How much Gold and Silver should I own

Gold and Silver are considered safe haven assets – that is, assets that help your Portfolio weather economic storms. They also provide essential diversification in a way few assets can, as prices move independently of the Stock market.

For these reasons, investors often turn to Gold and Silver to hedge against meltdowns, Inflation, deflation, interest rate movements, and financially unfavorable government policies. In this way, these Precious metals act similarly to insurance for your Investment Portfolio.

The most common statistic (and one we often suggest as a baseline) is that Gold and Silver should comprise 5-10% of your Portfolio. When discounting home or Real Estate equity, some experts raise this value to 10-20%. The other 80-95% of your Portfolio can buy Stocks, Bonds, and tangible assets like Real Estate. 

This range tucks enough of your Portfolio into safe haven assets to weather Inflation or high interest rates. At the same time, you won’t be too heavily invested in assets known for holding, not growing, their value. 

But just because conventional wisdom says 5-20% doesn’t mean that’s right for everyone. And even if it were, that’s still a pretty substantial range – how do you peg the right amount for you?

Here, too, experts are divided.

For instance, one MarketWatch journalist, Mark Hubert, suggests allocating just 4% to Gold. Writes Hubert, “4% is a good place to start in determining your Portfolio’s default allocation…. You would deviate from that allocation only if you believe…that investors worldwide, collectively, are wrong about Gold’s value relative to the Stock and Bond markets.” 

Perhaps a more notable opinion comes from CNBC’s Mad Money host Jim Cramer, who recommends a flat 10% Gold allocation. He holds that 10% is the “upper limit” because Gold is “an insurance policy, and no worthwhile insurance policy should be 20% [of your Investment].”

Meanwhile, Flexible Plan Investments LTD president Jerry Wagner, who launched the first registered Mutual fund with Gold bullion exposure, argues for a 20% Gold allocation. He contends that this level “is the appropriate exposure” for traditional Portfolios.

And famous Investment analyst, advisor, and Libertarian presidential candidate Harry Browne suggested that most investors should hold equally Stocks, Bonds, Golds, and cash at 25% each.

Gold and Silver are renowned for their unique characteristics like:

• Physical tangibility 

• The ability to be spent as currency

• An inability to be replicated or manufactured

• Price movements that don’t mirror other Financial markets

• Intrinsic values dependent upon factors like mining, usage, and global supply

We’ve looked at a diverse set of opinions on how much you “should” invest in Gold and Silver. We’ve also looked at why Silver and Gold hold a unique place in each investor’s Portfolio, and what that means on a broader scale.

Now, we’re going to narrow our scope. While each individual has to determine how much Gold and Silver they should own for themselves, the following questions can help you decide. 

The most important question to answer is just why you’re buying Gold and Silver.

• Are you seeking short- or long-term gains? Portfolio diversification? A store of value?

• Are you hedging against financial or economic risks like currency depreciation?

• Do you prefer collectibles, Bullion, or metal-related Investments (like Stocks or ETFs) that produce appreciation and dividends?

• Do you plan to use your tangible Investments as currency?

Though Gold and Silver tend to appreciate over time, they’re often pockmarked by short-term volatility due to geopolitical or supply risks. These fluctuations can make investors nervous, particularly if you have a low tolerance for volatility.

However, if you’re using Precious metals to diversify your Portfolio, their short-term price movements should be offset by your other holdings, and vice-versa. 

Investors seeking short-term returns on their Precious metals may find themselves disappointed. Though Gold and Silver are known for short-term volatility, their scope (and direction) don’t always produce the massive gains that can be found in the Stock market.

Generally, it’s wise to think of the Precious metals as long-term stores of value, rather than traditional income-producing assets. (Especially because tangible metals don’t produce interest or dividends like traditional assets.)