What percentage of investments should be in precious metals?
The portion of your portfolio that you dedicate to precious metals depends on your risk sensitivity. We generally recommend that our clients dedicate 5 to 15% of their portfolio to precious metals. Because of their more modest returns, it is best to invest more heavily in precious metals later on in the investment career. Those starting their investment careers are often best at investing just 1-2% of their investments in precious metals.
However, there are exceptional circumstances under which it might be advisable to invest in more significant precious metals at the start of your career. Peter Schiff has always recommended holding 10-20% of an investment portfolio in physical precious metals. But how much of that percentage should be in gold and how much in silver? Your portfolio should be structured so that you can achieve your long-term goals.
However, many experts warn that you should be careful how much gold should be added to your portfolio. A rule of thumb is to limit gold to no more than 5 to 10% of your portfolio. Depending on your situation and risk tolerance, you may feel more comfortable with a larger or smaller percentage of gold in your portfolio. The investigation revealed that the “sweet spot” for the gold share in the portfolio is 20%.
long term, this offers the best balance between risk and return. From an investment theory perspective, precious metals also offer little or negative correlation with other asset classes such as stocks and bonds. This means that even a small percentage of precious metals in a portfolio reduces both volatility and risk. Readers should probably never regard gold as a core holding company in their respective portfolios, as gold and accompanying metals can be unpredictable, pay no dividends and could pose a liquidity challenge, particularly in physical form.