“I don’t buy precious metals at all because I like my money—I don’t want to lose it. That simple.” — Dave Ramsey. On his radio show and in his financial advice, Ramsey has repeatedly stated that he avoids gold and silver entirely, viewing them as poor vehicles for long-term wealth building. He argues that precious metals have a “lousy long-term track record” and believes there are more stable and profitable options for investors, such as diversified mutual funds and real estate.
Ramsey’s approach is rooted in his emphasis on income-generating assets and consistent long-term growth. He sees gold and silver as volatile commodities that don’t yield dividends or interest, making them riskier and less reliable for building wealth.
Here’s why.
Poor Long-Term Performance Compared to Stocks
Ramsey argues that gold has a “lousy long-term track record” when compared to equities like mutual funds or index funds. Over the past century, stocks have consistently outperformed gold. For example, $20.68 invested in gold 100 years ago would be worth about $2,046 today (4.7% annualized), while the same amount in stocks would be worth $412,000 (10.4% annualized).
From 1990 to 2020, gold prices rose about 360%, while the Dow Jones Industrial Average soared 991%. Over rolling 25-year periods since 1978, equities have never delivered negative returns, with annualized gains always at least 7%, while gold’s best 25-year annualized return was just over 8%, and its worst was negative.
As Sagar Shinde, VP of Research at Fisdom, explains: “For building meaningful long-term wealth, equity mutual funds should form the core of an investor’s portfolio as equity mutual funds have historically outperformed gold over the long term in terms of wealth creation.”
Gold Does Not Generate Income
Unlike stocks and bonds, gold does not generate any income—there are no dividends or interest payments to holders. Its returns rely entirely on price appreciation, making it less attractive for investors seeking regular income or compounding growth. For example, stocks offer dividends, which can significantly enhance total returns over time, while bonds provide steady interest payments, adding predictability and income to a portfolio.
Over the past 30 years, the S&P 500 index has delivered an average annual return of 10.33% (drops to 6.47% when adjusted for inflation), with corporate bonds at 7.2%, both of which include income from dividends or interest. In contrast, gold’s 30-year compound annual return is 6.8%, with no income component—returns come only from changes in price.
Volatility and Emotion-Driven Booms and Busts
During periods of economic uncertainty or geopolitical tension, fear drives many investors to buy gold as a perceived safe haven, pushing prices sharply higher. Conversely, when markets stabilize or risk appetite returns, these same investors may quickly exit their positions, causing steep declines.
This pattern is amplified by psychological factors such as fear of missing out (FOMO), panic selling, and herd mentality, which can prompt investors to buy at price peaks during periods of heightened anxiety and sell at lows when panic sets in.
As a result, many investors who chase gold during emotional market swings end up buying high and selling low, suffering losses when prices inevitably correct.
Gold Fails as an Inflation Hedge
Dave Ramsey and other critics highlight that gold has not consistently protected against inflation, especially during periods of aggressive interest rate hikes. For instance, in 2022, despite inflation reaching multi-decade highs, gold prices fell about 6% in U.S. dollar terms.
This underperformance was largely attributed to the Federal Reserve’s rapid interest rate increases, which strengthened the dollar and made yield-bearing assets like bonds more attractive compared to non-yielding gold.
While gold is often promoted as an inflation hedge, its effectiveness is not absolute. As seen in 2022, high inflation alone was not enough to drive gold prices higher because rising interest rates counteracted gold’s appeal.
Lack of Practical Use in Economic Collapse
Dave Ramsey dismisses the notion that gold will be useful as a medium of exchange in a societal or economic collapse, calling the “safety factor” of gold a myth. Ramsey has publicly stated, “If the economy collapses, gold is not going to be worth anything. No one is going to be trading gold bars for bread and eggs”.
He emphasizes that in historical episodes of currency failure or economic turmoil—such as the collapse of the Confederate dollar after the U.S. Civil War—people did not switch to gold as a form of money, but instead adopted the new prevailing currency.
No Intrinsic Value Beyond Societal Belief
Dave Ramsey claims that gold’s value, much like fiat currency, is fundamentally based on collective belief and societal trust rather than any intrinsic utility. He argues that in the event of a societal or economic collapse, gold may not retain its value any more than paper money, since both rely on people agreeing they have worth.
Ramsey has stated that if the economy collapses, there is no guarantee that people will accept gold as a medium of exchange; historically, societies have not reverted to gold for daily transactions during crises. Instead, new forms of currency or barter systems tend to emerge, undermining the notion that gold offers unique protection in such scenarios.
Tax Implications and Transaction Costs
Gold investments often come with unfavorable tax treatment and significant transaction costs, both of which can reduce overall returns. The IRS classifies physical gold and gold-backed ETFs as “collectibles,” meaning long-term capital gains are taxed at a maximum rate of 28%—substantially higher than the 20% maximum rate applied to most stocks and other traditional investments.
If gold is held for one year or less, any profits are taxed as ordinary income, which can be even higher depending on the investor’s tax bracket.
Additionally, the cost basis for gold investments includes not just the purchase price but also dealer premiums, storage fees, and insurance costs, all of which further eat into profits.
Liquidity and Storage Issues
Storing gold safely, whether at home or in a vault, typically requires insurance that costs between 0.5% and 2% of the gold’s value per year. For example, insuring $10,000 worth of gold can cost $50 to $200 annually, depending on the insurer, location, and type of gold.
Professional storage facilities also charge annual fees, often ranging from 0.3% to 1% of the gold’s value, with minimum monthly charges commonly applied. Additionally, storing gold securely may require investments in home security systems or safe deposit boxes, further increasing costs and complexity.
Gold’s Recent Gains Are Not Sustainable
While gold has experienced impressive short-term gains—rising over 25% since early 2025 and even delivering a 38% year-over-year increase in 2024—Dave Ramsey warns that chasing such momentum is risky and unsustainable, especially when prices are at or near record highs.
Gold is known for its volatility, with prices prone to sharp rallies during periods of market fear or geopolitical turmoil, followed by steep corrections once those drivers subside. Major financial institutions and analysts caution that these surges are often driven by temporary factors like central bank buying or investor anxiety, rather than fundamentals that guarantee continued growth.
As a result, investors who buy gold during these peaks risk significant losses if the market reverses—a pattern Ramsey highlights as a common pitfall for those attempting to time the gold market.
Better Alternatives Exist for Building Wealth
Ramsey often suggests allocating investments across four types of mutual funds: growth, growth and income, aggressive growth, and international funds. This approach spreads risk and taps into both U.S. and global markets, aiming for long-term capital appreciation and income through dividends.
He advocates for disciplined, consistent investing—regularly contributing to retirement accounts like 401(k)s and IRAs. Over time, this strategy leverages the power of compound interest, which has historically led to substantial wealth accumulation.
By spreading investments across different sectors and asset classes, Ramsey’s recommended portfolios help reduce the impact of volatility and market downturns, making them more resilient for long-term investors.
Disclaimer – The Finance Key does not provide and does not intend to provide financial, investment, tax, or legal advice. Information contained in this article is for informational and educational purposes only. This list is solely the author’s opinion based on research and publicly available information. The inclusion of links to third-party content is not an endorsement by The Finance Key of such content or services. Please do your due diligence and use your discretion.
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