Is Gold Really the Best Investment Right Now?

Is Gold Really the Best Investment Right Now?

The aggressive increase in gold prices over the past two years has prompted the public to shift their investment attention towards gold. Data on Antam gold bar prices demonstrate a striking surge that cannot be ignored.

As of 1 February 2024, Antam gold prices stood at approximately IDR 1,143,000 per gram (selling price) and IDR 1,039,000 per gram (buyback price). A year later, on 1 February 2025, prices surged to approximately IDR 1,624,000 per gram (selling) and IDR 1,475,000 per gram (buyback). This increase continued on 1 February 2026, when Antam gold prices reached a new record at approximately IDR 2,860,000 per gram (selling) and IDR 2,650,000 per gram (buyback), with a transaction tax provision of 0.5 percent. Within two years, gold prices more than doubled—a performance rarely seen in the history of precious metals markets.

This surge makes gold appear particularly attractive, especially when compared to other financial instruments. Islamic bank deposit yield rates, for instance, which are heavily influenced by Bank Indonesia’s interest rate policy direction in 2026, stand at around 3-4 percent per annum, with a final tax of 20 percent. The difference in deposit tenors ranging from one month to 12 months does not provide significant differences in the net returns received by customers.

Slightly more attractive are Retail State Sukuk and Savings Sukuk, which offer lease returns of approximately 6.3-6.6 percent per annum, with a final tax of 10 percent, resulting in net returns to investors of around 5.7-5.9 percent per annum. These instruments are relatively stable and attractive for investors with a low-risk profile.

Meanwhile, Islamic equity investments, whether direct or through mutual funds, offer potential medium- to long-term returns in the region of 12-18 percent per annum, and in certain periods can exceed these figures. However, this potential comes with greater volatility and risk, making it not always suitable for all investors. For example, recent capital market turbulence naturally affects stock price fluctuations.

How, then, should we view gold investment?

First, establish clear financial objectives. Investment should not merely follow trends; rather, it should be directed towards achieving specific goals. For example, a family pilgrimage trip to Umrah scheduled for July 2027 might require approximately IDR 30 million per person or IDR 150 million for five people. With additional costs for souvenirs and other expenses, total funds to be set aside would reach IDR 200 million.

The next financial objective might be developing a rental property complex by 2030 as a source of passive income during retirement beginning in 2035. The construction financing required reaches IDR 1 billion, on a strategically positioned plot of land already secured. These two objectives have very different time horizons and risk characteristics and therefore are not always appropriately financed using the same investment instruments.

Second, understand investor risk profile. Beyond financial objectives, the decision to choose investment instruments is heavily determined by the investor’s ability and readiness to bear risk. Generally, there are three risk profiles: low, medium, and high. An individual’s attitude towards risk is influenced by education, investment experience, age, and environment. Gold is often perceived as a “safe” asset, yet it still carries price fluctuation risk, particularly in the short term.

Third, combine objectives and risk tolerance to determine the appropriate instruments. The combination of investment objective and risk profile will yield more rational instrument selections, including the decision of whether gold should be a primary instrument or merely a complementary element in a portfolio for diversification purposes.

It should be noted that gold prices do not move in a vacuum. They are influenced by many global factors, including geopolitical tensions, the direction of global central bank policies, the value of the US dollar exchange rate, and oil price movements. In situations of global uncertainty, investors tend to abandon risky financial assets and shift to gold as a safe haven. Conversely, limited gold supply means that surges in demand are quickly translated into price increases.

What are our options?

Ultimately, investment is not merely about pursuing the highest returns; it is also about how we safeguard and manage wealth as a trust. In Islam, wealth is viewed as a deposit that must be managed responsibly, fairly, and productively, not for excessive speculation or merely following trends.

In this context, whilst gold has demonstrated very impressive price performance over the past two years, it is not a singular answer for all needs and all people. For long-term value protection objectives, gold can play an important role in hedging against inflation, taxation, and zakat. However, gold does not provide regular returns each month.

Therefore, for productive purposes such as building a source of income during retirement, children’s education, or business development, other Islamic instruments such as sukuk or real-sector investments or Islamic business operations with sound strategy can provide more sustainable benefits. Indeed, commerce is one of the Sunnah of Prophet Muhammad SAW, who spent more time trading (25 years) than in preaching (23 years).

Consequently, gold is not the best investment in absolute terms; rather, it is one instrument that needs to be positioned proportionally according to financial objectives and risk profile. Ideal investment is one that balances security and growth, between worldly interests and afterlife orientation, and between financial profit and blessing.