Most investors assume that making money with gold is a two-step process:
- Buy gold.
- Wait for the price to rise.
Under this framework, a flat gold price appears to mean flat returns.
If gold trades at $4,000 per ounce today and still trades at $4,000 per ounce five years from now, many conclude that owning gold during that period was unproductive.
After all, if the price didn’t go up, where could the profit possibly come from?
But this assumption overlooks an important distinction: price appreciation and investment return are not the same thing.
Sophisticated investors understand this concept in nearly every other asset class, but when it comes to gold, discussions about performance often begin and end with one question:
“Where is the gold price headed next?”
That focus on price can obscure a different way of thinking about gold ownership.
Please note: All content is provided strictly for general informational and educational use. This information should not be interpreted as financial advice, nor should it replace professional consultation.
Can you make a profit from gold when prices are flat?
Yes, it’s possible to earn a profit from gold, even when prices are flat. Here are six simple steps for hedging against stagnating gold prices:
- Evaluate the limits of a price-focused approach.
- Determine how you should measure gold investment performance.
- Assess whether your gold can generate income.
- Determine where gold yield comes from.
- Find opportunities to put your gold to work.
- Compound your ounces over time.
Step 1: Evaluate the limits of a price-focused approach.
Many investors buy gold for reasons that have little to do with cash-flow generation.
They may want to preserve purchasing power, hedge against currency debasement, diversify their portfolio, or own an asset that carries no counterparty risk.
This causes most gold investors to judge the success of their investment by one metric alone: whether the price rises after they buy it.
As a result, discussions about gold often revolve around future price targets, market forecasts, and expectations about where the metal may trade next year.
Financial media reinforces a price-centric view of gold.
Open any financial publication (or launch their online equivalent) and you’ll find a steady stream of gold-related headlines:
- Gold hits a new all-time high.
- Gold falls after Federal Reserve announcement.
- Analysts raise gold price targets.
- Is gold headed to $5,000?
Most coverage focuses on predicting future price movements.
Compare that with how analysts discuss stocks, real estate, or private businesses. In those markets, conversations often include earnings, cash flows, dividends, rental income, operating margins, and return on invested capital.
Gold rarely receives the same treatment.
This conditions investors to view gold primarily through the lens of appreciation.
Price alone may not tell the whole story.
When price becomes the primary metric, investment success often gets reduced to a simple question:
“Is gold worth more today than when I bought it?”
That mindset can create a narrow framework for evaluating performance.
It naturally leads investors to ask questions such as:
- What if gold trades sideways for years?
- What if gold’s purchasing power remains stable, but its dollar price doesn’t increase?
- What if gold enters a prolonged period of consolidation?
These are reasonable concerns.
However, they also reveal a potential weakness in the conventional approach.
If the only way to profit from gold is for someone else to pay a higher price in the future, then every investment outcome depends on predicting future market prices correctly.
Most sophisticated investors apply a broader framework when evaluating other assets.
Gold deserves the same consideration.
Step 2: Determine how you should measure gold investment performance.
How do you evaluate the performance of your gold investment? Many investors instinctively measure success in dollars.
They buy gold to protect themselves from the risks associated with fiat currency, then evaluate that investment based on whether they have more fiat currency.
That may seem logical on its face. But if you’re using gold as a hedge against currency debasement, should you measure success exclusively in the currency being hedged?
And to realize your gains, you’ll have to sell your position—but why would you sell the gold you bought to escape the dollar?
Sophisticated investors focus on total return.
Professional investors rarely evaluate an asset solely by changes in its market price.
Instead, they focus on total return: the combined value generated by all sources of return available to the investor.
For example:
- A stock’s return may come from both price appreciation and dividends.
- A bond’s return may come from both price changes and coupon payments.
- Real estate may generate rental income while also appreciating over time.
In each case, investors evaluate all sources of return, not just appreciation.
This framework empowers you to separate temporary market fluctuations from the actual economic value generated by an asset.
Why is gold evaluated differently from other assets?
Curiously, many investors abandon this total-return framework when discussing gold.
Bullish arguments point to higher prices ahead. Bearish arguments point to lower prices ahead. Either way, the discussion revolves around appreciation.
After all, if sophisticated investors routinely distinguish between price return and total return in other asset classes, should gold be treated differently?
This is an important question to ask yourself during periods when gold prices remain relatively unchanged.
Consider measuring wealth in ounces.
An investor who buys gold is often expressing concern about the long-term purchasing power of fiat currency.
Viewed from that perspective, ounces become more than a commodity holding. They become a measure of accumulated wealth.
So, instead of asking yourself:
“How many dollars is my gold worth?”
You could ask:
“How many ounces do I own today compared to last year?”
If your goal is to compound your wealth over time, then growing your ounces may matter more than short-term fluctuations in the dollar price of gold.
And that raises another question.
Can the number of ounces you own actually grow?
Step 3: Assess whether your gold can generate income.
Different forms of gold ownership offer different opportunities.
- Gold coins stored at home.
- Allocated bullion in a vault.
- Shares of a gold ETF.
- Gold mining stocks.
- Gold held through a yield-generating structure.
Although each of these provides some form of exposure to gold, they don’t all produce the same investment outcome.
Some forms of ownership are designed primarily for storage and preservation. Others may provide opportunities to generate additional returns in fiat currency.
Only one provides you the opportunity to compound wealth in a money that has historically maintained its value across time and cultures.
What’s the opportunity cost of idle gold?
Every asset carries an opportunity cost.
- Cash that earns no interest depreciates in value.
- Vacant real estate requires upkeep, but doesn’t provide rental income.
- Underutilized business assets tie up capital without generating returns.
Gold is no different.
If your gold remains unchanged year after year, you could be losing money when the gold price dips. You could be losing money in storage fees when the gold price stagnates.
Or, in a bear market, you could be paying the hidden cost of a rising gold price.
Income and appreciation aren’t mutually exclusive.
Many investors instinctively think of income-producing assets and appreciating assets as separate categories.
But in practice, they’re often complementary.
A rental property can appreciate in value while generating income while, and a dividend-paying stock could distribute cash while its share price rises.
Gold can be evaluated through a similar lens.
And if you’re gold can be both an appreciating asset and an income-producing asset, where does that income come from and why are businesses willing to pay for your gold?
Step 4: Determine where gold yield comes from.
Before allocating capital to any income-producing investment, prudent investors seek to understand the source of the return.
So, where does gold yield come from?
Gold yield originates from productive economic activity.
Across the global gold market, businesses require physical metal to operate.
- Jewelry manufacturers need gold to create finished products.
- Refiners process newly mined and recycled metal into investment-grade bullion.
- Mints manufacture coins and bars.
Other businesses incorporate gold into electronics, medical devices, aerospace components, and industrial products.
For these businesses, gold isn’t primarily an investment, it’s an input.
Just as manufacturers require raw materials and retailers require inventory, many gold-related businesses require access to physical metal to generate revenue.
The economic value they create comes from transforming, refining, manufacturing, distributing, and selling products that contain gold.
Businesses may prefer access to gold over ownership.
Purchasing large inventories of gold requires significant capital.
At current prices, even a modest working inventory can represent millions of dollars tied up on a balance sheet.
As a result, many businesses evaluate whether owning that inventory outright represents the most efficient use of capital.
Growth initiatives, new equipment, additional production capacity, acquisitions, technology investments, and working capital all compete for the same resources.
In some circumstances, access to gold may be more valuable than ownership of gold.
(Read “Why would anyone lease gold? 3 analogies that explain it” to explore the ways in which gold leasing is similar to other forms of asset financing.)
Gold owners can be compensated for providing access to the metal.
When businesses obtain access to gold without purchasing it outright, gold owners may receive compensation in exchange for providing the metal.
That compensation is the source of gold yield.
Importantly, the return is linked to productive economic activity rather than a forecast about where the gold price may trade next month or next year.
Understanding the source of the yield enables you to evaluate gold income using the same framework you’d apply to any other investment opportunity.
Step 5: Find opportunities to put your gold to work.
By now, you’ve evaluated the limitations of a price-focused approach, considered alternative ways to measure performance, and examined how gold yield is generated.
The next step is participating.
Unfortunately, businesses that lease gold generally don’t source it from thousands of individual investors directly.
Instead, specialized firms facilitate these transactions by performing due diligence, structuring leases, and connecting gold owners with gold-using businesses.
How can you find gold leasing opportunities?
Monetary Metals was created for this purpose.
Rather than sourcing, evaluating, negotiating, and administering individual gold leases yourself, we provide clients with access to a marketplace of professionally structured gold yield opportunities.
In other words, we handle the work required to connect investors seeking yield with businesses seeking access to gold.
For investors, participating is a straightforward process:
Open your account
The process begins with opening an account.
It’s simple, intuitive, and takes less than 10 minutes.
Once your account is established, you’ll be able to review available yield opportunities and manage your gold holdings from a single platform: The Gold Yield MarketplaceTM.
Fund your account
After opening your account, you’ll need to fund it with gold.
There are two primary ways to do this:
- Purchase gold through Monetary Metals.
- Transfer gold you already own.
Many investors choose to move existing holdings into a Gold Yield Account, while others use the opportunity to acquire additional metal.
Either approach enables you to position your gold for potential income generation.
Review available opportunities
Not every gold lease is identical.
Each opportunity includes information designed to help you evaluate the transaction, including:
- The business using the gold.
- The purpose of the lease.
- The lease term.
- The expected yield.
- Other relevant details regarding the transaction.
Choose the opportunities that fit your objectives
You choose which opportunities you want to participate in and which you prefer to decline.
Some investors actively manage their allocations as new opportunities become available. Others prefer a more hands-off approach.
The important point is that you retain control over how your gold is deployed.
Monitor your holdings
Once your gold has been allocated, the process becomes largely passive.
The underlying businesses continue using the metal within their operations, while you receive the agreed-upon yield in gold.
Instead of relying solely on changes in the market price, you can monitor the growth of your holdings in ounces.
That growth becomes especially meaningful over longer periods of time, where additional ounces may themselves begin generating additional ounces.
Step 6: Compound your ounces over time
You likely already understand the power of compounding.
- A dividend reinvestment plan can increase the number of shares an investor owns.
- Interest payments can be reinvested to purchase additional bonds.
- Rental income can be used to acquire additional real estate.
Over time, those additional assets may generate additional income, creating a compounding effect.
Gold yield introduces a similar dynamic.
This introduces a second engine of growth alongside price appreciation, the significance of which becomes more apparent over longer investment horizons.
What if you invested $10,000 in gold 20 years ago?
In June 2006, gold traded at $613.10 per ounce1.
An investment of $10,000 would have purchased 16.31 ounces of gold.
Now consider two hypothetical investors:
- Investor #1 stores their 16.31 ounces, relying on gold prices to generate profit.
- Investor #2 invests their 16.31 ounces into yield-generating opportunities, reinvesting all yield back into their gold yield account.
At the end of the period, both investors remain exposed to the gold price.
The difference is that Investor #2 owns more ounces.
| Investor #1 (No yield) | Investor #2 (Gold yield) | |
|---|---|---|
| Initial investment (2006) | $10,000 | $10,000 |
| Initial gold holdings | 16.31 oz | 16.31 oz |
| Gold holdings (2026) | 16.31 oz | 35.26 oz* |
| Additional gold earned | 0 oz | 18.95 oz |
| Value on June 1, 20261 | $68,309 | $147,675 |
| Additional value created | $0 | $79,366 |
Those additional ounces may themselves generate additional ounces, creating a compounding effect over time.
As the investment horizon extends, the gap between the two investors may continue to widen. And not because one predicted the gold price more accurately, but because one accumulated more gold.
Flat gold prices don’t necessarily mean flat returns.
This is important when gold prices stagnate.
Consider four possible outcomes:
| Gold Price | Gold yield? | Result |
|---|---|---|
| Flat | No | Flat return |
| Flat | Yes | Positive return |
| Rising | No | Capital gain |
| Rising | Yes | Capital gain plus yield |
Traditional gold investing depends heavily on one variable: future price appreciation.
Gold yield introduces an additional source of return (see “Investing in gold vs gold investing: What’s the difference?”).
As a result, you may be able to benefit across a wider range of market environments, including periods when gold prices remain unchanged.
Overcome your flat gold price anxiety with Monetary Metals
Flat gold prices are disappointing.
Unless price appreciation isn’t your only source of returns.
By following the steps we outlined above, you may be able to increase your gold holdings over time—even when gold prices stagnate.
Notably, this doesn’t eliminate the role of price appreciation, it introduces an additional source of return alongside it.
To explore the concepts discussed in this article in greater depth, download our white paper, “The Case for Gold Yield in Investment Portfolios.”
