As for gold, silver and other precious metals, financial blogger Len Penzo points out that many experts recommend keeping 10 to 20 percent of your net worth (excluding home equity) in precious metals.
Set up a Gold IRAis a great way to invest in these precious metals and don't pay dividends: physically owning gold and silver or other precious metals doesn't provide an opportunity to earn dividend income. This is a very common debate regarding these investments, as investments in dividend-paying stocks can offer investors an opportunity to accelerate portfolio growth. That said, many so-called “experts” recommend investing in stocks, with an investment of 30 to 40% in precious metals. It is generally said that between 10 and 20% of that amount should be in gold and silver each, although that depends on you.
This assignment may be a little more confusing if platinum, palladium and other metals are also considered. Your portfolio should be structured in a way that helps you achieve your long-term goals. However, many experts warn that you should be careful about the amount of gold you should include in your portfolio. A general rule is to limit gold to no more than 5% to 10% of your portfolio.
Depending on your situation and your risk tolerance, you may be more comfortable with a larger or smaller share of gold in your portfolio. Investors can invest in gold through exchange-traded funds (ETFs), buy shares of gold miners and associated companies, and purchase a physical product. These investors have as many reasons for investing in metal as there are methods for making those investments. Gold, silver and other precious metals are natural resources with a limited supply.
Due to the finite supply of precious metals, as demand increases, prices are likely to rise as well. Gold values represent physical gold, but you don't have the right to exchange them for real metal. At the other end of the spectrum are those who claim that gold is an asset with several intrinsic qualities that make it unique and necessary for investors to keep it in their portfolios. Finally, if your primary interest is to use leverage to benefit from rising gold prices, the futures market may be your answer, but keep in mind that any holding based on leverage involves significant risk.
Now that the U.S. Federal Reserve has apparently finished raising interest rates in the near future, that should bode well for gold and silver, when rates are low. For this reason, investors often consider gold as a safe haven in times of political and economic uncertainty. The history of gold in society began long before even the ancient Egyptians, who began to make jewelry and religious artifacts.
That would be true if you believe that the dollar is a fair value compared to gold right now. In the end, gold can be an excellent addition to your portfolio as long as you know why you include it and can help you achieve your long-term financial goals. I like to think of physical gold and silver as financial insurance against inflation, which provides the ability to “set a specific rate”. The idea that gold preserves wealth is even more important in an economic environment where investors are faced with a declining U.
The traditional financial advice is that gold should represent 5 to 10 percent of assets, or 10 to 20 percent if home equity is not included. However, before deciding that you need to buy gold immediately, it's a good idea to take a step back.