Are You Making an Emotional Investment, or a Rational One?

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Last Updated on: 19th September 2025, 02:24 pm

I have learned the hard way that fear and excitement are terrible portfolio managers. It's easy to get carried away by news headlines and doomsday content on social media.

Let me tell you something, if the world really collapses like some conspiracy theorists predict it will, gold won't save you. In fact, a can of tuna may be worth way more than a gold bar in such a scenario…

Table of Contents

Start with your “why,” not the shiny object
Study the asset, not just the price
Physical gold vs paper gold
Know the products, premiums, and spreads
Understand the long game
Storage, custody, and logistics
Taxes, reporting, and paperwork
Speak to a fiduciary advisor
A simple pre-investment checklist
Final thought

Start with your “why,” not the shiny object

Markets move, headlines scream, and it is easy to hit “buy” or “sell” for the wrong reasons, like fear of missing out (FOMO). A better approach is slower, more rational and deliberate. In this post I want to walk through how I separate emotions from decisions, especially when I consider adding an asset class like gold to my portfolio.

Before I look at products or promotions, I write down why I want to add gold to my portfolio. Common reasons include diversification from a stock-heavy portfolio, inflation hedging, or just a general ‘insurance policy' in case paper markets go south. If your reason is grounded in a portfolio need, you are already investing more rationally. For context on how gold behaves in tough economies, I like reviewing our primer on what happens in a recession and the data showing how gold may perform in a portfolio. Again, none of this is financial advice. Speak to your financial advisor before making an investment decision.

Study the asset, not just the price

Gold isn't some magic pill that will make you rich overnight. Just like any other asset class, it has its pros and cons. Sure, it tends to perform well when the dollar and stocks are heading south, but that's not the only factor you should look at. Besides, past results aren't indicative of future returns. Nobody can predict the future, especially in these times of geopolitical turmoil.

Emotional investors chase tickers. Rational investors study how the market works. With gold that means understanding the spot price, how it is set, and why retail prices differ. If you are new to the mechanics, start with 7 facts about the spot gold price and this beginner’s guide on how to buy silver and gold.

Physical gold vs paper gold

I ask myself whether I want direct ownership or market exposure.

Physical gold means coins and bars you can store in a vault or safe. You pay a premium over spot, plus shipping, insurance, and storage. It can be held personally or inside a self-directed IRA that uses an approved depository.
Paper gold includes ETFs and futures. Pricing tracks spot closely, trading is simple, and you avoid shipping and vault logistics. You do not, however, control specific bars or coins.

If you are unsure which path fits your plan, this comparison is a helpful starting point: investing in a Gold IRA or buying physical gold.

Know the products, premiums, and spreads

Not all bullion is priced the same. A rational buyer compares liquidity and the total cost to round-trip a position.

Popular coins: American Gold Eagles, Canadian Maple Leafs, American Buffalos, Britannias, Krugerrands. Common coins tend to have deeper resale markets. See our list of the top 5 gold coins for investors.
Bars: 1 oz, 10 oz, 100 gram, kilo. Bars often carry lower premiums per ounce, which can matter for larger allocations. Here is a practical overview of the top 5 gold bars for investors.
Premiums and spreads: Premiums are what you pay above spot. Spreads are the gap between a dealer’s buy and sell price. Spreads can be wider on less common products. If you are bar-curious, this guide explains pricing basics: how much is a gold bar worth.
Jewelry is different: 18k jewelry is not a bullion investment and carries workmanship costs. For curiosity, here is how to think about value: 18k gold price per gram.

Understand the long game

Most investors and central banks hold gold for long horizons because it diversifies paper assets and can reduce portfolio volatility. That does not mean gold always rises. It means the risk and return drivers differ from stocks and bonds, which is why a measured allocation can make sense in a diversified plan. The key is sizing the position appropriately and rebalancing on a schedule, not reacting to headlines.

Storage, custody, and logistics

If you own physical metal, plan storage before you buy.

Approved depositories for IRAs: Use IRS-approved vaults if the metal is inside a retirement account. Here is a rundown of trusted and IRS-approved depositories.
Personal storage: If you buy outside an IRA, compare the four safest ways to store gold and this deep dive on gold storage options for IRAs. Curious about home storage questions that trip people up? Read home storage for your Gold IRA before you decide.
Safes: If you plan to store at home for non-IRA holdings, choose wisely. Our guide to the best gold safes will help you evaluate build quality and ratings.

Taxes, reporting, and paperwork

Rational investors do not ignore taxes. If you use a self-directed IRA, review everything you need to know about taxes and your Gold IRA. For personal holdings, be aware of reporting requirements for gold investments. When it is time to exit, read our guide to selling gold and silver so you know how to compare bids and verify settlement.

Speak to a fiduciary advisor

I like to bounce my plan off a fiduciary who understands my full financial picture. A good advisor will stress test your allocation, check liquidity needs, and make sure metals play a specific role instead of being a reaction to anxiety. If you ever feel pressured or rushed, step back. Our readers avoid headaches by reviewing our quick notes on avoiding scams and by taking time to read disclosures and fee schedules.

A simple pre-investment checklist

Use this to turn emotions into a structured decision.

Write one sentence about why you want gold in your portfolio.
Pick your vehicle: physical, IRA, or ETF.
If physical, choose products with strong liquidity and compare the all-in cost, which includes premium, shipping, storage, and the expected resale spread.
Decide where you will store it and what it will cost per year.
Set a target allocation and a rebalancing rule so you do not chase rallies.
Confirm tax and reporting implications for your account type.
Run the plan past a fiduciary advisor. Sleep on it, then place your order.

Final thought

Investing rationally is not about eliminating emotion. It is about giving your rational side a clear process to follow when markets get loud. If you do the homework up front and document your plan, you will be far less likely to make impulsive decisions later.

Further reading on GoldIRAGuide: