping for a deeper reduction, and Fed Chairman Jerome Powell’s subsequent press conference kept experts guessing about whether future rate cuts were any more or less likely.

The U.S.-China trade war escalated next. At the start of August, President Donald Trump threatened to slap a 10% tariff on another $300 billion in Chinese imports effective Sept. 1, prompting Beijing to threaten retaliation. So far, China has announced it will suspend imports of U.S. agricultural products and let its currency, the yuan, tumble to an 11-year-low. The latter move is expected to agitate Trump, who has accused Beijing of currency manipulation in the past.

Standard & Poor’s 500-stock index dropped quickly, losing almost 4% between the July 30 close (the day before the Fed announcement) and the Aug. 5 market open. Some investors are going to cash – but others are seeking out areas of the market that might rise as the market falls, or places to collect dividends while waiting out the volatility.

Here, we examine 11 of the best ETFs to buy if you’re looking for portfolio protection. This relatively small cluster of funds covers a lot of ground, including high-dividend sectors, low-volatility ETFs, gold, bonds and even a simple, direct market hedge.

Data is as of Aug. 4. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds.

• Type: Sector
• Market value: $10.1 billion
• Dividend yield: 3.1%
• Expenses: 0.13%, or $13 annually on a $10,000 investment

Whenever you read about the markets having a rough day, look at how different sectors performed. Often, you’ll see heavy losses in certain aggressive, high-growth sectors (think technology or consumer discretionary/services). But other sectors – especially those that traditionally offer high yields – may experience lighter losses, sometimes even gains on those days, because investors flock to the protection their businesses and dividend payments offer.

Utility stocks – companies that provide electricity, gas and water service, among others – are one such sector. There’s little growth in these firms. They’re highly regulated, so they can’t just jack their prices significantly higher overnight, and because they’re regional in nature, they can’t rapidly heap on new customers.

But they provide necessities that people must use no matter how bad the economy gets, and as a result, they have extremely reliable revenue streams that translate into predictable profits. And those profits often are returned to shareholders in the form of above-average dividends. The combination of these two factors makes utility stocks attractive when the rest of the market quivers.

The Utilities Select Sector SPDR Fund (XLU, $60.15) provides access to a tight cluster of the 28 utility companies in the S&P 500. Because the fund is weighted by market value (the biggest firms make up the biggest portions of the portfolio), it is very heavily invested in a few stocks. Largest holding NextEra Energy (NEE), for instance, accounts for more than 12% of the ETF’s assets, and the top five holdings alone account for roughly 40%. That means significant moves in just one or two of these stocks can have an outsize effect on XLU’s performance.

The upside? Utility stocks as a whole tend to be more stable than the broader market anyway. And they certainly are more income-friendly – XLU’s current 3.1% yield easily trounces the 1.8% you’ll get by investing in S&P 500 ETFs such as the SPDR S&P 500 ETF (SPY).

Learn more about XLU at the SPDR provider site.

• Type: Sector
• Market value: $12.3 billion
• Dividend yield: 2.7%
• Expenses: 0.13%

Just like you need utilities such as gas to heat your home and water to drink and stay clean, you also need a few goods to get you through the day – food and basic hygiene products among them.

That’s what consumer staples are: the staples of everyday life. But while some are what you’d think, others aren’t. Bread, milk, toilet paper, toothbrushes are obvious basics, though consumer staples also tend to include things such as tobacco and alcohol – not needs, per se, but they’re consumed like it. Thus, like utilities, consumer staples tend to have somewhat more predictable revenues than other sectors, and also pay out decent dividends.

The Consumer Staples Select Sector SPDR Fund (XLP, $59.23) invests in the 30-plus consumer staples stocks of the S&P 500 – a who’s who of the household brands you’ve grown up with and know. Top holding Procter & Gamble (PG, 16.2% of assets) is responsible for Bounty paper towels, Charmin toilet paper and Dawn dish soap. Coca Cola (KO) and PepsiCo (PEP) – the latter of which also boasts Frito-Lay, a massive snacks division – combine to make up another 20% of assets.

And you must buy those products somewhere, which explains the inclusion of companies such as Walmart (WMT) and Costco (COST).

The Consumer Staples SPDR has long been among the best ETFs to buy, from a sector standpoint, in market downturns. It proved its mettle during the bear market of 2007-09, when it delivered a total return (which includes price and dividends) of -28.5%, which was only half as bad as the S&P 500’s 55.2% loss. Or consider 2015, when the S&P 500 returned just 1.3% versus 7% for the XLP. The ETF also outperformed during the fourth-quarter slump in 2018.

You can partly thank its consistently above-average yield, which currently sits at 2.7%.

Learn more about XLP at the SPDR provider site.

• Type: Sector
• Market value: $2.3 billion
• Dividend yield: 2.5%
• Expenses: 0.34%

The last sector we’ll look at here involves real estate investment trusts (REITs). Congress created this corporate structure almost 60 years ago to encourage property investment among mom ‘n’ pop investors – the type of people who couldn’t afford to just buy an office building or two with couch change.

REITs own and sometimes operate properties of all sorts: the aforementioned offices, sure, but also apartment buildings, malls, self-storage units, warehouses, even driving ranges. And they were built with income in mind. These companies must pay out 90% of their taxable income as dividends to shareholders – a quid pro quo for being exempt from federal taxes.

• iShares Cohen & Steers REIT ETF (ICF, $115.17) tracks an index built by Cohen & Steers, which calls itself the world’s first investment manager dedicated to real estate securities.” The result is a portfolio of 30 larger-sized REITs that “are dominant in their respective property sectors.” American Tower (AMT, 8.7%), for instance, is a top provider of telecommunications infrastructure, which it leases out to the likes of Verizon (VZ) and AT&T (T). Prologis (PLD, 8.2%) owns 786 million square feet of logistics-focused real estate (such as warehouses) and counts Amazon.com (AMZN), FedEx (FDX) and the U.S. Postal Service among its customers.

REITs – much like utilities – also feature another mutual benefit: Their businesses tend to be mostly concentrated within America’s borders, which insulates them somewhat (though not entirely) from trade friction.

One final note about ICF: Its yield of 2.5% is smaller than many other REIT ETFs. However, its capital gains are typically so consistently strong that even once its inferior dividend is included, it outperforms most rivals.

Learn more about ICF at the iShares provider site.

• Type: Low volatility
• Market value: $30.7 billion
• Dividend yield: 1.8%
• Expenses: 0.15%

Low-volatility ETFs are considered among the best ETFs for environments like the current one because they’re designed to keep you exposed to stock-market upside while reducing risk. Just know what to expect: They typically underperform during bull moves and outperform during downturns.

The iShares Edge MSCI Min Vol USA ETF (USMV, $62.59) is the largest low-vol ETF on the market, and one of two volatility-suppressing options in the Kiplinger ETF 20 list of high-quality, low-cost funds. USMV targets stocks with “lower volatility characteristics relative to the broader U.S. equity market.”

Here’s how the sausage is made: USMV looks at the top 85% (by market cap) of U.S. stocks that have lower volatility compared to the rest of the market. It then uses a multi-factor risk model to weight the stocks. The portfolio is refined further by an “optimization tool” that looks at the projected riskiness of securities within the index.

This portfolio can fluctuate a lot over time. For instance, in late 2018, USMV was nearly 20% invested in tech stocks and 15.4% invested in health care. Today, IT is 16.6% and health care 10.9%. Also, don’t mistake “minimum volatility” for “lack of growth.” The ETF’s top holdings include Visa (V) and McDonald’s (MCD), both of which have sprinted past the broader market and hit all-time highs within recent weeks.

Learn more about USMV at the iShares provider site.

• Type: Low volatility
• Market value: $702.3 million
• Dividend yield: 3.5%
• Expenses: 0.27%

The Legg Mason Low Volatility High Dividend ETF (LVHD, $32.10) provides an ideal mixture of the low-volatility factor and high dividend yield.

Essentially, it’s a 1-2 punch of portfolio protection.

Low volatility swings both ways. Sometimes, being more volatile than the market can mean you’re generating more upside, so reducing volatility can limit gains. But if you can reduce volatility via stocks that deliver substantial income, you can make up some of the price difference.

LVHD accomplishes this by scanning a universe of 3,000 stocks that screens for companies that pay “relatively high sustainable dividend yields,” then scoring them based on price and earnings volatility. Every time the fund rebalances, a stock can account for a maximum of 2.5% of assets, and no sector can be larger than 25% (except REITs, which can’t exceed 15%). Just note that’s at rebalancing – as stocks rise and fall in between adjustments, those percentages can rise and fall, too.

Legg Mason’s ETF typically holds between 50 and 100 stocks. Right now, it has 79 holdings that are most concentrated in utilities (25.7%), followed by REITs (16.0%) and consumer staples (13.9%) – a blend that shouldn’t surprise you if you’ve been reading closely so far. Top 10 holdings include P&G, telecom REIT Crown Castle (CCI) and utility American Electric Power (AEP).

Learn more about LVHD at the Legg Mason provider site.

• Type: Low volatility
• Market value: $2.0 billion
• Yield: 2.7%
• Expense ratio: 0.25%

Small-cap stocks rarely are recommended as a way to hedge against an uncertain market. Sure, they have enormous growth potential, but they’re also high on risk – and when investors are scared, they tend to ditch risk.

The Invesco S&P SmallCap Low Volatility ETF (XSLV, $47.92) lets you have your cake and eat it too.

XSLV invests in the 120 least volatile stocks with the S&P SmallCap 600 Index. The portfolio is compiled not by market value, but by low volatility scores. It also reconstitutes more frequently than some other funds – quarterly, rather than semi-annually, so it’s better able to weed out companies that might have succumbed to a higher level of volatility.

Per Kiplinger’s Nellie Huang, who recently analyzed the fund as part of its inclusion in the Kip ETF 20: “Invesco S&P SmallCap Low Volatility is designed to smooth out the ride. So far, so good: Since this ETF launched in early 2013, it has outpaced two small-company stock benchmarks – the Russell 2000 and the S&P SmallCap 600 – on an annualized basis, with less volatility.”

XSLV is lopsided from a sector standpoint, however, with a whopping 44% of its portfolio invested in financials and almost another quarter of the fund in real estate. But these concentrations, especially in REITs – including top holdings Apollo Commercial Real Estate Finance (ARI) and Redwood Trust (RWT) – results in a yield of 2.7% that’s significantly fatter than the 1.6% generated by the Russell 2000 small-cap index.

Small-cap stocks also can provide some insulation from international troubles, given that often, most if not all their revenues are generated domestically.

Learn more about XSLV at the Invesco provider site.

• Type: Commodity (Gold)
• Market value: $566.0 million
• Dividend yield: N/A
• Expenses: 0.1749%

Gold is a popular flight-to-safety play that can get a lift from several sources. Part of it is just a worst-case-scenario fear: If global economic structures come crashing down and paper money means nothing, humans still will assign some worth to the shiny yellow element that once was a currency, regardless of its limited practical use compared to other metals.

Of course, at that point, you’re probably not thinking about your IRA.

But gold also is an uncorrelated asset that doesn’t move perfectly with or against the stock market. It’s often considered a hedge against inflation. It tends to go up when central banks unleash easy-money policies. Because gold itself is priced in dollars, weakness in the U.S. dollar can make it worth more. So sometimes, it pays to make shorter-term bets on the metal.

If you don’t want to go through the hassle and cost of having gold bars or coins delivered, finding somewhere to store them, insuring them, then having to find a buyer and a way to unload them when you want to exit your “position,” consider one of the many ETFs that trade based on the worth of actual gold stored in vaults.

Each GraniteShares Gold Trust (BAR, $128.83) unit represents 1/100th of an ounce of gold. And with a 0.1749% expense ratio, it’s the second-cheapest ETF that’s backed by physical gold. First is Aberdeen Standard Physical Swiss Gold Shares ETF (SGOL), which in late 2018 undercut GraniteShares at a flat 0.17% – yet another salvo in what has been an aggressive fee war in the space.

But BAR has other incentives, including a low spread that’s attractive to traders, and an investment team that’s easier to access than those at larger providers.

Learn more about BAR at the GraniteShares provider site.

• Type: Gold stocks
• Market value: $11.3 billion
• Dividend yield: 0.4%
• Expenses: 0.52%

Gold mining stocks are a mix of commodity and equity – they’re publicly traded companies that have revenues and earnings, but their fates are largely dictated by the motion of the yellow metal.

You see, gold miners have a calculated cost of extracting every ounce of gold out of the earth. Every dollar above that is profit in their pockets. Thus, the same pressures that push gold higher and pull it lower will have a similar effect on gold mining stocks.

The VanEck Vectors Gold Miners ETF (GDX, $27.77) is among the best ETFs for this purpose. It’s the largest gold mining ETF, at more than $11 billion in assets, and it’s pretty straightforward. The fund holds more than 40 stocks that engage in the actual extraction and selling of gold. (VanEck has a sister fund, GDXJ, that invests in the “junior” gold miners that hunt for new deposits.)

But why gold miners instead of gold itself?

Gold stocks sometimes act in a more exaggerated manager – that is, when gold goes up, gold miners tend to gain by even more. For example, gold itself has had a phenomenal 2019, with the aforementioned BAR returning 12.3% year-to-date. The GDX, however, is up almost 32%, surging when gold climbs and slumping on even slight weakness in the metal.

Learn more about GDX at the VanEck provider site.

• Type: Bond
• Market value: $16.8 billion
• SEC yield: 1.8%*
• Expenses: 0.15%

The iShares 1-3 Year Treasury Bond ETF (SHY, $84.68) is, to be blunt, boring. It’s a basic index fund that currently invests in a basket of more than 80 U.S. Treasury bonds with an average effective maturity (the amount of time until a bond’s principal is paid in full) of just less than two years.

These bonds are a safe bet, given that two of the three major credit providers give American debt the highest possible rating. The short maturity helps, too, because it tamps down on the risk of interest rates rising quickly, thus making SHY’s current holdings less attractive.

Safe bets typically don’t pay much, of course, but these aren’t typical times. SHY’s current yield of just under 1.8% is only a few basis points (one one-hundredth of a percent) less than the riskier iShares 7-10 Year Treasury Bond ETF (IEF), whose weighted average maturity is more than four times longer.

SHY rarely moves much. Over the past five years, the fund has traded in a range of about 3% from its highs to its lows. So in good times, the S&P 500 usually crushes short-term bonds. But the prospect of getting a 1.8% yield without worrying much about hemorrhaging capital losses sounds pretty good versus staying fully invested in equities during a correction or bear market.

Learn more about SHY at the iShares provider site.

* SEC yield reflects the interest earned for the most recent 30-day period after deducting fund expenses. SEC yield is a standard measure for bond funds.

• Type: Low-volatility bond
• Market value: $62.3 million
• SEC yield: 4.1%**
• Expenses: 0.40%

The IQ S&P High Yield Low Volatility Bond ETF (HYLV, $23.66) blends a few of the themes we’ve discussed here. You’re avoiding exposure to the stock market via bonds, you’re leaning on high income to lift returns and you’re seeking out low volatility to minimize losses.

The HYLV tries to find a middle ground where you can enjoy the high yield of below-investment-grade (“junk”) bonds while trying to mitigate their relatively high risk. The underlying index selects bonds using a calculation that factors in the bond’s duration (a measure of its sensitivity to interest rates), the bond’s spread (the difference between its yield and a similar-maturity U.S. Treasury bond’s yield) and the spread of the broader universe of bonds that the fund is selecting from.

The result shouldn’t surprise anyone: Eighty-three percent of HYLV’s debt portfolio is in the highest-quality junk tier (BB), with about 26% total in the absolute highest non-investment-worthy grade, BB+. The rest is in B-rated debt, as of the ETF’s most recent fact sheet – none is in CCC or lower.

You’re bringing in less income (4.1%) than what you’ll get from junk mainstays such as the SPDR Bloomberg Barclays High Yield Bond ETF (JNK) and iShares iBoxx $ High Yield Corporate Bond ETF (HYG), both of which yield more than 5%. But HYLV’s movements tend to be less drastic, giving you more peace of mind.

Learn more about HYLV at the New York Life provider site.

** SEC yield data for HYLV is as of June 30. Morningstar data for SEC yield was not available at time of writing.

• Type: Inverse stock
• Market value: $1.9 billion
• Dividend yield: N/A
• Expenses: 0.89%

While all the following ETFs are certainly among the best ETFs to own if you’re looking for protection, none are inherently as crash-proof as the ProShares Short S&P500 ETF (SH, $26.71).

In fact, the best-case scenario for SH is a market crash.

The ProShares Short S&P500 ETF is a complex machine of swaps and other derivatives (financial instruments that reflect the value of underlying assets). But what it provides investors is simple: the inverse daily return (minus fees) of the S&P 500 Index. In short, if the S&P 500 loses 1%, the SH should gain 1%. Reality bears this out: Look at any chart of the ProShares Short S&P500 ETF, and you’ll see a virtual mirror image of the S&P 500.

SH is best used as a simple market hedge. If you’re scared of a market correction or worse, you could abandon all your stocks – but you’d rack up a ton of trading fees, not to mention potentially lose out on high yields-on-cost of established dividend positions. Or, you could stay mostly long but allocate a small percent of your portfolio to SH. That way, if the rest of your stocks go down, chances are SH is at least countering some of those losses, and you’re also not absorbing all those trading fees.

The risk is easy to see: If the market goes up, SH will muffle some of your gains.

Be warned: More aggressive “leveraged” inverse ETFs provide double or even triple this kind of exposure, be it on the S&P 500 or even sectors and industries. But you also risk double or triple the losses – far too much risk for your typical buy-and-hold, retirement-minded investor. A small hedging position in SH, however, is manageable and won’t crack your portfolio if the bulls do in fact win out.

Learn more about SH at the ProShares provider site.

The stock market has been shaken in recent days by an escalation of the trade battle with China, as well as a Federal Reserve move to lower benchmark interest rates for the first time since 2008 – but not by as much as some on Wall Street hoped. But even after heavy selling, Standard & Poor’s 500-stock index remains just a few percent off all-time highs.

Is this the start of a long-awaited stock market correction? Possibly. But rather than trying to gauge exactly when a correction is coming or what will spark it, a better plan is to simply prepare. That is, you can shift the composition of your portfolio so it can better weather a storm – but still profit as long as the bull keeps running.

A more defensive posture does have drawbacks; nothing is free. The biggest problem is being underweight the stocks that are still driving the market higher. But for investors who do think a correction is coming and don’t want to play the losing game of trying to time the market, we’ve asked a group of investment managers and other experts which stocks they expect to hold up should the market pull back.

Here are 13 of the best stocks to buy to ride out a stock market correction. Most of these revolve around the idea of investing in high-quality companies that have good cash flows and business health, boasting pricing power and stable customer demand. This includes consumer staples stocks that sell products and services that people cannot live without. A couple will help raise your exposure to gold, which is emerging from a multiyear slumber.

Data is as of Aug. 1.

• Market value: $222.5 billion
• Dividend yield: 3.0%

Market pundits often suggest consumer staples stocks when the market seems ready to pull back. Companies in this group enjoy stable demand in good times and bad and their stocks tend to pay good dividends, making them among the best stocks to help soften the blow of a market downturn.

However, just because a company is in this sector does not mean it can stave off the bears. It must offer solid financial health and good market share in its industry.

David Bickerton, president of MDH Investment Management in Ohio, says Coca-Cola (KO, $52.03) is well-positioned within the sector, has a “fortress” balance sheet and pays a strong dividend. That payout has increased without interruption for 57 consecutive years, too, putting KO among the ranks of the Dividend Aristocrats.

Coca-Cola cruised to new all-time highs in July thanks in part to organic growth through its Dasani brand of seltzer waters. Its acquisition of British international coffee chain Costa Coffee – which had nearly 3,900 locations by the end of 2018 – is proving to be a major contributor to growth through its stores and thousands of vending facilities.

Coca-Cola’s revenues still are growing outside of the United States, too, despite the generally slower global economy – again thanks in part to Dasani.

A strong U.S. dollar is a headwind for Coca-Cola, as it weakens the effect of the company’s overseas earnings. But should the dollar weaken, that would provide another lift to Coke’s business.

• Market value: $12.7 billion
• Dividend yield: 3.0%

David Bickerton also ranks J.M. Smucker (SJM, $111.73) as a top candidate for safety and growth.

Most people are familiar with Smucker’s brands, from Folgers and Dunkin coffee to Jif peanut butter, Crisco shortening and the namesake Smucker’s jams. Pet owners likely will recognize Meow Mix, Milk-Bone, Kibbles ‘n Bits, 9Lives and the celebrity-branded Rachael Ray Nutrish.

These are traditional consumer staples products that people will still buy no matter what the economy does. That should give the company’s stock price natural support if and when we experience a stock market correction.

Bickerton says SJM’s balance sheet has the same “fortress” quality as Coca-Cola. Smucker doesn’t have as lengthy a payout history, but it has improved its dividend for 18 straight years. Over the past half-decade, Smucker increased its dividend five times for an average annual increase of 7.9%.

• Market value: $42.3 billion
• Dividend yield: 3.1%

Danny Ray, founder of PinnacleQuote Life Insurance Specialists, recommends retailer Target (TGT, $82.62).

The most interesting aspect of this stock is off the balance sheet, Ray says. Target is not a specialty retailer – such as store that only deals in, say, furniture or clothing – and thus would not be hit as hard by an economic slowdown. Target, thanks to its grocery options, is a part of many Americans’ everyday life. That doesn’t make TGT immune to a pullback, but it and similar retailers should be among the best stocks in the industry if the market wanes.

Strong net operating cash flow also gives the company the flexibility to sustain a longer period of a correction. In addition, its dividend – which currently yields more than 3% and has been growing continuously for almost half a century – will help investors bide their time by partially offsetting downside price movements.

Ray adds that dividend investors tend to be long-term holders, so selling pressure in income stocks such as Target would be mitigated. He also thinks larger institutional funds won’t exit their positions and instead are likely to accumulate more shares at lower prices.

• Market value: $312.3 billion
• Dividend yield: 1.9%

For similar reasons, Danny Ray also likes Walmart (WMT, $109.38). It is an “everyday American” retailer. Many analysts agree that it also is one of the few traditional brick-and-mortar retailers that have built an online presence that’s truly competitive with Amazon.com (AMZN) – the 800-pound e-commerce gorilla.

Bickerton concurs, pointing out that during its most recent quarterly earnings report, Walmart announced e-commerce growth of 37% year-over-year – a huge number considering how much they’ve already grown the large platform. Grocery pickup and delivery through Walmart.com continue to add to the growth story.

Ray says the demographics of consumers using Amazon are middle class and above – essentially, people with money to spend. However, lower-income consumers tend not to shop on Amazon. Many rely on fixed incomes, including Social Security, and the majority of them still head to Walmart (and Target) in person.

A stock market correction in and of itself is unlikely to affect these consumers much. They would be unlikely to pull back on spending the way a more affluent consumer might when their portfolio shrinks.

“Even during the financial crisis in 2008, when many retailers were going under, parking lots at Walmart were not empty,” Ray says.

Consider that during the most recent correction during the fourth quarter of 2018, AMZN shares lost 31% peak-to-trough while WMT lost only 19%. Importantly, Walmart fared better across the entire downturn; Amazon lost a quarter of its value across all of Q4 and the S&P 500 lost 14% … while Walmart only gave up less than 1%.

• Market value: $47.3 billion
• Dividend yield: 0.8%

One of the least expensive home improvement projects is a fresh coat of paint. And with demand for home improvement proving to be less cyclical than in the past, Izet Elmazi – senior portfolio manager with Bristol Gate Capital Partners in Toronto – thinks Sherwin-Williams (SHW, $512.95) is the right stock for stability and growth.

Sherwin-Williams is a global leader in making and selling paints, coatings and other similar products. Elmazi believes the company is financially sound thanks to high free cash flow generation and an improving balance sheet. SHW has generated $17.7 billion in revenue over the past 12 months with 43% gross margins.

Remodeling and refurbishment drive the bulk of its demand, and the company has ample pricing power. Sherwin-Williams should be a survivor, then, even in a consolidating industry.

“If our thesis is right, this is just the beginning as gross margins trend back towards 50% over time and organic growth accelerates from here,” Elmazi says. “Demand for its products are still not at previous cycle highs. How many things can you say that for?”

• Market value: $93.6 billion
• Dividend yield: 1.6%

The need for telecommunications infrastructure is clear as it is, but the advent of 5G communications is making that need more pressing. This is an example of an industry that is not beholden to the minor ups and downs of the economy or stock market, as it is central to a macro trend across the globe.

Emmet Savage – CEO of MyWallSt, an investing app and educational website – likes American Tower (AMT, $211.41) for exposure to this space, calling it “a great one to invest in when considering stocks that are recession-ready.”

American Tower is a real estate investment trust (REIT) that, despite what the name might imply, owns and operates wireless and broadcast infrastructure not just in the U.S., but also in 16 other countries. AMT owns more than 170,000 cellular towers and leases them to some of the biggest names in communication, including AT&T (T) and Verizon (VZ). And demand for American Tower’s infrastructure solutions should only expand once 5G reaches its mass-rollout stage.

“Today, they’re in a growth market,” Savage says. “And if there is a downturn, American Tower’s services will not be disturbed. No matter what happens, people will still need a phone signal and that means their towers will still be rented.”

American Tower, as a REIT, is required to pay out at least 90% of its taxable profits as dividends. The current yield below 2% isn’t impressive, but the company has improved its payout every quarter since early 2012.

• Market value: $13.8 billion
• Dividend yield: 3.1%

Sometimes a good investment does not look that enticing on the surface. Take automotive parts and office supplies maker General Parts (GPC, $94.53). Since peaking April 5 at $115.20 per share, its stock price has mostly gone downhill, falling to current levels around $95. This isn’t a momentum story at the moment.

However, there is something to be said for a company that sees relatively stable demand for its products and offers a decent dividend yield. These qualities are why Chris Matteson – who runs Integrated Planning Strategies, an Oklahoma-based fee-only registered investment advisor – likes GPC to shore up a portfolio ahead of any upcoming pullback.

“GPC has an adequate cashflow position,” he says. “Its current ratio and quick ratio (two measures of corporate liquidity) look good, and it sports an affordable payout ratio of about 51%. Although it has recently increased debt its debt burden to pay for acquisitions, it has a healthy balance sheet.”

Genuine Parts’ price drop, Matteson adds, were sparked by weak sales in a challenging European economy, but sales in the rest of the world are growing slowly. “I’d add to my existing position if the stock dips any further,” he says.

He’s not alone. As the stock fell from April through August, insiders held on to their shares. In fact, there was one 5,000-share purchase and zero sales from people with intimate knowledge of the company’s health.

The combination of solid fundamentals and a price that has already come down substantially puts GPC among the best stocks to buy to weather a market-wide correction.

• Market value: $73.9 billion
• Dividend yield: 3.6%

Pharmaceutical stocks are more defensive in nature, too. After all, people have to take their medicine regardless of what the market or economy do.

Chris Matteson likes Bristol-Myers Squibb (BMY, $45.20) in this space because it is fundamentally strong yet currently out of favor on Wall Street; BMY shares are trading near six-year lows.

“It’s still a solid business with a full product line that includes strong-selling drugs such as Opdivo (cancer), Eliquis (anticoagulant) and Revlimid (cancer),” Matteson says. “Their recent acquisition of the pharmaceutical company Celgene (CELG), a cancer-focused biopharma company, spooked investors into selling the stock because they think Bristol-Myers Squibb overpaid for a drug with limited patent protection.”

BMY does appear to be “washed out.” This means that heavy selling pressure from fleeing investors have been exhausted, in turn suggesting limited downside price movement from here.

“Liquidity ratios look good, debt is low for a pharmaceutical company, and the dividend payout is about 51%, for little chance of seeing a dividend cut,” says Matteson, who says he owns the stock and, despite current sentiment, would consider accumulating more at current levels.

• Market value: $5.6 billion
• Dividend yield: 3.2%

In the model of Warren Buffett, buying undervalued assets has been a good way to grow capital in good environments and bad. The theory is that others are overlooking the asset’s potential.

While the U.S. economy still puts out great numbers in jobs, wages and confidence, we cannot say the same for much of the rest of the world. Europe in particular remains under extreme pressure and many countries have lowered interest rates to below zero in an attempt to stimulate the continental economies.

That’s what makes investing in Europe now so intriguing.

Tom Chapin, chief investment officer of Pennsylvania-based Mill Creek Capital Advisors, thinks an easy way to gain exposure to Europe is via the iShares MSCI Eurozone ETF (EZU, $38.38). This ETF holds shares of large- and mid-cap stocks from developed-market countries that use the euro as their official currency. It’s a concentrated fund, though; nearly three-quarters of its market value is derived from France, Germany and Netherlands.

Chapin believes European markets have already priced in their economic conditions and now trade at more conservative valuations. For example, the underlying MSCI Eurozone index trades at a price-to-earnings ratio of 13.9 based on forward-looking profit estimates. Compare that to the S&P 500, which trades at 17.7. And the EZU, at 3.2%, offers a far richer yield than the sub-2% S&P 500.

• Market value: $105.2 billion
• Dividend yield: 3.7%

Daniel Kent, owner and researcher for StockTrades ­­– a Calgary-based investment and personal finance website – thinks the major Canadian banks are some of the world’s best stocks, as far as reliability is concerned. That’s paramount when the market starts looking shaky. Reliable earnings will help them hold their value in most conditions, including market corrections.

“They have proven time and time again they can withstand market hardships,” Kent says. “During the 2008 financial crisis, they weathered the storm better than any banks in the world.” In fact, not a single Canadian institution failed.

His top stock pick is Toronto-Dominion Bank (TD, $57.51). The Canadian financial giant has operations spread across North America and also owns a portion of online broker TD Ameritrade (AMTD).

The dividend is quite attractive at current levels. Given the company’s recent payout growth – the distribution has expanded by nearly 10% annually over the past half-decade – and healthy payout coverage, future dividend hikes seem likely, too.

• Market value: $111.6 billion
• Dividend yield: 3.9%

Daniel Kent also recommends the Royal Bank of Canada (RY, $77.77) for riding out any market pullbacks.

Royal Bank is a global enterprise, operating in 42 countries including Canada and the United States. The company posted more than C$3.2 billion in profits last quarter and is one of Canada’s most valuable brands. It also has raised dividends for eight consecutive years, at a clip of about 8% annually over the past five years.

RY, like many other Canadian banks, began its current dividend growth streak near the end of the financial crisis – just when markets were starting to recover. But the important takeaway is that Canadian banks’ dividends were starting from higher ground. None of the Canadian “Big Five” banks executed a dividend reduction, and in fact, none had to take a bailout. “I think this contributed heavily to the speed of their recovery,” Kent says.

As Royal Bank’s stock fell from roughly $49 to under $25 during the heat of the crisis, the stock recovered back to its original $49 price point in less than a year. Compare this to Bank of America (BAC), which currently trades at $29 per share but topped out above $54 in 2007.

“Canada’s extensive regulatory environment is what saved these banks from insolvency, and is one of the primary reasons they are such a valuable asset to any investors portfolio today,” he says.

• Market value: $8.4 billion
• Dividend yield: 2.1%

Gold mining stocks often are recommended when economic, or geopolitical, conditions start to sour. The idea is that gold as an asset is not correlated to movements in stocks, and that it provides a safe haven for money to hide when stocks do stumble. To wit, gold has fared well in a year of high uncertainty, and it recently closed at multiyear highs.

Investors can buy gold itself, either directly as coins or indirectly via gold-based exchange-traded funds (ETFs). However, if it takes longer for the economy and stock market to sour, investors in gold will miss out on the potential profits offered by stocks.

The ideal compromise is to shift some money into gold miners, which will benefit from rising gold prices but still can follow the broad market higher.

Simon Popple – editor of U.K.-based Brookville Capital Newsletter, which specializes in gold and silver investing – is most excited about Australian miner Evolution Mining (CAHPF, $3.38), especially if the market corrects. He says there are several reasons why Evolution is well-positioned, but the main one is that it’s such a low-cost producer. This has two key benefits in a market correction.

The first is that investors feel more comfortable with companies that are already generating a lot of cash. Evolution Mining would fall into that lower risk category because it’s the lowest-cost producer in the VanEck Vectors Gold Miners ETF (GDX) at $615 to $650 per ounce. Gold currently trades near $1,441 per ounce.

The second is that the company likely will remain profitable if gold falls in price when many other gold miners may not be. And if the gold price goes up, they become even more profitable.

Evolution’s home market is Australia, where it averages about 10 million shares traded daily. U.S. investors can most easily get exposure via the CAHPF shares, which trade over-the-counter (OTC). The caveat? The OTC shares trade an average of less than 9,000 shares daily, so interested investors will want to take precautions such as using limit orders and stop-losses.

• Market value: $12.9 billion
• Dividend yield: 0.9%

David McAlvany – CEO of Colorado-based gold brokerage and advisory firm McAlvany ICA, which is responsible for the gold investing app Vaulted – thinks gold and silver miner Agnico Eagle Mines (AEM, $54.39) checks all the right boxes. In fact, he owns shares in client, firm and personal accounts.

McAlvany likes that Agnico runs high-quality, profitable mines with superior returns on capital. It operates in the fairly stable geopolitical jurisdictions of Finland, Canada and Mexico.

The company has exceeded guidance for seven years running, McAlvany says, and its assets provide stability and visibility of cash flows.

Agnico has a policy of not hedging, which essentially means not selling any of its gold or silver production forward. This gives investors full exposure to gold and silver prices, for better or worse. Considering that gold itself has finally emerged from a six-year trading range, hedges would only create a drag on returns right now.

The company also has a long history of paying dividends, unlike many peers. With a sub-1% yield, AEM is far from an income play. But the extra padding contributes to Agnico Eagle Mines’ status as one of the best stocks for protection against a downturn.

Wall Street’s analysts and market experts have scores of unique investing ideas and perspectives as we begin the new year. But one common thought across dozens of 2019 market outlooks: Nothing will come easy for investors.

Where will the American stock market go in 2019? What sectors will shine – and which ones will fall to the back of the pack? Will Chinese equities rebound? Will cryptocurrencies find their way back into favored status among aggressive investors?

Experts from across the spectrum – from Wall Street’s most prominent stock-analysis outfits to “boutique” shops that specialize in just one or two corners of the market – have delivered their market outlooks for 2019. Kiplinger’s has published its own insights: our economic outlook and our guide on where to invest for the year. But we suggest also taking in the analyst community’s views on stocks, bonds and beyond.

Digest these key 2019 market outlooks to find investment ideas that fit your portfolio in the new year. They include price targets for the Standard & Poor’s 500-stock index, economic forecasts and various investing strategies.

Editor’s note: The following are excerpts from market outlooks provided by analysts. Many of these outlooks were provided throughout the month of December, and thus are based on varying market levels at the outlooks’ time of publication. Analysts can and do update their price targets and outlooks as market conditions change. This article is simply a snapshot of different expert views entering the new year.

• Focus: U.S. economy
• Expert: JPMorgan Asset Management

First, we’ll set the stage with JPMorgan Asset Management’s 2019 investment outlook – specifically, its thoughts on U.S. economic growth in the coming year.

“Entering 2019, the U.S. economy looks remarkably healthy, with a recent acceleration in economic growth, unemployment near a 50-year low and inflation still low and steady. (In July 2019), the expansion should enter its 11th year, making this the longest U.S. expansion in over 150 years of recorded economic history. However, a continued soft landing, in the form of a slower but still steady non-inflationary expansion into 2020, will require both luck and prudence from policy makers.”

JPMorgan’s analysts do see real GDP slowing in 2019, for four reasons:

• “First, the fiscal stimulus from tax cuts enacted late last year will begin to fade. …”
• “Second, higher mortgage rates and a lack of pent-up demand should continue to weigh on the very cyclical auto and housing sectors.”
• “Third, under our baseline assumptions, the trade conflict with China worsens entering 2019 with a ratcheting up of tariffs to 25% on USD 200 billion of U.S. goods. Even if the conflict does not escalate further, higher tariffs would likely hurt U.S. consumer spending and the uncertainty surrounding trade could dampen investment spending.”
• “Finally, a lack of workers could increasingly impede economic activity. … With the unemployment rate now well below 4.0%, a lack of available workers may constrain economic activity, particularly in the construction, retail, food services and hospitality industries.”

This theme of caution and prudence peppers many experts’ market outlooks to come.

• Focus: U.S. stocks/S&P 500 target
• Expert: BofA Merrill Lynch

BofA Merrill Lynch, like JPMorgan Asset Management, expects the U.S. economy’s growth to slow and sees a similar fate for American corporate earnings. Nonetheless, their stock-market outlook for 2019 is positive, with an S&P 500 price target that implies double-digit growth ahead.

“The Standard and Poor’s 500 Index is expected to peak at or slightly above 3,000 before settling in at a year-end target of 2,900,” which would be a 15.7% gain for the year based on 2018’s closing readout of 2,506.85.

“Earnings growth also is likely to slow in the U.S., though the near-term outlook remains somewhat positive. We forecast earnings per share (EPS) growth of 5 percent, which would put the S&P 500 EPS at a record high of $170 next year.”

Where will that growth come from?

“Our U.S. equity strategists are overweight health care, technology, utilities, financials and industrials, and underweight consumer discretionary, communication services and real estate.”

• Focus: U.S. stocks/S&P 500 target
• Expert: Sam Stovall, Chief Investment Strategist, CFRA

CFRA’s Sam Stovall sets a stern tone about the outlook for both 2019 share-price returns and U.S. corporate earnings, though he does set a higher price target for the S&P 500 than BofA Merrill Lynch’s analysts.

After illustrating 2018’s strength in GDP growth and S&P 500 profits, he writes, “Yet to quote the Old Milwaukee beer commercials of years past, ‘It just doesn’t get any better than this.’ Indeed, a tailing off of the trend is the theme for 2019, as global GDP growth, along with S&P 500 EPS, face stiffer comparisons.”

“CFRA’s Investment Policy Committee is lowering its 12-month projected target for the S&P 500 to 2975 from the current 3100, based on the median forecast of IPC members,” Stovall wrote on Dec. 10, implying 13% from the S&P 500’s Dec. 7 close, and 18.7% upside from the end of 2018. “We see few opportunities for economic stimulation as a result of tighter monetary policy and the new congressional make-up. Indeed, history reminds us that the S&P 500 posted a below-average 12-month price gain of 6.2% in the 12 months following the end of rate-tightening cycles in the past 65 years, as compared with the average 8.7% advance for all years.”

CFRA’s outlook for earnings is equally hesitant.

“Lastly, the tax cut’s boost to 2018’s EPS will not be repeated in 2019. At the beginning of 2018, S&P 500 EPS growth was pegged at 11.4%. Today it is a shade below 23%. On 9/30/18, the S&P 500 was projected to record EPS growth of 10% in 2019. Today the estimate is 7.5%. We think the result will be a bit softer at 5%.”

• Focus: U.S. stocks/S&P 500 target
• Expert: Darrell L. Cronk, CFA, President of Wells Fargo Investment Institute

Wells Fargo, in its 2019 outlook titled “The End of Easy,” sets a target range for the S&P 500 Index of 2,860-2,960, implying anywhere between 14.1% and 18.1% upside for 2019. It raises no eyebrows, sitting close to many other major market outlooks.

More notable to investors is the letter to investors from Darrell L. Cronk, CFA, President of Wells Fargo Investment Institute, which concisely presents some of the headwinds that loom ahead.

• “The end of cheap capital: As interest rates rise from generational lows, consumers and businesses will have to rationalize how rising costs of capital affect borrowing and spending decisions.”
• “The end of outsized job gains: Multidecade tight labor conditions put upward pressure on wages, making it difficult for employers to attract and retain needed talent for growth. This, in return, should slow job growth.”
• “The end of extremely low volatility across equities, rates and currencies: One of the hallmarks of this cycle has been the extraordinarily low volatility regimes for most major asset classes. We believe that this began to change in 2018, and we expect this trend to continue throughout 2019.”

Cronk does provide one glimmer of light, however:

“The end of equity returns driven by only a few sectors: Outsized investor performance has come from only a few equity sectors through much of this cycle. We see the range of opportunities broadening, resulting in appealing valuations across a number of equity sectors.”

• Focus: U.S. stocks/S&P 500 target
• Expert: Brad McMillan, CFA, CAIA, MAI, CIO of Commonwealth Financial Network

The last broad-market outlook featured here comes from Commonwealth Financial Network’s Brad McMillan, whose 2019 look-ahead includes a nod to stock valuations.

“Despite all the worries about tariffs, strong economic fundamentals have allowed us to sail through the market storms, and this is likely to continue to be the case.”

“With solid fundamentals, the real question will be what stock valuations do. Historically, high levels of confidence have driven valuations higher, which is what we have seen through most of 2018. Recently, however, valuations have dropped to the lower end of the range typical of the past five years or so. As confidence levels moderate and growth slows, we can expect valuations to remain at the lower end of that range.”

“Given projected earnings growth and a resetting of valuations to levels prevailing through the past couple of years – to about 15 times forward earnings – the S&P 500 is likely to end 2019 between 2,900 and 3,000,” implying 15.7% to 19.7% upside. “There is upside potential if valuations recover to the high levels seen recently. But there may be more downside risk, as even a valuation of 15 is quite high historically. Still, this estimate is consistent with revenue and earnings growth projections and with overall economic growth.”

• Focus: Global economy
• Expert: Jeffrey Kleintop, Senior Vice President, Chief Global Investment Strategist, Charles Schwab

Charles Schwab’s Jeffrey Kleintop paints a gloomy picture for the global economy, and international stocks, for the coming year.

“Global growth may slow in 2019 as the economic cycle nears a peak, with increasing drag from worsening financial conditions combining with full employment and rising prices. Global stock markets may peak in 2019 if leading indicators signal the gathering clouds of a global recession.”

“If we borrow the severe weather scale for storms and apply it to the global economy and markets, we aren’t forecasting ‘Recession Warning,’ meaning a recession is here or imminent. A better term is ‘Recession Watch,’ in which conditions are favorable to a recession if a number of risk factors (e.g., trade, interest rates, inflation) deteriorate.

“For all the concerns about trade policy, Brexit and other issues, 2018's big stock market declines generally were driven by inflation and interest rate concerns. These are the indicators investors should watch most closely in 2019. Historically, when unemployment and inflation rates have converged to become the same number – signaling an overheating economy – it has marked the beginning of a prolonged downturn for the stock market, followed about a year later by a recession. The gap between the unemployment rate and the inflation rate is close to one percentage point in major countries like Germany, Japan, the United Kingdom, and the United States.”

A couple tips from Schwab:

• “Consider reducing portfolio volatility by trimming historically more-volatile asset classes, such as emerging market stocks.”
• “Consider rebalancing back to long-term asset allocation targets. Historically, long-term asset class trends have tended to reverse in the year prior to global recessions and bear markets. This may begin to favor international over U.S., value over growth, and large- over small-cap stocks.”

• Focus: International stocks
• Expert: Kristina Hooper, Chief Global Market Strategist, Invesco, and Arnab Das, Global Market Strategist, EMEA, Invesco

Most diversified portfolios are going to include some allocation to international stocks. Naturally, then, investors should be concerned with more than just S&P 500 targets; Invesco provides its outlook on what could drive international developed- and emerging-markets stock returns in 2019:

“The US Federal Reserve (Fed) is very likely to continue on its path of regular gradual rate hikes. It would probably take a major downturn in economic data or a very severe US stock market correction to divert the Fed from that rate hike path at this juncture.”

“In addition, the European Central Bank (ECB) is due to begin winding down its own quantitative easing program from the end of 2018, which could contribute to further disruption in Eurozone bond markets, which are already experiencing renewed divergence. … In addition, more emerging markets economies are tightening – many doing so to keep up with the Fed – creating an overall environment that is less accommodative.”

“In the Eurozone and Japan, we expect continued support of risk assets because of more accommodative monetary policy, which in our view should result in modest positive stock returns for those regions despite relatively low economic growth. In emerging markets (EM), we expect the Fed‐driven re‐pricing to continue to spill over into global markets through a stronger dollar, higher US bond yields and tighter global financial conditions, pointing to more pressure on EM currencies, putting downward pressure on growth and upward pressure on inflation – a challenging scenario for EM equities, bonds and currencies.”

“However, there is a significant possibility that by mid‐year 2019, the Fed may moderate its normalization as economic growth slows, which should result in some moderation in the investment implications mentioned above, in our view.”

• Focus: Emerging-markets stocks
• Expert: BlackRock Investment Institute

BlackRock, in its outlook for emerging-markets equities, makes a somewhat hesitant bull case for the year ahead:

“Emerging market assets have cheapened — offering better compensation for risk in 2019. Country-specific risks — such as a series of EM elections and currency crises in Turkey and Argentina — look to be mostly behind us. China is easing policy to stabilize its economy, marking a sea change from 2018’s clampdown on credit growth. We see the credit impulse turning positive in 2019 and fiscal policy becoming supportive.”

“Other positives for the asset class: The Fed is closer to the end of its tightening cycle and may pause rate hikes and/or balance sheet reduction in 2019. And economies are adjusting: Currency depreciations have led to improved current account balances in many EM economies. The key risk for EM assets: The Fed tightens faster than markets anticipate, renewing the dollar’s uptrend and tightening financial conditions for countries with external liabilities. We are cautiously positive on EM assets for 2019.”

Helen Zhu, Head of China Equities, BlackRock Fundamental Active Equity, said specifically about Chinese stocks: “There’s upside potential for Chinese equities if fiscal and monetary stimulus goes hand in hand with growth-boosting measures such as land reform. Other catalysts are abating trade tensions and a weaker U.S. dollar.”

• Focus: Emerging-markets stocks
• Expert: Jay Jacobs, head of research and strategy at Global X

The biggest question investors face in 2019 about dipping a toe into China may not be whether to do so … but how to do so. Jay Jacobs, head of research and strategy at fund provider Global X, says:

“2018 saw the introduction of Chinese A shares into global benchmarks, which has further increased the investable opportunity set in China and its weight in emerging market indices.”

“As the world’s second largest economy, though, we believe that investors need to dig deeper into China and evaluate their exposure on a sector level. If there was anything to be learned from the market’s reaction to tariffs, it’s that China is not a monolith, and that its sectors, like any other major economy’s, do not move in unison.”

“Whether trade risks remain prominent into 2019 or not, China is 10% of the world’s market cap, and investors are have exposure to the nation in some form, either directly or indirectly. It’s important that the exposure investors are getting to China be more nuanced than simply taking a whole-market approach, as we learned this year.”

• Focus: Investing strategies
• Expert: Sam Stovall, Chief Investment Strategist, CFRA

CFRA provides a general breakdown of how investors should allocate their portfolios in the year ahead, as well as a few more specific recommendations:

“CFRA’s Investment Policy Committee recommends a 55% exposure to global equities” – that’s U.S. and international stocks – “and a 45% weighting to fixed income. We suggest reducing the exposure to U.S. equities to 40% from 45%, while maintaining a neutral 15% exposure to foreign stocks. One reason for the reduction in U.S. equities is that as of 12/7/18, the S&P 500 has recorded an 11.6% CAGR in price over the past 10 years, which is above the average of 5.9% since 1918 and more than one standard deviation above the mean (+11.2%) during this period. Though not a signal of an impending top, this rolling 10-year CAGR implies that the bull may be running out of steam.”

“CFRA thinks that foreign equities offer positive-trending EPS growth, attractive valuations and higher yields. For 2019, while the S&P 500 should see slowing in EPS growth, the reverse is true for foreign markets.” Both the S&P Developed Ex-US BMI (broad market index) and S&P Emerging BMI are expected to post better profit growth in 2019 than in 2018, and “both the developed and emerging market benchmarks are trading at greater than 20% and 35% discounts, respectively, to their average relative P/E (versus the S&P 500) over the past 15 years. Income investors should also remain attracted to overseas markets since they yield more than their domestic counterparts.”

Also, a few notes on sector recommendations. CFRA advises overweights in energy, utilities and information technology, loving the latter for its “above-market 2019 EPS growth expectations combined with more attractive forward relative valuations.” Meanwhile, it has underweights in financials as well as communication services, saying about the latter that it will face “pressure from increased social media regulatory scrutiny along with additional cable subscriber defections.”

• Focus: Stock investing strategies
• Expert: LPL Financial Research

LPL Financial Research’s forecast for 2019 includes GDP growth of between 2.5% and 2.75% in 2019, as well as a total return (stock-price performance plus dividends) of 8% to 10% for the S&P 500 – a less bullish target than many other market outlooks.

Needless to say, in that reality, investors will have to be pickier about where they take their shots. LPL’s thoughts on where investors might find better fortunes:

“LARGE VS. SMALL CAPS: Small caps generated outperformance early in 2018, aided by being relatively more insulated from trade tensions than large caps. However, as trade issues mitigate, the business cycle ages, and the dollar’s uptrend potentially hits resistance, market leadership may shift back toward large caps. In addition, a rising interest rate environment, potentially with tightening financial conditions, may create a challenge for small cap companies that have higher costs of capital and a greater reliance on debt. Accordingly, over the next several months, we suggest suitable investors shift toward target allocations across market capitalization with benchmark-like exposures to small, mid, and large cap stocks.”

“GROWTH VS. VALUE: We maintain our slight preference for value despite its underperformance relative to growth in 2018. We expect value in 2019 to benefit from the pickup in economic growth that began in mid2018, relatively attractive valuations after a sustained period of growth outperformance, and our positive view of financials.”

• Focus: Stock investing strategies
• Expert: JPMorgan Asset Management

The cautious tone JPMorgan set in its outlook for the U.S. economy continues in its view of the investing environment for 2019.

“Investors have recognized that trees do not grow to the sky, and that the robust pace of profit and economic growth seen this year will gradually fade in 2019 as interest rates move higher. While history suggests that there are still attractive returns to be had in the late stages of a bull market, the transition away from quantitative easing and toward quantitative tightening has contributed to broader investor concerns. Many equate this new environment to walking on an investment tightrope without the liquidity safety net that has been present for over a decade.”

“This leaves investors in a tough spot – should they focus on a fundamental story that is softening, or invest with an expectation that multiples will expand as the bull market runs it course? The best answer is probably a little bit of each.”

JPM’s allocation suggestions for the new year: “We are comfortable holding stocks as long as earnings growth is positive, but do not want to be over-exposed given an expectation for higher volatility. As such, higher-income sectors like financials and energy look more attractive than technology and consumer discretionary, and we would lump the new communication services sector in with the latter names, rather than the former. However, given our expectation of still some further interest rate increases, it does not yet seem appropriate to fully rotate into defensive sectors like utilities and consumer staples. Rather, a focus on cyclical value should allow investors to optimize their upside/downside capture as this bull market continues to age.”

• Focus: Stock investing strategies
• Expert: Michael Sheldon, CIO and Executive Director at RDM Financial Group at HighTower

Sheldon sees a shift away from the dynamic seen in the final quarter of 2018, during which technology was battered, and investors huddled into defensive plays such as consumer staples and utility companies.

“We believe that investors need to have some exposure within a diversified portfolio to dynamic faster growing advanced technology companies. Companies that operate in this area of the market are likely to be more volatile than the average company. However, over the next several years, we believe that companies that operate in areas like cloud computing, web services, artificial intelligence, autonomous cars and robotics are likely to generate positive growth and attractive returns.”

“Heading into the new year we favor technology due to strong balance sheets, positive growth characteristics and attractive valuation levels, and healthcare due to a combination of both defensive and growth characteristics along with historically attractive valuation levels.”

“While some defensive areas of the market like utility and consumer staples stocks have performed better recently due to the recent pick up in volatility, these parts of the market are starting to get more expensive and appear unlikely to provide investors with attractive returns looking ahead over the next several years.”

• Focus: Stock investing strategies
• Expert: William Studebaker, President & CIO of ROBO Global

ROBO Global’s William Studebaker discusses some of the factors in robotics and artificial intelligence (RAII) that could help drive stocks in the technology and industrial sectors this year.

“Massive adoption of AI will transform the healthcare industry. The medical field is seeing the light when it comes to the very real benefits of AI in all things healthcare. Machine learning is already helping physicians make smarter decisions by making it easier to view and analyze patient scans. 3D printing matches medical devices to the exact specifications of patients. Genomic sequencing makes it possible to diagnose and treat diseases earlier than ever, and robot-assisted surgeries are improving surgical outcomes.”

• “Autonomous vehicles will deliver Level 4 autonomy. Level 5 autonomy requires capabilities that work predictably in all environments all of the time. And while that Holy Grail remains beyond our grasp – for now – Level 4 autonomy, which requires that self-driving vehicles work in some places, some of the time, is ready for use in limited situations. The result: autonomous vehicles will begin to appear in a variety of geo-constrained environments such as airports, closed campuses, and retirement communities, laying the groundwork for wider adoption and acceptance as technology get closer and closer to Level 5.”
• “Winners and losers will be defined by how quickly they adopt robotics and AI. Sears and Toys R Us are just the latest examples of companies that were market leaders who failed because they failed to adapt in the new RAAI-driven economy. As robotics and AI continues to march forward, winners and losers in every industry will be increasingly defined by how willing they are to evolve their processes and business models to take advantage of the latest advancements. Those who are unwilling or unable to make the shift will be next on the chopping block.”

• Focus: Bonds
• Expert: Kathy Jones, Senior Vice President, Chief Fixed Income Strategist, Charles Schwab

Charles Schwab’s Kathy Jones believes interest rates might have hit a ceiling, but that’s not an all-clear for the bond space.

“The worst may be over for the bond bear market. After more than two years of steadily rising bond yields (and falling bond prices, which move inversely to yields), our research suggests that 10-year Treasury bond yields may have peaked for this tightening cycle at the 3.25% level. The Federal Reserve likely will continue to raise short-term interest rates to about 3% in 2019, but we don’t see longer-term yields moving much above the recent highs. Tighter global monetary policy, a strong U.S. dollar and sluggish global growth exacerbated by trade conflicts are likely to weigh on economic growth and inflation, limiting the rise in bond yields.”

“However, the path forward isn’t likely to be smooth. As markets adjust to tightening financial conditions, volatility is likely to increase.”

“We expect the Federal Reserve to raise rates two to three more times, bringing the federal funds target rate to the 2.75% to 3% area in early 2019, short of the Federal Open Market Committee’s 3.4% median estimate for 2020. Because short- and long-term interest rates tend to converge at cycle peaks, the yield curve likely will flatten toward zero. We suggest investors gradually add to average portfolio duration when yields rise.

“As the Fed normalizes rates and reduces its balance sheet, volatility may increase in riskier parts of the fixed income market – such as bank loans, high-yield and emerging-market bonds – due to issuers’ high leverage. We suggest investors move up in credit quality and/or limit exposure to these asset classes. Municipal bonds may post solid performance in 2019, as demand appears strong for tax-exempt income.

• Focus: Bonds
• Expert: Dan Draper, Managing Director and Global Head of Invesco ETFs

Invesco’s Dan Draper says while pressures are easing, interest rates still could head higher again in 2019.

“The rise of trade tensions between the US and China — and the ensuing tariffs — have softened global growth expectations, and thereby potentially eased, to a degree, the expected upward pressure on interest rates in both the US and Asia. On the other hand, solid US economic growth combined with improved wage growth and low unemployment in the US support the expectation that the Federal Reserve will maintain the gradual pace of short-term interest rate increases through 2019.”

But the global head of Invesco’s ETF division has some advice for this scenario:

“With the overall climate still tilting in the direction of higher rates in 2019, one way to potentially manage that risk is to build bond ladders using defined-maturity bond funds, whether domestic or international. A bond ladder is a portfolio of bonds that mature at staggered intervals across a range of maturities. If rates continue to rise, proceeds from each maturing rung of bonds can be reinvested in longer-dated bonds at higher rates. Defined maturity ETFs can help investors build bond ladders quickly and easily, with a range of bonds that can help provide diversification to a portfolio.

“Another way to help mitigate the impact of currency volatility on fixed income portfolios is to stick with US-dollar-denominated international bond portfolios.”

• Focus: Income-generating strategies
• Expert: Jay Jacobs, head of research and strategy at Global X

The Federal Reserve’s continued rate hikes for the past couple of years have put pressure on investors in fixed income. While bonds did see some significant relief late in 2018, as a safety play amid the market selloff, Global X’s Jay Jacobs says a return to bond weakness could be at hand.

“The big focus for investors in the back half of the year has been on market volatility that's been seen across asset classes. Although the conventional wisdom would see those investors moving their attention to the fixed income market, we believe that the steady course of rising rates makes traditional fixed income assets unattractive, necessitating alternative methods to generate income.”

“Preferreds offer investors some of that yield, with added potential tax benefits, and we also see an over-sold (master limited partnership, or MLP) market as particularly attractive, especially as the US continues to become a leading producer of oil and natural gas.

“Another attractive area is covered call strategies that can generate income that is tied to volatility, rather than interest rates, giving it little to no duration.”

• Focus: Commodities
• Expert: BofA Merrill Lynch

2018 largely was a down year for commodities. Oil prices made the most noise with their precipitous drop, but gold – despite a year-end revival – finished the year lower, too. However, BofA sees rosier times ahead for several commodities in 2019.

“The outlook for commodities is modestly positive despite a challenging global macro environment. We forecast Brent and WTI crude oil prices to average $70 and $59 per barrel, respectively in 2019.” Respective 2018 year-end prices of $53.80 and $45.41 would imply potential annual gains of 30.1% and 25.2% at those averages.

“Weather-induced volatility is expected in the near term for U.S. natural gas, as cold weather could propel winter natural gas over $5/MMbtu (million British thermal units), yet we remain bearish longer term on strong supply growth.” Natural gas closed 2018 at $2.94 per MMbtu; thus, BofA’s outlook implies gains of as much as 70% for winter natural gas.

“In metals, we remain cautious about copper because of Chinese downside risk. We forecast gold prices will rise to an average of $1,296 per ounce, but could rally to as high as $1,400, driven by U.S. twin deficits and Chinese stimulus.” That target average price of $1,296 is a mere 1% higher than gold’s 2018 close of $1,281.30, but the high-end projection of $1,400 would represent a more substantial 9% gain for the yellow metal.

• Focus: Gold
• Expert: Will Rhind, CEO of GraniteShares

While stock prices tanked in the final quarter of 2018, gold prices – and the gold investments tethered to them – enjoyed a renaissance. Gold, which sometimes is thought of as a safe haven against rocky markets, shot up from an October low of roughly $1,185 per ounce to above $1,280 per ounce, and Will Rhind, CEO of GraniteShares, sees more potential tailwinds for the yellow metal in 2019.

“Gold prices may be supported by rising U.S. deficits (and national debt), a struggling U.S. stock market and signs of resurging inflation and resolution of trade frictions. In 2018, gold was impacted by the strength of the U.S. dollar (partly caused by trade frictions), rising U.S. interest rates and low U.S. inflation.”

“Moderate and stable U.S. interest rate increases, in the face of a strong U.S. economy, have acted to help strengthen the U.S. dollar and lower gold prices YTD. To the extent higher interest rates slow U.S. economic growth and help move U.S. stock markets lower, gold prices may increase. In addition, if the Federal Reserve Bank moves to a more accommodative monetary policy in light of slowing growth, gold prices are also likely to rise.”

“Lessening of trade frictions between the US and China, in particular, but also the between the US and the EU, will act to increase demand and weaken the U.S. dollar, which would likely benefit gold.”

• Investment Area: Cryptocurrency
• Expert: Eric Ervin, CEO of Blockforce Capital

Blockforce Capital chief Eric Ervin provides an outlook not for the direction of Bitcoin or any other cryptocurrency – but the outlook for investors’ access to this newer asset:

“With every passing year, the probability of a Bitcoin ETF notches higher and higher. In Bitcoin’s 10-year history it’s very likely 2019 will mark the start of Bitcoin ETF trading. With Bitcoin ETFs, we’ll then naturally see other crypto-related ETF offerings emerge.”

Ervin pointed to comments by SEC Chairman Jay Clayton, at CoinDesk Consensus 2018, about things that must be changed for an ETF to be approved. “The prices retail investors are seeing are the prices they should rely on, and free from manipulation - not free from volatility, but free from manipulation,” Clayton said.

Says Ervin, “It is our belief that as more institutions enter the space, there will be more regulation and these valid concerns raised by the SEC will diminish.”

Other things to look for in cryptocurrency investing:

• Crypto-basket apps: “2018 will go down as the year we started seeing one-click options for crypto-basket investing. Casual investors can now invest in a variety of (often market-cap weighted) cryptocurrencies with just one click using well known and respected platforms. We expect the ‘crypto-curious’ market to accelerate in growth during 2019 and the space will need an onramp to investing.”
• Crypto hedge funds: “Despite a market of bears for 2018, there was a huge influx of crypto-related hedge funds, with over 100 funds sprouting up in 2018. 2019 will be the year of weeding out. This will also be due to 2019 being the year of institutional adoption. I expect we’ll see a decrease in the number of a new funds launching and an increase in the number of funds closing. Only the strong survive.”

Since March 2009, U.S. stocks (including dividends) have returned 400%, quintupling in value, and many investors are naturally worried that the fun may end soon. They’re looking for other places to put their money, and two popular choices are oil and gold. In recent years, neither commodity has moved in tandem with the stock market.

Oil has taken a wild ride. A barrel of Brent Crude, the global benchmark, bottomed at about $34 at the end of 2008, soared to $126 in 2012 and fell to $29 in early 2016 before rising to $85 today. The price of an ounce of gold has increased by only about one-third since stocks bounced off their lows of nearly 10 years ago. Gold jumped above $2,000 in 2011, but the metal dropped by nearly half within four years and has since been trying to keep its head above water.

It’s smart to own assets that are uncorrelated—in other words, that move up and down in different, or even opposite, ways. In 2011, for example, Vanguard 500 Index (symbol VFINX), a mutual fund linked to Standard & Poor’s 500-stock index, returned just 2%, but United States Brent Oil (BNO), an exchange-traded fund that mimics the price of a barrel of oil, returned 19.5%. In 2013, the S&P 500 ETF rose 32.2%, while SPDR Gold Shares (GLD), an ETF linked to an ounce of gold, fell 28.3%. Conversely, in 2010, the gold ETF returned 29.3%, and the S&P fund returned 14.9%. As you can see, owning gold or oil—or both—can even out the volatility of a stock portfolio. Is this a good time to buy these commodities? And which one should you buy?

Going their own ways. Gold and oil are not just uncorrelated to stocks, they are uncorrelated to each other, too. Since the end of June 2017, oil has been going up and gold has trended down. Oil has benefited from three developments. First, there’s the continued boom in the global economy. When business is good, more petroleum is needed to power cars and factories, generate electricity, heat homes, and convert into chemicals and fertilizer. Second, production has been constrained because the number of global rigs drilling for petroleum plummeted from 3,736 in February 2014 to 1,405 in May 2016. The most recent (September) rig count is 2,258. Third, the U.S. has imposed tough new sanctions on Iran, keeping much of the oil from the world’s number-five producer off the global market. Like the low rig count, the sanctions reduce supply, and in an environment of rising demand, prices go up.

Now imagine what could go wrong. The number of rigs could continue to rise, differences with Iran could be ironed out (or other countries could defy the U.S. sanctions), or the global economy could slow down. Trade wars could escalate, reducing demand in China and Europe, or, conversely, the U.S. economy could overheat. That would force the Federal Reserve to raise interest rates more aggressively, choking off growth, which would inevitably drive down oil prices.

Kiplinger projects 2018 U.S. growth at 2.9% and inflation at 2.5%—solid but hardly too hot. Still, unemployment is at the lowest level in 49 years, and labor costs may rise significantly—perhaps along with consumer prices, especially with new tariffs and other restrictions on imports.

Gold is another matter. The mythology is that gold is a hedge against inflation and a safe haven in a crisis. In fact, when inflation pushes up interest rates, gold suffers, as has been the case recently. The reason is that gold, unlike most other investments, does not generate income. If the rate on the two-year Treasury note is just 2%, then gold investors aren’t sacrificing much. But should the rate rise to 3% or 4%, the sacrifice increases, and bonds become relatively more attractive.

Nor does history validate the view that gold is shelter from a storm. Gold spiked by about 10% shortly after 9/11 but quickly settled back down. The price plummeted more than 20% during the Great Recession of 2008–09 and hit highs in 2010–12, a period of recovery and global stability. Patterns, however, can change. The most popular safe haven in recent years has been U.S. Treasury bonds, but in the next crisis, American debt may not prove to be as popular.

In addition, no one should under­estimate the unpredictable psychology behind gold prices. After the Great Recession, people who worried about the potential for another major crisis held gold as protection. High confidence levels more recently may have depressed gold prices to bargain levels.

Time to get on the train? Right now, oil looks like a bet for momentum investors, who like to jump onto moving trains, and gold is for contrarians, who would rather board in the station and wait—sometimes for years—before starting to move. I’m a contrarian, and my preference today is for gold. Still, it makes good sense to own both as a way to provide the ballast of uncorrelated assets in your portfolio.

How to buy is another question. I am not a fan of commodities futures markets, where transaction fees are lofty and the temptation of leverage can cause you to lose everything on a single volatile move. With both oil and gold, there are two alternative categories of investments: the stuff itself and the companies that produce and sell it.

For example, the Brent ETF I mentioned earlier links to the price of global oil through a portfolio of futures contracts. United States Oil (USO) is an ETF that does the same but is linked to the price of the U.S. benchmark, West Texas Intermediate crude. Currently, WTI is trading about $10 less than Brent, but it makes little difference which ETF you choose. In both cases, the fees are high for funds that require no judgment from a manager: 0.90% for the Brent ETF and 0.77% for USO. Gold ETFs come with more-reasonable fees: SPDR Gold Shares charges 0.40%, and iShares Gold Trust (IAU), the one I prefer, charges 0.25%.

Or you can buy funds that own shares of businesses. For oil, focus on exploration and production com­panies, which are more exposed to the ups and downs of prices than the huge integrated energy firms, such as ExxonMobil. A good ETF choice is Invesco­ Dynamic Energy Exploration and Production (PXE), whose top assets include EOG Resources (EOG); another good choice is SPDR S&P Oil & Gas Exploration & Production (XOP), with a portfolio that includes as its third-biggest holding California Resources (CRC), a much smaller company that’s focused on one state. For gold, my preferences are Fidelity Select Gold (FSAGX), a mutual fund whose top holding is Newmont Mining (NEM), and iShares Global Gold Miners (RING). This ETF has 15% of assets in Newmont and 12% in Barrick Gold (ABX), its top two holdings.

Because they don’t move in concert with stocks, oil and gold should offer your overall portfolio a smoother ride through any storms ahead. And you can be sure that there will be storms.

Even if you have been an investor for 30 years, you don’t really know about high interest rates.

U.S. interest rates peaked in October 1981, when the 30-year Treasury bond traded at 15%. The dream, when I started investing later that decade, was of “hat-sized yields” of 6%-7%, which didn’t become the norm until the early 1990s.

Today, interest rates are less than half that. Early in 2018, the rate on the 30-year Treasury stood around 2.7%. By mid-February, the yield on that long-term debt had spiked about 15% to around 3.1%, which is roughly where it trades today.

Investors panicked at the time, and higher interest rates still have investors worried. For good reason. After all, higher interest rates make bonds more competitive with some dividend stocks, and perhaps more importantly, they make borrowing more expensive for corporations, eating into the bottom line.

The Federal Reserve has already raised its benchmark rate once this year, is about to do so a second time and is expected to hike interest rates once or even twice more before 2018. Your portfolio could well feel the shockwaves from these actions – though you can minimize the damage by taking a few actions. Here are six techniques suggested by money managers.

You can find steady (albeit modest) income at the very short end of the yield curve.

Right now, major brokers are selling 3-month certificates of deposit that pay interest of about 2%. And the Vanguard Short-Term Bond ETF (BSV) of one- to five-year U.S. government, corporate and international bonds yields 2.8%.

Aash Shah – a senior portfolio manager for Summit Global Investments in Bountiful, Utah – says big investors can build a “ladder” of short-term bonds spanning three and six months, as well as one and two years, held to maturity. When bonds mature, they can be rolled into longer-term instruments, whose rates will have increased.

James Demmert – management partner at Main Street Research, a wealth management firm in Sausalito, California, agrees. As interest rates rise, buy individual bonds with maturities of just one to five years. Bond mutual funds and exchange-traded funds don’t have maturity dates, as bonds do, “and will continue to decline as rates rise.” But proceeds from individual bonds can be reinvested at higher rates.

Kate Warne, investment strategist at Edward Jones in St. Louis, expects the Federal Reserve to raise short-term interest rates quickly if inflation accelerates. “If you have more in short-term bonds, you can reinvest as those bonds mature and benefit as interest rates rise,” she says.

A special type of asset pays investors more automatically as interest rates rise.

Treasury Inflation Protected Securities (TIPS) were first issued in 1997, and are now available at maturities of five, 10 and 30 years. These securities pay income twice a year that rises with inflation and decreases with deflation. Moreover, at maturity, you’re paid the greater of the original principal or the principal adjusted for inflation.

“Remember what a corrosive impact inflation has on wealth,” says Erik Davidson, chief investment officer for Wells Fargo Private Bank in Chicago. “Even at today’s levels, add taxes to inflation and you have to earn 4%-5%” just to break even. TIPS can help maintain a portfolio’s value as rates rise, he says.

If you’re looking for similar flexibility, David Thomas, senior investment management consultant for Equitas Capital in New Orleans, says you can also buy private instruments with floating rates. Such “floating-rate corporates” will benefit if interest rates rise, he says. ETF such as the iShares Floating Rate Bond ETF (FLOT) provide such exposure.

J.J. Feldman, a portfolio manager with Miracle Mile Advisors in Los Angeles, specifically suggests the Guggenheim Floating Rate Strategies (GIFAX) mutual fund, which puts at least 80% of its net assets in floating-rate instruments and has a four-star rating from Morningstar.

Many portfolio managers suggest holding some cash – an emergency fund that lets you take advantage of opportunities, as with the market’s February volatility. Some also value gold.

Graham Summers – president and chief market strategist of Phoenix Capital Research in Alexandria, Virginia, and author of The Everything Bubble – warns that if interest rates really take off, it could create a debt bubble 10 times bigger than the one that caused the Great Recession. If that happens, the best place for you to be, he suggests, is in cash or gold. He wrote for Gold-Eagle that the early February market selloff was stopped only by central bank intervention.

“No one says you must put capital to work,” he says. “Sometimes you just need to protect yourself and wait for the smoke to clear.”

Charles Thorngren – CEO of Pasadena, California-based Noble Gold Investments, which sells gold-backed retirement accounts – says that even with inflation of 2%, 60% of your investment power is lost to inflation during any 30-year career.

“Investing in precious metals ensures portfolio diversification and protects purchasing power when the dollar is weak,” he says. Gold and other precious metals act as a hedge against currency risks. “Currency valuations change over time. Precious metals offset the negative effects.”

In addition to gold, silver, platinum, aluminum and palladium all hold up well when inflation is high, says Jeff Carbone, managing partner for Cornerstone Wealth in Charlotte, North Carolina. “A fund that has a nice diversification of commodities” can be a good hedge against inflation, he suggests.

Dividend stocks, like bonds, deliver regular income to holders. Their advantage? They can grow their payouts over time, and they typically have much more potential for capital gains.

Thomas of Equitas Capital notes that some a few traditional stocks, such as AT&T (T) and Ford (F), currently pay dividends around or above 5% – still significantly better than on offer from U.S. and most corporate investment-grade debt.

But it’s not all about current yield. Clorox (CLX), for instance, yields just 2.7% at the moment on a 96-cent quarterly payout. However, 10 years ago, that dividend was just 40 cents. If you bought at around $57 a decade ago, you’re enjoying a 6.7% yield on your original investment – plus, your asset value has more than doubled. The iShares 7-10 Year Treasury Bond ETF (IEF) fund of medium-term bonds is up just 17% in that time.

Wells Fargo’s Davidson says rising dividends are a great hedge against inflation. “Look for consumer-related stocks that benefit from pricing power” such as Clorox, he says, or those involved in commodities.

“They never raise the coupon of a bond,” Thomas adds. “They may call your bond and try to sell you a lower rate” when interest rates fall. You don’t necessarily have that problem with dividend stocks – though there is the risk of a dividend cut such as what General Electric (GE) implemented in November 2017.

Exchange-traded funds are like mutual funds in that they hold large baskets of assets, such as stocks and bonds. However, unlike mutual funds, they trade on exchanges and can be bought and sold just like stocks, with prices that change throughout the day. And several financial advisors love ETFs as a way to execute the previously discussed strategies without buying individual stocks or bonds.

Michael Windle – a financial advisor with C. Curtis Financial Group in Plymouth, Michigan – says ETFs “can be a great way to get the diversity that you see in a mutual fund with more liquidity and much lower fees.”

“In a market such as we are seeing now, ETFs are going to be a great option for many investors and can help limit some downside potential while capturing growth in the sectors and asset classes that are performing,” he says.

Shah, of Summit Global Investments, says commodity ETFs such as the Invesco DB Commodity Index Tracking Fund (DBC) provide diversified exposure to commodities, and that “rising inflation is typically good for commodity ETFs.”

You can also invest in short-term bond funds such as the aforementioned BSV or the iShares 1-3 Year Treasury Bond ETF (SHY). Looking for dividend growth? Consider ETFs such as the Vanguard Dividend Appreciation ETF (VIG) or the ProShares S&P 500 Dividend Aristocrats ETF (NOBL) – the latter of which holds companies that have increased their dividends each year for at least a quarter of a century.

Just one warning: Carbone of Cornerstone Wealth agrees that “ETFs control costs,” but they don’t pick-and-choose. They invest across an asset class, buying a group’s dogs as well as its stars.

The market hasn’t fully recovered from the February selloff, and in fact technically remains in correction territory. However, the major indices have clawed back at least some of those losses and are even sporting modest gains for the year-to-date.

That said, the economic picture remains mixed. Most of the analysts interviewed expected only modest increases in interest rates for the rest of 2018. The U.S. and several trading partners are announcing tariffs and retaliatory tariffs as the world seemingly crawls toward an extended trade war. Oil is on the rise, but unused global capacity is at least helping to keep energy in check.

For that reason, the most common advice by advisers was to stay diversified – in other words, don’t put all your eggs in one basket. Hold baskets of stocks, bonds, commodities and even a little cash – don’t go all-in on any one thing.

That doesn’t mean you should target a perfect balance. A few overweights make sense.

Craig Birk – executive vice president of Portfolio Management at Personal Capital, a San Francisco investment advisor – says adjustments to make when interest rates are rising may include adding banks and brokers, which benefit from higher interest rates, and cutting out lower-yielding dividend stocks that act as a proxy for bonds.

Brad McMillan – chief investment officer for Commonwealth Financial Network in Waltham, Massachusetts – reminds investors that numerous forces will continue to press on rates from both sides. For instance, as Baby Boomers age, “more capital will move to fixed income,” he says. “The supply of capital will get larger, holding interest rates down … (meanwhile) the government will borrow hundreds of millions of dollars, driving rates higher.”

The result will be balance. A balanced portfolio is the best way to capture it.

I've been asked about Bitcoin a lot lately. I haven't written anything about it because I find myself in an uncomfortable place in agreeing with the mainstream media: It's a bubble. Bitcoin started out as what I'd call "Millennial gold" — the young (digital) generation looked at it as their gold substitute.

Bitcoin is really two things: a blockchain technology and a (perceived) currency. The blockchain element of Bitcoin may have enormous future applications: It may be used for electronic contracts, voting, money transfers — and the list goes on. But there is a very important misconception about Bitcoin. Ownership of Bitcoin doesn’t give you ownership of the technology. I, without owning a single bitcoin, own as much Bitcoin technology as someone who owns a million bitcoins; that is, exactly none. It’s just like when you have $1,000 on a Visa debit card: That $1,000 doesn’t give you part ownership of the Visa network unless you actually own some Visa stock.

Owning Bitcoin gives you a right to … what, actually? Digital bits?

Wall Street’s Wrong about What It’s Worth

A client jokingly told me that his biggest gripe with me in 2016 and 2017 was that I didn’t buy him any Bitcoin. I told him not so jokingly that if I bought him Bitcoin, he’d be right to fire me. Maybe I’m a dinosaur; but, like gold, Bitcoin is impossible to value. What is it worth? It has no cash flows. Is a coin worth $2, $200 or $20,000? But Wall Street’s price model sounds like this: “If only X percent of the global population buys Y amount of Bitcoin, then due to its scarcity, it will be worth Z.” On the surface, these types of models bring apparent rationality and an almost businesslike valuation to an asset that has no inherent value. But the simple truth is this: Bitcoin is un-valuable.

In 1997, when Coke’s valuation started to rival some dot-coms, bulls used this math: “The average consumer of Coke in developed markets drinks 296 ounces of Coke a year. These markets represent only 20% of the global population.” And then the punchline: “Can you imagine what Coke’s sales would be if only X% of the rest of the world consumed 296 ounces of Coke a year?” Somehow, the rest of the world still doesn’t consume 296 ounces of Coke. Twenty years later, Coke’s stock price is not far from where it was then — but on the way it declined 60% and stayed there for a decade. Coke, however, was a real company with a real product, real sales, a real brand and real tangible, dividend-producing cash flows.

The Foolish Reason People Buy Bitcoin

If investors cannot value an asset, they cannot be rational. With Bitcoin at over $10,000 today — at its highest, in December it was almost $20,000 — it is crystal clear to me, with the benefit of hindsight, that I should have bought Bitcoin at 28 cents. But you only get hindsight in hindsight.

Let’s mentally (only mentally) buy Bitcoin today at $11,000. If it goes up 5% a day and gets to $110,000 — you don’t need rationality. Just buy and gloat. But what do you do if the price goes down to $8,000? You’ll probably say, “No big deal, I believe in cryptocurrencies.” What if it then goes to $5,500? Half of your hard-earned money is gone. Do you buy more? Trust me, at that point the celebratory articles you are reading today will have vanished. The awesome stories of a plumber becoming an overnight millionaire with the help of Bitcoin will not be gracing the social media. The moral support — which is really peer pressure — that drives you to own Bitcoin will be gone, too.

Then you’ll be reading stories about suckers who bought it at what — in hindsight — turned out to be the all-time high. And then Bitcoin will tumble to $2,000 and then to $100. Since you have no idea what this crypto thing is worth, there is no center of gravity to guide you or anyone else to make rational decisions. With Coke or another real business that generates actual cash flows, we can at least have an intelligent conversation about what the company is worth. We can’t have one with Bitcoin.

People who are buying Bitcoin today are doing it for one simple reason: FOMO — fear of missing out. Bitcoin is priced today at $10,000 because the fool who bought it for $10,000 is hoping that there is another greater fool who will pay $12,000 for it tomorrow. This game of greater fools is not new. The Dutch played it with tulips in the 1600s. It did not end well. Americans took the game to a new level with dot-coms in the late 1990s. And now Millennials and Millennial-wannabes are playing it with Bitcoin and few hundred other competing cryptocurrencies.

But What Makes Dollars or Other Currencies Real?

The counterargument to everything I have said so far is that those dollar bills you have in your wallet or that digitally reside in your bank account are as fictional as Bitcoin. True. Currencies, like most things in our lives, are stories that we all have bought into. Of course, society and, even more important, governments have agreed that these fiat currencies are going to be the means of exchange. Also, taxation by the government turns the dollar bill “story” into a very physical reality: If you don’t pay taxes in dollars, you go to jail. (The U.S. government will not accept Bitcoins, gold, chunks of granite or even British pounds.)

And finally, governments tend to look at Bitcoin and other cryptocurrencies as a threat to their existence. First, governments are very particular about their monopolistic right to control and print currencies. No less important, the anonymity of cryptocurrencies makes them a heaven for tax avoiders — and governments don’t like that. The Chinese government outlawed cryptocurrencies in September 2017. Western governments might not be far behind.

If you think outlawing a competitor currency can happen only in a dictatorial regime, think again. This can and did happen in a democracy like the U.S. With Executive Order 6102 in 1933, President Franklin D. Roosevelt made it illegal for the U.S. population to hoard gold coin, gold bullion or gold certificates.

However, nothing I have written above will matter until it does. Bitcoin may go up to $110,000 by the end of the 2018 before it comes down to … earth. That is how bubbles work. Just because I called it a bubble doesn’t mean it will automatically pop.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The strangest of years will be drawing to a close in just a few weeks. It’s already time to start mapping out your financial plans for 2018. So, what should we expect in the new year? And importantly, what are the best investments you can make heading into it?

Let’s start with what we know, or at least with what we think we know.

The Federal Reserve is planning on raising interest rates three or four times next year. Take any forecasts with a grain of salt, but it’s safe to say there will be at least a little monetary tightening and that short-term rates will go a little higher. This by no means guarantees market turbulence, but it does create headwinds for further gains. Just remember: The Fed is raising rates because the economy is strong and getting stronger. Unemployment is near multi-decade lows, and even long-dormant European and emerging-market economies are showing signs of life. We’ll be starting the new year with very strong economic momentum.

We also know the stock market will start 2018 in expensive territory. The S&P 500 currently sports a Shiller price-to-earnings ratio of 32, nearly double the long-term average. Expensive markets regularly get more expensive, but at this stage in the cycle, you must be more careful about where you invest.

Lastly, investors have gotten used to ignoring political and macro risk, from bombastic comments from President Donald Trump to the threat of war with North Korea. But that complacency may or may not last. Suffice it to say, 2018 should be interesting.

Today, I’m going to recommend five of the best investments you should make in 2018. This is not another hot list of stocks, but instead a full strategy for the year ahead. However, some of these require significant planning, so you’ll want to take the first steps today.

Data is as of Dec. 6, 2017. Click on ticker-symbol links in each slide for current share prices and more.

The general consensus out there is that tax shelters are the domain of the uber-rich. But while wealth does have its perks, the truth is that history’s greatest tax shelter is readily available to regular, everyday investors.

I’m talking about the humble 401(k).

I know, I know. The average 401(k) plan is a collection of mediocre mutual funds loaded with high fees. Be that as it may, it's still a shockingly good place to staff your savings.

Let’s assume you’re in the 25% tax bracket. For every dollar you invest in your 401(k), that’s an extra 25% of your investment that’s allowed to compound, which can be a powerful thing when you’re talking about decades of tax-free treatment. And if your employer matches your contribution, you’re essentially earning an extra 100% on those funds.

The IRS is raising the annual contribution limits on 401(k) plans to $18,500, which does not include employer matching. And if you are 50 or older, you can contribute an additional $6,000 per year, for a total of $24,500.

Do yourself a favor: Try to max out your 401(k) plan in 2018. If you’re nervous about the market, no problem – you can invest your account balance in a money market or stable value fund. You’ll still benefit from the tax break and any employer matching. It likely will be the best decision you make all year.

The stock market is the biggest wealth creation machine in human history, and that’s not hyperbole. Stocks give you a little piece of the U.S. economy. So if you’re bullish on America’s long-term future, you’re bullish on the stock market.

But while the stock market might be the best place to park your money over an investing lifetime, it’s not necessarily the best home for it at all times. Consider that from 1968 to 1981, the Dow Jones Industrial Average was flat, not earning a single red cent. In inflation-adjusted terms, they actually lost money. But commodities and gold performed fantastically in those years. From 1971 to 1980, the price of an ounce of gold exploded by more than 2,000%.

The lesson here is not necessarily to buy gold but rather to diversify. Have some portion of your wealth in alternatives that aren’t tightly correlated to the market. That can include anything from precious metals and artwork to rental real estate and even actively managed strategies that zig when the market zags.

“The inclusion of an alternative investment in a portfolio is a form of insurance,” says Endre Dobozy, manager of FTM Limited, a firm specializing in low-volatility alternative investments. “As the global financial crisis illustrated, equites remain diversified until they aren’t. By including an alternate investment in your portfolio that has little to no correlation to the market, you are able to offset a portion of any market losses and reduce the overall drawdown of your portfolio.”

The alternatives space is less regulated than traditional asset classes such as stocks and bonds, so you must do a little extra due diligence here. And never invest in something you don’t understand. But adding alternatives to your portfolio, if done right, can be that magic elixir of higher returns with less risk.

When I was a kid fresh out of college, my mother’s financial advisor, Daniel, gave me some remarkably good life advice that I was too young and immature to take. He told me that the markets were a fine place to park your excess savings, but that the biggest investment I should make was in my own career. Go to work, better yourself and dedicate your energy to your job, because that is what actually pays your bills.

This was the late 1990s, so that was the last thing I wanted to hear. Everyone was getting rich quick trading tech stocks, and I was convinced I would be a retired millionaire by the age of 25. The 2000-02 bear market taught me a little humility, however, and I realized that if I wanted to make a decent living, I’d have to roll up my sleeves and go to work.

I’m glad I experienced a good bear market when I did because it forced me to do a better job of prioritizing. I became more focused, and 20 years later, I’m in a much better place in life because of those changes I made then.

So again, invest your savings in stocks, Bitcoin or whatever else strikes your fancy. But invest your time and energy in your career. And this doesn’t mean accepting life as a corporate automaton. With the skills, experience and contacts you reap from your job, you can build the foundations to start your own business and better control your financial destiny.

But it all starts with going to work in the morning.

When I was 10 years old, I believed myself to be an “expert” on baseball cards. I had my library of Beckett Baseball Card Monthly magazines and plenty of sweat equity from haggling and trading with my friends. And I invested my entire modest life savings in baseball cards believing fully that I would one day be a wealthy man.

It didn’t quite work out that way. In the late 1980s and early 1990s, baseball cards were a bubble, but it wasn’t just freckle-faced boys like me bidding up prices. Grown men who should have known better would spend thousands of dollars on mass-produced cardboard pictures of other men in baseball uniforms. Eventually, this ridiculous bubble burst. By the time the dust settled, most of the cards weren’t worth the paper they were printed on.

As I write this, Bitcoin just exploded past $14,000. As recently as last year, you still could buy it for less than $400.

Who am I to argue with that kind of growth? The bull market in Bitcoin and other crypto currencies seems to be creating new millionaires every day. If you happen to be one of those millionaires, congratulations on making a monster trade. But if you’re on the outside looking in, be cautious. Bitcoin is starting to show all the classic signs of a bubble. And as I discovered as a child, faddish investments like these are notoriously hard to accurately value.

According to Rodney Johnson, co-founder of economic forecasting firm Dent Research: “If a company or commodity has no assets, no returns and no backing, what’s it worth? In a word, ‘priceless.’ Some will see zero value, others infinite value.”

If you still want to dabble in Bitcoin, go for it, but don’t invest more than you can afford to lose. “I wouldn’t risk any significant portion of my wealth on such a thing,” Johnson says. “But I might put a few dollars in, like buying an investment lottery ticket.”

Sometimes collectibles do fantastically well. But when they do, it usually is because the buyer has specialized knowledge in that field and is a true connoisseur. I can’t credibly call myself a Bitcoin expert, so I won’t invest any real money in it.

So, I’ve covered a couple a couple broad strategies and even the best investments you can make in yourself, but I haven’t yet said a word about what stocks to buy.

There’s a reason for that. While stock picking matters, it always should be secondary to broader allocation and savings decisions. But once you have the cash ready to invest, you still need to do something with it. And in 2018, I suggest you focus on value stocks.

That might seem like a controversial statement these days. After all, growth stocks have absolutely beaten the pants off value stocks in recent years, and in 2017 in particular. Barron’s crunched the numbers and found that through mid-October, the Russell 1000 Growth Index had outperformed the Russell 1000 Value Index roughly 22%-9%. Translation: Growth-stock returns have more than doubled value stock returns this year.

But relative outperformance tends to be cyclical. Think back to the 1990s tech bubble. In those years, growth stocks utterly obliterated value stocks, too. Even the venerable Warren Buffett got his tail kicked. The old man didn’t “get” the new economy.

Well, what happened next was predictable. While the tech bust pulled the major stock indices into bear market territory, dividend-paying value stocks enjoyed a fantastic run. 2000-01 was a fantastic time to be a value investor.

I can’t guarantee that value will outperform growth in 2018, but I certainly believe that, in the pendulum swings of the markets, value stocks are poised to outperform over the next five years or more. So, make sure you have some good value stocks or funds in your portfolio. In particular, I really like automaker stocks such as Ford (F, $12.53) and General Motors (GM, $42.02), and I think there is a lot of value to be found in energy infrastructure stocks as well.

Charles Lewis Sizemore was long F and GM as of this writing.

With so much going on in the world these days, it’s easy to overlook the developments in the precious metal markets. Even as governments continue to devalue currencies, central banks across the globe have been accumulating gold. I think investors should start considering a small allocation in precious metals as well.

I realize that probably doesn’t sit well with many other advisers, who regard gold and silver as nothing more than shiny metal that sits in a vault, collecting dust and earning no interest or dividends.

But investors, in general, need to protect themselves from these currency devaluations, which will likely lead to inflation in the future. Even if we are currently in a deflationary environment, central banks continue to pursue inflation. I think they will, at some point be successful in achieving this goal. As such, a small allocation to precious metals could protect the purchasing power of your savings and insure your overall wealth.

How much you should invest in precious metals, of course, depends on your portfolio and other factors. A good baseline for any investor interested in maintaining a small allocation in precious metals would be to keep a 10-to-1 ratio in mind. For these investors, every $10 you have in bonds or annuities should be matched by $1 invested in precious metals.

In the current global economic environment, precious metals look like a good short term-investment. Simply put, precious metals may be a good hedge for investors facing the myriad problems associated with the present economic environment, especially currency devaluation.

A diversified portfolio of tangible assets such as gold or silver should equal about 5% (and sometimes more) of an investor’s portfolio. That's a prudent asset-diversification strategy at any time. And in today's uncertain political and economic environment, there are many (and very sound) reasons to consider investing in precious metals to diversify your holdings.

Keep in mind, precious metals are not like other asset allocations. For example, putting money in precious metals is very different than investing in the stock market. Even the word “investment" seems a bit out of place here. Gold doesn’t pay dividends; gold doesn’t pay interest. It’s a metal that has historically been used as money. Throughout the world, gold continues to be recognized as money. As such, it offers long-term protection as our currency is devalued for investors looking to be able to maintain their lifestyles 10 to 15 years down the road.

I think silver is an even better option than gold for investors looking to diversify. Right now, the silver-to-gold price ratio is fairly high. Historically, that ratio has been 16-to-1; meaning 16 ounces of silver are valued the same as 1 ounce of gold. Right now, the ratio is far higher: 65 to 70 ounces of silver have the same dollar value as every ounce of gold. If history repeats itself, we should see that 16-to-1 ratio of silver to gold return in the near future. As such, I see far more upside with silver than I do with gold.

Allocating a portion of your assets in silver, at current prices, could offer investors and retirees one of the single best long-term investments available today. Along with gold, it is recognized as a store of value. What is not so well known is that, while gold has demonstrated a solid trend of price appreciation since 2001, more than quintupling in price, the price of silver has in the past outperformed gold.

Precious metals have been a safe haven in times of war, political strife and uncertainty. With the potential for rising inflation and the continued devaluation of paper currency as likely possibilities, I think it’s a good time to consider precious metals for your retirement portfolio.

The safest way to do that may be to own the metal outright. You can also consider gold and silver mining company’s such as Goldcorp (GG), Barrick Gold (ABX) and Newmont Mining (NEM) to name a few. For silver, consider First Majestic (AG), Silver Wheaton Corp. (SLW) and Pan American Silver Corp. (PAAS).

Kevin Derby contributed to this article.

Investment Advisory Services offered through Brookstone Capital Management LLC an SEC Registered Investment Adviser.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Index funds are all the rage nowadays—and why not? Over the past 10 years, fewer than one-third of actively managed U.S. stock funds beat their benchmark indexes. But if you want to find funds that, on average, beat their benchmarks, one good place to turn to is Morningstar, the Chicago-based investment research outfit.

Five years ago, Morningstar launched its Morningstar Medalist ratings. The firm’s analysts pick their favorite funds by looking at both quantitative and qualitative factors, then divide their top picks into gold, silver and bronze medalists. The analysts have the most confidence in gold-rated funds, the second most confidence in silver and the third most confidence in bronze.

Over the past five years, a majority of the medalists have beaten their benchmark indexes. Nearly 60% of gold-medalist funds outperformed their benchmark, 54% of silver funds beat their index, and 53% of bronze funds came out ahead.

How do Morningstar analysts pick funds that they think will do well? They start by looking for low costs and strong returns, adjusted for market volatility. But the analysts also include some data points that are difficult for individual investors to evaluate on their own.

Morningstar employs more than 100 fund analysts. They visit fund companies and get to know the managers, research analysts and executives through continuing interviews by phone and in person. “We’ve covered most of our medalists for many years,” says Russ Kinnel, Morningstar’s director of manager research.

Among the questions the analysts endeavor to answer: Do the fund’s managers have a competitive advantage that enables them to execute a sound strategy consistently over time? How talented is the manager or managers? How good are the analysts who research the securities owned by the fund? What kind of company runs the fund? Is its corporate culture one of salesmanship or stewardship?

Morningstar’s fund analysts present a tentative rating to a committee for approval. The committee then discusses the rating and ensures that all the needed work has been done before the company issues a final rating.

Only 350 funds currently have five-year records as medalists. Before it came out with its medalist rankings, Morningstar singled out its favorite funds as “analyst picks.” The methodology was slightly different, but it was also successful, more often than not, in picking market-beating funds.

Below are descriptions of some of my favorite gold-rated funds. Returns are as of March 3.

AMG Yacktman Fund Class I (YACKX) lost founding manager Don Yacktman to retirement last year, although he remains an adviser. But Yacktman’s son Stephen and comanager Jason Subotky have been ably doing most of the day-to-day work on the fund for many years. The fund looks for high-quality companies with stocks that sell at depressed prices. Nearly one-third of the fund’s holdings are low-risk companies that make everyday necessities. And 20% of the fund is in cash. That risk-averse positioning has hurt relative returns—the fund has lagged Standard & Poor’s 500-stock index over the past five years. But I believe patient investors will be rewarded. This fund is a keeper.

American Funds International Growth and Income F-1 (IGIFX), like all American funds, is available through several online brokerages, including Fidelity and Schwab, without an initial sales charge. At $11 billion in assets, this is one of the smallest, and therefore most nimble, of the firm’s funds—one of the reasons I like it. Despite the fund’s name, its yield is only 2.3%. The four managers are each responsible individually for a portion of the portfolio.

Dodge & Cox Stock (DODGX), a member of the Kiplinger 25, is a venerable, low-cost, conservative, large-company fund with a focus on bargain-priced stocks. The fund trailed the Russell 100 Value index for 2 1/2 years until the second half of 2016, and it fared even worse against the S&P 500. But it has since returned to its winning ways. The fund buys stocks of companies facing temporary difficulties, then holds on patiently.

Oakmark Fund (OAKMX) has profited recently from a 35% stake in financials. The sector rose 22% in 2016. Veteran comanagers Bill Nygren and Kevin Grant often find value in places others don’t. The fund’s long-term record is superb. Over the past 10 years it returned an annualized 9.2%—an average of 1.3 percentage points a year better than the S&P 500.

T. Rowe Price Real Estate (TRREX) has been managed capably since its inception in 1997 by David Lee. Lee and his team look for well-managed real estate investment trusts that are likely to keep growing, with shares that trade below the net asset value of the underlying properties. Lee is incredibly patient; turnover is less than 10% annually, which means that in the course of a year, the fund changes fewer than one in 10 holdings.

The real trick with actively managed funds, in my view, isn’t so much picking good funds initially (although that’s not easy). The hardest part is sticking with active funds during the inevitable years when they lag their benchmarks. Even the best of funds will go through two-year or three-year periods when they trail their indexes. Holding on and not selling can be incredibly difficult—particularly if a fund lags by a lot. Owning a fund with a Morningstar gold rating can help you remain patient during the bad times.

Steve Goldberg is an investment adviser in the Washington, D.C., area.

Last year, during a client coaching event, I asked participants to write down on index cards what was keeping them up at night.

When I collected them, the top three answers were:

1. ISIS;
2. a cyber attack on the U.S. power grid; and
3. the deficit.

These are, of course, big problems over which these people have no control. But we could, and did, talk about how national and world affairs affect their financial affairs, and we discussed how they could adjust their planning accordingly.

As a financial coach as opposed to a more traditional financial adviser, sure, my focus is still on helping my clients accumulate wealth and to preserve and protect their assets from market losses. But I also talk to people about broader issues—their hopes and concerns about money and the world in general—and it actually helps to take the emotion out of planning.

In my quarterly coaching events and monthly public seminars I get a chance to talk about the things people shouldn't get alarmed about just because they pop up during the 24-hour news cycle. And if we can, we set the record straight on the "facts" they pick up from a variety of sources, including friends or on Facebook.

For example, I'll ask, "Who owns most of our country's debt?" The most popular answer is China. But in reality, the biggest holders of U.S. debt are the Social Security trust funds and other federal government accounts, as well as the Federal Reserve System. China owns less than 8% of our debt.

We'll talk about the election, and which party is better for Wall Street. I tell them I believe that the market is bigger than the presidency, that Wall Street likes bipartisanship and checks and balances. Yes, right now we're seeing some volatility because the markets don't like uncertainty. But after things settle down, so will Standard & Poor's 500-stock index. But it's also important to diversify—and we talk about how people can fall short sometimes by investing too heavily in just one or two asset classes.

Another popular topic is gold because in temperamental times, when the market goes down, you'll see a lot of commercials touting this precious metal as a safe haven, a cure for everything. People wonder if they should change their financial plan and invest more in gold. But that market is as subject to speculation and volatility as other markets. At one of our seminars, we asked, "Gold: What is it good for?" The answer: Gold is good for jewelry.

Of course, inflation is always a good topic. Right now, interest rates are low and paying at the pump isn't that painful. People just don't see inflation coming. But I'll ask: Have you noticed that cereal boxes are getting smaller? I've enjoyed Clif Bars for as long as I can remember, and they are definitely getting smaller! Inflation is there; it's just harder to see.

Lastly, not everyone has a pension anymore—those days are over! How do retirees produce income off of their assets during these volatile times? During the accumulation phase of life, pre-retirees are contributing to their 401(k)s, IRAs and other retirement accounts.

Once you retire, you have entered what I like to call the harvesting phase. This is when you should consider enlisting the help of a financial adviser or coach. Increasingly, people are retired for almost as long as they worked. So it isn't just about what you make; it's also about what you don't lose. People are losing their hard-earned savings in ways they don't even realize. I find that investors are often oblivious to all the hidden fees in their accounts, and they fail to recognize the threat inflation has on their future spending. With the odds in your favor for a long life, it's important to have a financial coach help create an income plan that you don't outlive.

You should strive to alleviate concerns about how world affairs might affect financial affairs by focusing on the things you can do something about. With a financial coach on your side who can help take the emotion out of investing and create a customized retirement income plan, you, too, can get on the path toward financial independence!

Alfie Tounjian is a Certified Financial Planner™, an Investment Adviser Representative and founder and president of Advantage Retirement Group and Tounjian Advisory Group LLC. He is also a licensed insurance professional.

Investment advisory services offered through Tounjian Advisory Group LLC, a Registered Investment Adviser.

Kim Franke-Folstad contributed to this article.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

It's been a typical spring. The stock market has been gyrating (sell in May and go away), a contentious election cycle is just heating up, Europe is still a mess, and then there is the Middle East. And just like mosquitoes, the gold bugs are out in full force.

"Avoid being a victim of the next crisis, and protect yourself with gold," the gold bugs love to say. Because as the "only" store of true value, owning gold is the best way to protect yourself from the ravages of the next crisis, right?

Not so fast. The world is full of worries; same as it ever was. I'm not so sure that we are in any bigger or more imminent danger than we always seem to be in. Even if the next financial/economic/energy/global unrest crisis is inevitable, it is no more imminent today than it was 10 years ago. The world only seems scarier.

But with the concession that some formidable crisis is inevitable, what it the best way to prepare?

Investing is about comparative value. You have X dollars to invest. What alternatives bring the most value? Let's test gold. Is the glittery stuff really the best hedge against a crisis?

For this comparison, let's assume that you can buy all the gold in the world, versus something else. Warren Buffett offered a similar analysis in his 2011 annual letter to shareholders. At that time, he calculated that all the gold ever mined from the earth (currently about 171,000 tonnes) if melted together would form a cube that would roughly fit inside a baseball diamond. And it could all be yours for just $6.577 trillion! Tempting.

But consider some alternatives. Instead, let's say money was no object, and you could buy (as in the entire company): Amgen Inc (symbol AMGN), Merck (MRK), Procter & Gamble (PG) and Johnson & Johnson (JNJ). Why? Because no matter what crisis we may face, we will all still want medicine, toothpaste, diapers and toilet paper.

And why stop there? How about Verizon (VZ) and Apple (AAPL) because smartphone texting and tweeting will always be something to do; General Electric (GE) and Exxon Mobil (XOM) because oil is oil and big machines need oil to run; Microsoft (MSFT), Berkshire Hathaway (BRK.A) and International Business Machines (IBM) because who wouldn't want Bill Gates, Warren Buffett and Watson (IBM's artificial intelligence) working for them?; Amazon (AMZN) because people will always be buying stuff; Wells Fargo & Co. (WFC) because the guy that bought the giant gold cube will need to monetize it somehow; and Anheuser-Busch Inbev (BUD) because… well, if we truly face Armageddon, we'll all need a beer!

Okay; you might not be impressed and still opt for the gold. But here's my point. Based on their most recent dividend payments, if you owned each of these companies, they would be yielding an extra $97.643 billion per year in dividends! Your gold cube? It just sits there, doing nothing. It doesn't pay dividends, and it doesn't provide any real value (no beer, no toilet paper). That is called opportunity cost. By buying the gold cube, you forgo the opportunity to collect $97 billion a year between now and Armageddon.

Still not convinced which way to go? In addition to owning those fine companies, let's say you would have enough money left over to also buy about 385 million acres of farm land. If we faced a true global catastrophe, you could provide the world with 150 bushels of corn and 40 bushels of soy beans per acre per year. If things were to go really wrong, I'm thinking the dude with the gold cube would deliver it to you for just a few thousand of those acres.

What's this mean to someone without $6.577 trillion to invest, but maybe wants to put 10% or so of their savings into gold bars and coins? It's this: Gold comes with a huge opportunity cost. It sits there—sometimes for very long periods of time without doing anything. Gold hit $400 an ounce in November of 1979. It didn't cross the $400 threshhold and stay higher until August 2004. That's 25 years of lost opportunity and missed dividends. Sure, gold more than tripled in value from 2004 through 2011. But then, it dropped 40% until a recent bottom in November of last year. (It's now trading around $1,300.) Gold has hardly been a "store of value" over the years.

That's not to say gold is never a valid investment. But as a strategy, blindly buying and holding the metal doesn't make any more sense than blindly buying and holding any investment. Gold sellers will argue against buying paper gold such as the stocks of gold miners or an ETF such as GLD that buys actual gold to back its shares. You need the real stuff, they argue. But paper gold has one real advantage—it's very liquid. If we do have another financial crisis that drives the price of gold back to or above $1,800 an ounce, with GLD shares you can sell before suffering the subsequent post crisis drop.

Gold mining companies, such has Newmont Mining (NEM), benefit exponentially from an increase in the price of gold. Costs are fixed, so every incremental change in the price of bullion drops directly to the miners' bottom line. Shares of NEM have roughly doubled this year.

In other words, gold is a trade. Perhaps a nice wedding or anniversary present. It's not an investment.

Disclaimer: 401 Advisor, LLC is long the gold ETF (GLD) in our growth portfolios.

Bill DeShurko started in the financial services industry in 1987. He is the owner of 401 Advisor, LLC, a Registered Investment Advisor.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

After more than three years in the dumps, gold is once again glittering. The price of gold bullion has surged from $1,049 an ounce in midDecember to $1,208 an ounce today, a jump of 15%. Market Vectors Gold Miners ETF (symbol GDX, $18.53), an exchange-traded fund that tracks an index of 36 mining stocks, has zoomed 49% since January 19. (Prices and returns are as of February 22.)

Gold has benefited as turbulence in the stock market and parts of the bond markets sends investors scurrying for safe havens. Also contributing to gold’s revival is recent weakness in the U.S. dollar. Because gold is priced in dollars, its price rises when the value of the greenback falls (although it is possible for gold and the dollar to move in tandem, as happened in 2008, when investors flocked to both gold and dollars during the financial crisis).

The dollar, in turn, has been struggling lately over growing speculation that the Federal Reserve will not be able to raise short-term interest rates as much as it would like and might, in fact, have to resort to negative interest rates, as central banks in Europe and Japan have done.

Fed Chair Janet Yellen discussed negative interest rates during congressional testimony on February 10. She said that although the Fed doesn’t currently see a need to take rates below zero, such a move might be useful to keep in its arsenal. The price of gold jumped $51 an ounce the day after her comments. “The fact that the Fed is now openly discussing negative interest rates has made a lot of people think, Why do I need to keep my money in a bank?” says John Hathaway, comanager of the Tocqueville Gold Fund (TGLDX).

George Milling-Stanley, head of gold strategy for State Street Global Advisors, says that gold should be worth $1,250 to $1,350 per ounce, given dynamics in interest rates and the stock market, and given current rates of production and consumption of gold. A move to $1,350 would represent a 10% jump from the current level, but Milling-Stanley adds that the price could also jump much further if momentum-following investors pile into gold. That was what happened from 2010 to 2011, he says, when the price of gold popped from around $1,100 per ounce to nearly $1,900 per ounce.

If you want to ride the golden tide, you have several options. You can make a bet directly on the price of gold by buying one of the exchange-traded products that invest in bullion. The two biggest are SPDR Gold Shares (GLD, $115.49) and iShares Gold Trust (IAU, $11.65). We slightly prefer the latter because of its lower expense ratio, 0.25%, compared with 0.40% for the SPDR fund.

You’ll find bigger opportunities—and bigger risks—in stocks of gold-mining companies. Tom Winmill, manager of the Midas Fund (MIDSX), says that the way to play a gold bull market is to buy mining companies with high cost structures. If a company spends $1,225 to produce one ounce of gold and that ounce of gold sells for $1,230, then the company only nets $5 per ounce, he explains. But when the price of gold rises to $1,350, profits pop to $125 per ounce, a 25-fold increase. Two companies that Winmill says fit the bill are Yamana Gold (AUY, $2.66) and Detour Gold (DRGDF, $15.33). Yamana produces gold in South America, but because the company also produces copper it isn’t a pure play on the gold rise. Detour conducts open-pit mining in Canada. It extracts thousands of tons of rocks and earth, resulting in just a few grams of gold per ton processed.

The safer, though far from safe, way to invest in mining stocks is through a fund. Tocqueville Gold is a fine option, although you’re unlikely to invest if you pay too much attention to its record. It lost money in each of the past five calendar years, including a horrific 48% decline in 2013. That said, its five-year annualized loss of 18.3% through February 19 puts it in the top 32% of its category. Over the past 15 years, Toqueville returned an annualized 10.6%, crushing the average precious-metal stock fund by an average of 8.2 percentage points per year and Standard & Poor’s 500-stock index by an average of 5.5 points per year. At the end of 2015, the fund held 15% of the portfolio in actual bullion and the rest in mining stocks. Three Canadian companies occupied the top three spots: Detour Gold, Franco-Nevada Corp. (FNV, $57.70) and Agnico Eagle Mines (AEM, $34.65). The fund’s annual expense ratio is 1.43%.

Market Vectors Gold Miners is the best choice if you prefer an ETF. As with the Toqueville fund, the ETF lost money in every calendar year from 2011 through 2015, so buying it will require a leap of faith, as well as confidence that the rally will continue. Its top three holdings are Barrick Gold (ABX, $12.82), Newmont Mining (NEM, $25.12) and Goldcorp (GG, $15.12). Newmont is based in the U.S., the other two in Canada. Annual expenses are 0.53%

Let me put my prejudices on the table: I loathe gold. Not as jewelry but as an investment. In fact, I loathe all commodities. The main reason is that many years ago I fell under the spell of an exceptionally smart and likable economist named Julian Simon. In 1980, Simon proposed a wager with Stanford biologist Paul Ehrlich, author of The Population Bomb, a popular book that asserted that because of global population growth, demand for natural resources would soon outstrip supply.

Simon essentially bet Ehrlich that the total price of a basket of commodities that included chromium, copper, nickel, tin and tungsten would be lower in ten years. Simon, who died in 1998, won easily; the price of all five commodities dropped.

What I learned from Simon is that commodity prices don’t rise with increased demand from a growing population because of the wonders of the human imagination. We find ways to use finite resources more efficiently through recycling; we discover new methods to get more resources out of the ground (through fracking, for example); and we find substitutes (for example, plastic for iron, PVC for copper, electronic images on a screen for paper).

But isn’t gold different? It is frequently called a “store of value,” and it has been used through the ages as currency. Certainly, the yellow metal has a mystique. But when all is said and done, it is just another commodity, subject to the same forces that made Simon confident he would win the bet. For example, for currency we’ve substituted silver and copper, cheap alloys, and ultimately paper. And we are using technology to get more gold out of the ground. Since 1900, gold production has risen from 400 tons a year to 2,500 tons. Since 1980 alone, production has increased by more than 100%.

Yes, there are periods when gold’s price soars (you can say the same for tungsten). But over the long term, I’d rather have my money in stocks, which put the brilliance and the imagination of the human mind on my side and allow me to benefit from the ability of people to create new ways of making profits rather than from the depletion of a commodity.

Writing in the New York Times in July 2001, I told readers to stay away from gold. At the time, the price of an ounce was $271. Today, it is $1,289. Whoops. Maybe my prejudices have gotten the better of me. Comparing prices, however, depends on where you start. Go back to 1980. After soaring in the latter part of the 1970s, gold peaked that year at $875. At the same time, the Dow Jones industrial average was trading at about 850. So, over the past 34 years, gold’s price has risen by less than 50% (far less than inflation), and the price of blue-chip stocks has climbed by a factor of 18 (and that doesn’t include dividends).

It’s not all glitter. Over the past half-century, gold prices adjusted for inflation have generally stagnated, with the exception of two huge spikes: from 1976 to 1980 and from 2001 to 2012. Stocks have their peaks and valleys, too, but the pattern is nowhere nearly as dramatic as with gold. The two spikes began in times of world turbulence: the stagflation of the late 1970s and the terrorist attacks of 9/11. Gold is often seen as a haven in stormy times. If the government devalues the currency or if barbarians crash the gates, you can fall back on the gold you have buried in the backyard. But gold is too heavy for convenient hoarding (as compared with diamonds, for example). It has to be tested to prove that it isn’t fake or diluted, and it is far from the only available haven. U.S. Treasury bonds have also proved attractive.

Nor is gold a particularly good inflation hedge, as Claude Erb and Campbell Harvey point out in their 2013 paper, “The Golden Dilemma,” in the Financial Analysts Journal. They write, “Given that the trailing ten-year real gold return was negative from 1988 to 2005, it is obvious that gold might have failed to live up to investor expectations as an effective long-term inflation hedge.” (Consumer prices rose 65% over that period.) Also remember that the recent run-up in gold occurred during a time of low inflation.

Because of its volatility, gold attracts traders, who try to find the bottom and ride gold to the top, then jump off and catch the bottom again. The problem with trading is that so few investors can do it profitably. Among the victims of the recent drop in gold prices was John Paulson, the hedge-fund manager who made billions by betting before and during the financial crisis that the price of many mortgage securities would collapse.

Though it may be hard to make money by trading gold, it has become easy to buy and sell the stuff. More than a dozen exchange-traded products let you bet on (or against) gold. The largest gold-oriented exchange-traded product, SPDR Gold Shares (symbol GLD), which directly tracks the price of the metal, was launched a decade ago and now has $32 billion in assets. SPDR Gold rose in price in each of the first eight years of its existence. However, it lost 28.3% in 2013, a year when Standard & Poor’s 500-stock index earned 32.4%. SPDR Gold’s five-year annualized return (through April 30) is now 7.3%, compared with 19.0% for SPDR S&P 500 (SPY), an exchange-traded fund that tracks the S&P index.

For trading purposes, you can make a case for gold, and that case can be summed up in one word: China. A study by the World Gold Council predicts that demand for gold in China will increase from the current 1,130 metric tons per year to 1,350 metric tons in 2017. China is the world’s largest gold market, and as its middle class grows from 300 million people to 500 million by the end of this decade, newly comfortable citizens will want more jewelry. China is also the world’s largest jewelry market, tripling in size over the past ten years. In addition, says the study, the Chinese government may decide to boost its gold holdings, which currently amount to only 1% of its foreign reserves. Meanwhile, for much the same reasons, gold demand in India is rising as well—up 13% in 2013, to 975 metric tons.

Miners over the metal. You can make a better case for investing in companies that mine and sell gold because they appear to be cheap. Shares of Barrick Gold (ABX), based in Toronto and with operations all over the world, have fallen by two-thirds in the past three years. Goldcorp (GG), another Canadian company, which mines in North and South America, has skidded from $55 to $25 over the same period. And shares of Randgold Resources (GOLD), which is based in the Channel Islands and mines in Africa, have dropped from $120 to $80 since October 2012. Or you can buy Market Vectors Gold Miners (GDX), an ETF that owns mining stocks, with Barrick and Goldcorp representing more than one-fourth of its assets. The fund is down 52% since the start of 2012. In my view, gold stocks have overreacted to the recent decline in the price of bullion. Shares of Barrick, for example, were higher in July 2000—when gold was less than $300 an ounce—than they are today.

What these companies have in common, besides relatively low prices, is the force of the human imagination, the object of Julian Simon’s enthusiasm. They have become more proficient at finding, processing and marketing gold. The price of the metal matters, no doubt. Randgold went from a $511 million profit in 2012 to a $326 million profit in 2013 after gold fell by more than one-fourth. I am not recommending gold in any form, but if you are bitten by the bug and convinced that the Chinese and Indians are going to stampede the jewelry counters, then buy gold stocks, not the inconvenient hard stuff or its ETF equivalent.

James K. Glassman owns none of the stocks and ETFs mentioned.