My 8-year-old son was given $35,000 in gold bars. Do we hold onto them — or sell and invest the money?

Dear Quentin,

I did not grow up with wealth and I am only now, in my 40s, beginning to understand how to invest and save for retirement for myself. 

However, with everything I’ve learned, I’m trying to ensure my child will be in a better position, and have knowledge and opportunities that I did not have. 

For several years, he has one section of his piggy bank for both saving and investing, and one for spending. At least once a year we count that up and it goes into high-yield savings and a custodial investment account (primarily in ETFs). 

Here is my dilemma: he was gifted gold by a generous friend of the family. These bars are safely stored, but cannot be insured. Today, the gold is worth just over $35,000. I am not sure whether we keep this gold or if we should get the cash value and invest it. 

He is only eight, so there’s a lot of time for compounding. I realize there’s no crystal ball, but I assume there may be a general consensus in the investment community on liquidity/investments versus physical gold.

What is the best way to utilize this gift for his future?

The Mother 

“It’s nice to look at, nice to hold, but if you want to build a viable nest egg, you’re better off avoiding gold.”

MarketWatch illustration

Dear Mother,

This is a good time to invest. Money you invest broadly in the stock market today for your child will experience the miracle of compounding over coming decades. Before I go any further, you should be aware of the capital-tax implications of selling a precious metal. The Internal Revenue Service could charge you up to 28% capital-gains tax. That said, I do have some strong opinions on your dilemma.

Gold is a raw material. It’s a hedge against inflation and it’s always good to diversify your portfolio. Gold, like silver and other commodities, may go up (or down) in value, but it does not yield dividends, it pays no interest and, unlike real estate, it will not provide a roof over your head or long-term income. It’s nice to look at, nice to hold, but if you want to build a viable nest egg, you’re better off avoiding gold. 

Your eight-year-old son will benefit from the growth of his capital investment over a long period of time. Over the past 30 years, the SPDR S&P 500 ETF Trust
has had an average annual total return (after expenses and with reinvested dividends) of 9.6%, according to FactSet. If you invested $35,000 in the stock market today at a conservative annual return of 7%, he would have $249,000 after 30 years.

Gold is traditionally seen as a safe haven: it’s not typically vulnerable to the wild ride the stock market experiences, and people turn to this commodity when they are uncertain about the economic outlook. You may wish to keep a small percentage of this $35,000 in gold (10% or thereabouts, according to this recent fascinating analysis on MarketWatch) but you owe it to yourself and to your son to do something with this money when time is on your side.

Under the Uniform Gift to Minors Act or Uniform Transfer to Minors Act, you can open a custodial brokerage account for your child — a Roth IRA, where the contributions will grow tax-free, ABLE account or 529 tax-advantaged account for college expenses — and all the income from those accounts will belong to your child. Your son will ultimately take control of the account when he reaches 18 or 21, depending on the state where you live. 

Not everyone is as gold phobic as the Moneyist. “Many long-term investors benefit from having some of their portfolio in physical gold, whose prices go up when stocks, bonds, and cash go down and vice versa,” says Edmund C. Moy, the 38th director of the United States Mint. “But as in any insurance policy, it is unwise to have a policy bigger than what you need. “

“Unlike stocks or bonds, or even cash, gold has held its value throughout its 5,000 year history,” he adds. “Another factor to consider is whether the expectation is that the overall portfolio will be worth much more in the future. If that is the case, keeping all the gold now, even if it means that gold is disproportionately a bigger part of the portfolio, eventually it will become better over time.”

Going ‘long’ on fear

Warren Buffett, the Oracle of Omaha, is not sold on gold. He has said gold won’t do anything but look at you and, as an investment, he described it as going “long” on fear. “If you own one ounce of gold for an eternity, you will still own one ounce at its end,” he wrote. He said our relationship to gold will remain untarnished (he does not mean that as a compliment), adding, “Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold.”

Despite its shine and relative safety as an investment, gold is not the most exciting or rewarding investment. Keep in mind: you may need funds when your son attends college in 10 years time. It will happen faster than you think. An ounce of gold currently costs around $1,827. “The price of gold is basically the same as it was before inflation started heating up 3 years ago,” says Timothy Speiss, partner at Eisner Advisory Group. 

You have other options. Certificates of deposit are investment vehicles that attract people looking for a safe haven for their cash in an uncertain economic climate. CD rates typically track the federal-funds rate, which is currently 5.25% to 5.50%. Right now, inflation is high, but unemployment is low, and you can get some very attractive annual percentage yields on CDs and high-yield online savings accounts. Yields on both are topping 5%.

But when you’re eight years old, there’s never a bad time to invest in the stock market, and you’re never too young to think about retirement. Your son has a lifetime to ride the peaks and troughs of several stock market cycles. Most importantly, this will also give him a stake in how the U.S. economy performs and likely create another miracle of compounding — an endless, self-fulfilling loop of curiosity and knowledge that will last his lifetime.

You can email The Moneyist with any financial and ethical questions at, and follow Quentin Fottrell on X, the platform formerly known as Twitter.

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