“All that is gold does not glitter”, a piece of a quote from J.R.R. Tolkien’s The Fellowship of the Ring. Gold has always been the most precious metal due to its limited supply and it has played a major role in economies of many nations. It has been used as a commodity even until now due to its liquidity but there several reasons why it’s a bad choice for an investment.

For one, unlike stocks, gold does not earn passive income. Returns only come when you decide to sell it when the value increases. While waiting for the value to increase you will need physical storage plus insurance which are additional costs on your part. And since gold is considered a collectible, capital gains tax is pegged at 28% which further decreases your returns. On top of that, gold has not been performing well for the past 5 years and may continue to do so in the following years.

With those facts being said, better think twice before investing in gold because it may lose its glitter.