Owning physical gold and silver holds significant importance for investors seeking to diversify their wealth. These precious metals have been valued throughout history for their intrinsic qualities, making them a popular choice for hedging against economic uncertainties and preserving purchasing power. 

‍

Unlike traditional paper instruments, physical gold and silver represent tangible wealth that you can hold in your hands. This attribute adds a level of security and control, allowing you to directly manage and store a part of your wealth outside the financial system.

‍

How much physical gold and silver should you own?

While it's often suggested that physical precious metal should represent 10%-30% of one's overall holdings, the actual amount can vary from one person to the next. Here are some key factors to consider:

1. Financial Goals: The amount of gold and silver one owns should align with specific wealth-protection objectives, whether short-term or long-term. Factors such as the need for capital preservation, wealth growth, or income generation play a crucial role in determining the optimal allocation.

• Short-term goals may necessitate a more conservative allocation to gold and silver, focusing on liquidity.
• Long-term goals, such as retirement planning, may warrant a higher allocation to benefit from the stability and preservation of value offered by precious metals over time.

‍

2. Risk Tolerance and Investment Objectives: Each investor has a unique risk tolerance level and investment goals. The proportion of gold and silver in a portfolio should reflect an individual's comfort with market volatility, desire for stability, and long-term wealth preservation objectives.

• Higher risk tolerance may lead to a smaller allocation to gold and silver, allowing for greater exposure to potentially higher-risk, higher-reward assets
• Lower risk tolerance may result in a higher allocation to precious metals as a means of mitigating overall portfolio risk.
  
  

2. Economic Conditions: Consideration of prevailing economic conditions, including inflation rates, global economic trends, and geopolitical factors, is essential. Gold and silver often serve as effective hedges against economic uncertainties, and the allocation may be adjusted based on the investor's outlook on these conditions.

• Inflationary environments often favor higher gold and silver allocations as hedges against currency devaluation.
• Deflationary concerns may prompt investors to increase their allocation to precious metals as a store of value.
• Economic uncertainty or geopolitical tensions may lead to an increased allocation to gold and silver as safe-haven assets.

4. Portfolio Diversification: The role of gold and silver in portfolio diversification is vital. Investors may determine their allocation based on the correlation of precious metals with other asset classes, aiming to reduce overall portfolio risk and enhance stability.

• The correlation of gold and silver with other assets in the portfolio is crucial. Precious metals often have a low correlation with stocks and bonds, making them an extremely effective counterbalance.

‍

5. Preference for Tangible Assets: Physical gold and silver are tangible assets you can hold in your hand and store at home. Real estate is the other popular investment vehicle that is a tangible asset. Stocks, bonds, CD’s, annuities, cryptocurrencies are all digital and paper assets.  

• Investors who prefer tangible assets typically allocate a higher percentage to physical gold and silver.
• Those comfortable with paper assets typically allocate a smaller percentage to precious metals.

The historical performance of gold and silver shows them to be first-rate investments that offer the benefits of tangible assets, such as the ability to store them at home, as well as the time-tested financial protection they offer during times of political and economic uncertainty. 

‍

So how much should you own?

‍

Each situation is unique and only you can answer that question. Hopefully this article has given you some useful information to consider.

‍

Contact us to discuss your specific situation and goals, and we can help you find a balance of gold and silver that’s right for you based on real-time market data.