It’s never too early (or too late) to look for ways to protect your money. But this week, it became mandatory after stock market performance plunged with the Dow Jones Industrial Average, specifically, falling more than 1,600 points on Thursday. Combined with a cooler but still stubborn inflation rate of 2.8% (almost a full percentage point higher than the Federal Reserve’s 2% target) and a federal funds rate that’s remained unchanged since December 2024 (causing borrowing costs to remain elevated) and it becomes clear that many Americans could benefit from an added layer of financial protection right now.

Fortunately, a gold investment, in any of its myriad forms, can provide just that. Many investors have already turned to the precious yellow metal in recent years because of its safe-haven reputation, causing the price of gold to surge to numerous records, the latest being in recent days when gold surged to more than $3,100 per ounce. But if you’re a beginner investor or simply just a beginner in the precious metals space, it helps to know how a gold investment can specifically protect your money, both now and over the long term. Below, we’ll break down what to know.

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How a gold investment can protect your money now

Here are three important ways a gold investment can help protect your money:

It can hedge against inflation

Arguably, its most well-known feature and one of the major reasons why gold investing interest spiked and why the price has surged in recent years, the hedge against inflation that gold offers is a significant benefit right now. When inflation rises, the price of gold tends to tick up as well. 

In other words, when inflation erodes the purchasing power of the dollar, gold’s price rises, offsetting the negative impacts typically felt by stocks and bonds in the same economic climate. It’s not always a direct relationship, but frequently, when inflation is a concern for your portfolio, gold can help ease some of that stress. And with inflation still rising, albeit at a lower pace, it makes sense to add a portion of gold to your portfolio right now.

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It can diversify thanks to a steady value

Because of gold’s relationship with inflation and general reliability when economic conditions are volatile, investors tend to rely on it as a diversification tool. That makes it a particularly timely and effective investment now. Even with stock market performance plunging over the past week, approximately, the price of gold surged to yet another new price record. And this dynamic is likely to continue in the weeks to come, absent some dramatic reversal in economic activity or policy. 

That said, just be sure to invest in gold as a diversifier, not as a primary asset. So that means keeping your gold investment limited to no more than 10% of your overall portfolio to allow other, income-producing assets to perform as intended.

It can rise in price

If your stocks and bonds all declined in recent days, then it makes sense to find an asset that can actually tick up in value. And gold can do just that. Now around $3,100 per ounce, expectations are high that the gold price could soon break yet another new record, potentially on its way past the $3,500 price point. 

It makes sense, then, to buy in now, before the price surges. This will allow you to benefit from future price increases (over time, gold only tends to rise in price, minus a few temporary dips) but it will also allow you to buy in at a reasonable entry point before it potentially becomes out of reach permanently.

The bottom line

Gold, thanks to its historic ability to hedge against inflation, diversify portfolios and rise in price over time, is a particularly smart asset to invest in right now. By being proactive, investors can add a layer of protection on top of their stocks, bonds and real estate assets and, potentially, even turn a quick profit should they look to sell gold during the next inevitable price hike. Just avoid sitting idle, as the protection gold can offer is critical both now and over the long run.