It’s been quite a year for gold investors. While the stock market has struggled, gold has continued to hit new all-time highs, topping $3,500 per ounce for the first time a few weeks ago. Year-to-date, gold has gained nearly 30% while the S&P 500 is in negative territory. This has certainly gotten people’s attention—but does gold make sense for your portfolio?

To answer this question, let’s start by looking at the arguments in favor of gold. Supporters typically point to two key attributes, both of which have contributed to its rise this year. First, gold has a reputation as being an effective inflation fighter. And second, it’s viewed as a “safe haven” during times of economic uncertainty.

Gold’s reputation as a bulwark against inflation stems mainly from the 1970s. For decades prior to that, the exchange rate between gold and the U.S. dollar had been fixed at $35 an ounce under an agreement known as the Bretton Woods system. But for a variety of reasons, that system became untenable, and in the early-1970s, gold prices were allowed to float freely. What happened next cemented gold’s reputation.

In less than a decade, gold jumped nearly 20-fold, from $35 to $650. That coincided with a period of unusually high inflation in the United States, which hit nearly 14% at one point. That led many investors to the conclusion that gold and inflation must be linked. Because the 1970s were also a period of malaise in the stock market, gold ended the decade looking like an ideal investment.

While the 1970s were an exceptional period, gold enthusiasts point to a much longer history. When archeologists excavated tombs from ancient Mesopotamia, they found gold jewelry, including headdresses, bracelets and earrings dating back some 5,000 years. They found the same thing in the tombs of Egyptian pharaohs. Tutankhamun’s mask contained more than 20 pounds of gold.

Gold, in other words, is arguably the world’s oldest store of value in continuous use, and that, too, has contributed to its unique reputation.

A reason, perhaps, for its longevity is that gold, unlike traditional paper money, isn’t under the control of any government. This has been key to preserving its value. In contrast, it’s easy for governments to issue new currency, which has the effect of debasing the value of existing money in circulation, including consumers’ paychecks and savings. We saw that most recently during Covid. To support the economy, the Federal Reserve created approximately three trillion new dollars, much of which Congress distributed in the form of stimulus checks. That was a key contributor to the inflation spike we saw in 2022.

Unlike paper currency, which can be created at the whim of any government, the supply of gold grows very slowly due to the cost and effort involved in mining. Indeed, the World Gold Council estimates that if all of the gold ever mined were fashioned into a single cube, it would measure just 72 feet on each side.

To illustrate the stability of gold, fans cite the notion that an ounce of gold has always translated—more or less—to the cost of a men’s suit. They argue that this rule of thumb has held true at least since the Roman empire. Does the data really support this? It’s debatable, but true or not, stories like this contribute to gold’s reputation.

Gold’s longevity, scarcity and independence from government control help explain why it’s earned its unique status as a safe haven during periods of uncertainty, which is the second key benefit cited by gold supporters.

We’ve seen that dynamic this year. The White House’s new tariff policies have upended global trading patterns, and that’s impacted the stock market, as would be expected. But because of the resulting economic uncertainty, the value of U.S. Treasury bonds has also been affected. In the midst of all this, gold has become relatively more attractive to investors looking for an alternative to stocks and bonds. That explains a large part of gold’s recent rise.

The gains this year have been particularly impressive, but gold has generally moved to the beat of its own drum, and that’s contributed to its appeal as a way for investors to diversify. In statistical terms, gold’s correlation to stocks has been quite low, averaging just 0.24 over the past 10 years, on a scale where zero indicates no correlation and 1 indicates perfect correlation.

Gold, in other words, seems uniquely appealing. Still, I don’t recommend it. That’s for two reasons. First, despite its reputation, gold hasn’t always been a reliable hedge against inflation. To be sure, it did well in the 1970s, but aside from that, gold hasn’t always delivered. Even in 2021 and 2022, when inflation was high, gold investors didn’t do terribly well. And when inflation began to subside, gold gave up whatever gains it had achieved.

In a 2022 interview, a hedge fund manager described the frustration for gold investors: “It’s been a horrible experience,” he said. “You have high inflation, the Fed behind the curve, and gold going down rather than up…It’s enormously disappointing.”

Why didn’t gold deliver more for investors in 2022, when inflation hit a 40-year high? In my view, it’s because gold lacks intrinsic value. That is, it doesn’t produce income. That’s in contrast to other investments like stocks, which produce dividends, bonds, which deliver interest, and real estate, which provides rent. Because gold doesn’t produce any income, its price is driven largely—if not mostly—by emotion.

There is no math, in other words, that an investor can do to determine an appropriate price for gold. It’s worth only what other investors are willing to pay for it, and that, in my view, is why its price can fluctuate so widely. It gains in value when the economic environment seems uncertain, but when the bad news passes, gold’s value as a safe haven suddenly becomes less valuable, and then it can give up all of its prior gains. That’s why a long-term chart of gold prices looks a lot like a rollercoaster, lacking the same overall upward momentum as the stock market. For that reason, I would be wary of buying gold—except as jewelry.​