Due to its unique physical properties, gold has been used as money for thousands of years.Since the collapse of the Bretton Wood system in 1971 however, gold has no official link tothe monetary system. What drives gold prices today and what role the metal should serve inan investment portfolio are highly debated questions. The aim of this report is to bring factsand clarity to this debate. To examine the drivers of gold prices an OLS-regression has beenconducted on the period 1971-2021. From the regression and with the support of graphs and previous literature we concluded that gold is positively correlated with money supply and negatively correlated with real interest rates. In order to study what place gold has in amodern investment portfolio, we have used sharpe ratio as a measure of a portfolio’sefficiency. The ratio was optimized in Excel, and we found that the gold/US equity portfoliowhich had achieved the highest sharpe ratio during our testing period consisted of 5.68% goldand 94.32% S&P 500 TR. We also studied gold’s performance in times of economic crisis and found that gold has worked as a protection against downturns in the stock market.