Gold's allure as a safe haven asset has intensified, with its prices soaring over the past year. However, financial advisors urge caution, warning investors not to succumb to the growing enthusiasm surrounding gold investments. Notably, Wells Fargo's investment models suggest maintaining a modest allocation to commodities, including gold, ranging from 2% for conservative investors to 7% for those pursuing aggressive growth. This conservative approach mirrors a longstanding investment principle.
"Be fearful when others are greedy, and be greedy when others are fearful." – Warren Buffett
The recent surge in gold prices, up about 42% over the past year, can be attributed largely to heightened geopolitical tensions and economic uncertainties. U.S. sanctions on Russia, initiated in 2022, have acted as a "turbocharger" for gold returns, significantly boosting the asset's appeal. Gold futures prices have also climbed approximately 10% year-to-date and stand 36% higher than the previous year.
Despite the glittering returns, experts caution against over-enthusiasm. Lee Baker highlighted the growing greed concerning gold investments.
"It feels to me everyone is starting to get greedy as it pertains to gold." – Lee Baker
While gold often emerges as a preferred asset during times of crisis, data suggests that bonds have historically performed better than gold, offering more stability. The S&P 500 U.S. stock index, meanwhile, has shown resilience, rising about 1.5% in 2025 and achieving a notable 17% increase over the past year. Such performance underscores the importance of a well-diversified portfolio in navigating volatile markets.
Sameer Samana advises investors against chasing gold returns during periods of peak prices.
"Don't chase" gold returns, Samana said: "As a whole, you probably want to hold off on precious metals at [current] levels." – Sameer Samana
For those considering physical gold investments, practical challenges such as storage and insurance costs must be factored in. Insurance alone may cost investors between 1% to 2% of their gold's value annually. Additionally, funds and stocks offer greater liquidity compared to physical assets, providing more flexibility if an investor needs to sell.
Wells Fargo emphasizes that gold should occupy only a small fraction of an investor's portfolio, ideally not exceeding 3%. This conservative stance aligns with historical data showing that excessive allocation to a single asset class can increase risk.
In recent trading sessions, gold prices dipped more than 1%, reflecting the volatile nature of the commodity market. Nonetheless, demand for gold remains strong due to ongoing geopolitical uncertainties and economic concerns.
Lee Baker expressed skepticism regarding a prolonged upward trend in gold prices without significant global disruptions.
"There's no reason in my mind gold will continue to have a significant uptrend, barring — and I certainly hope not — some sort of protracted war," – Lee Baker
The SPDR Gold Shares fund (GLD), which tracks the price of gold bullion, registered an approximate 11% increase in 2025 as of Tuesday afternoon. This performance highlights the growing investor interest in precious metals despite expert advice urging caution.