How Much Gold Should You Own? 9 Experts Weigh in on Gold Allocation in a Portfolio

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Last Updated on: 29th March 2023, 12:14 am

In these times of economic unpredictability, savvy investors recognize the necessity for diversification as a hedge against soaring inflation, economic uncertainty, geopolitical tension and the potential for a global recession.

Historically, a diversified retirement portfolio that includes precious metals such as gold and silver has proven to be a judicious investment strategy. Central banks know it, and that is why they have purchased a record amount of gold recently, as reported by CNBC. 

In this article, 9 experts weigh in about what percentage of your retirement portfolio should be allocated to gold and silver.

Four Times the Value of Gold Versus Silver Assets

“The general rule for gold and silver is that you should have 5 – 10% of your portfolio in gold and silver. However, that could be too large in portfolios later on. I think of gold and silver as a more stable form of cryptocurrency. The prices can swing, just not as much as cryptocurrency. On average, gold and silver increase by over 4% each year, which beats inflation. But gold decreased by 20% in the 1990s, and silver increased by 74% in 2021. No one can accurately predict these prices.

Precious metals are still risky assets, and retirees cannot expect gold and silver to maintain value, much less increase in value. When someone is young, they may have up to 10% of their portfolio before they turn 45. After that, I would reallocate 1% of a retirement portfolio every 2 to 5 years to lessen the risk. This will ensure enough time for investors to see their assets increase in value but make them less exposed to sudden drops in value.

When allocating for precious metals, I recommend having four times the value of gold versus silver assets. Silver is the most volatile of the precious metals, while gold is the least volatile.”

Omer Reiner, President and Licensed Realtor, FL Cash Home Buyers, LLC

I Include 15% in my Own Portfolio

“There is no should that works for all retirement portfolios. It is absolutely possible to create a portfolio that meets a person's retirement objectives and risk tolerance that does not include gold or silver. However, metals are often uncorrelated with other asset classes and can help reduce the ulcer index of a portfolio as measured by the excellent tool provided by Portfolio Charts. So I would say that I recommend an allocation that has a tolerable ulcer index combined with an acceptable return (based on historical performance with all the normal caveats).

Recent markets are testing that uncorrelation so we will see how it plays out. Gold and Silver are relatively volatile in isolation. The magic is in the mix with other asset classes.

I include 15% in my own portfolio and it keeps my ulcer in check.”

Carol Christie, CFP®,  Free to be Finance LLC

5-10% of a Retirement Portfolio to Gold and Silver is a Sensible Choice

“There is no definitive answer when it comes to allocating a percentage of a retirement portfolio to gold and silver.

Some experts recommend 5-10%, while others advocate for a much higher percentage. Ultimately, it depends on the individual investor's goals and risk tolerance. That said, there are a few reasons why allocating a portion of a retirement portfolio to gold and silver makes sense.

First, these precious metals can act as a hedge against inflation. Over time, the purchasing power of paper money declines, but gold and silver tend to hold their value. This makes them a good investment for those who are worried about the long-term effects of inflation.

Second, gold and silver tend to be less volatile than stocks and other investments. This means that they can provide stability for a portfolio during periods of market turbulence. This can be especially helpful for retirees who can't afford to see their nest egg decline in value.

Finally, gold and silver have historically outperformed other investments during periods of economic uncertainty. This makes them a good choice for those who are worried about another recession or market crash.

For all of these reasons, allocating 5-10% of a retirement portfolio to gold and silver is a sensible choice for many investors.”

Michael Ryan, Current Financial Coach, Retired Financial Planner

Two Main Ways to Invest in Gold and Silver

“I would suggest investing a maximum of 5% to 10% of your portfolio in Gold and Silver. Gold and Silver are considered to be a safe haven when the stock market is volatile, or there are macroeconomic crises. Unlike other assets, they're not dependent on the market to derive value. Investors with high-risk tolerance can invest more in the metal. If we compare the price of gold and silver to the US dollar over a long period of time, we can see that there has been a steady increase in the price of gold and silver.

There are two main ways to invest in gold and silver – physical gold and silver or through a gold and silver mutual fund or ETF. If the investor has a low-risk tolerance, then investing in gold and silver through a gold and silver mutual fund or ETF is a better option. The reason is that when you invest in physical gold and silver, you're exposed to not just market risk, but also the risk of theft and fraud. Mutual funds and ETFs are invested in actual gold and silver bullion stored in vaults across the world. They don't charge storage costs or insurance premiums.”

Lorie Carson, Founder and  Marketing Manager, Real People Finder

1% to 5% of a Retirement Portfolio to Gold

“Every person should have some gold; there is never a good time to purchase it.

There is never a good time to purchase gold, but I predict that the price will reach $2,000 per ounce by the end of the year. Every investor's portfolio ought to include some gold.

Typically, I advise allocating 1% to 5% of a retirement portfolio to gold. But now, that might increase from 5% to 15%.

Most people's portfolios still only include a minimal amount of gold. However, a slight rise of 1% to 2% might significantly impact.”

Steve Wilson, Founder, Bankdash

I Believe 10% is a Good Starting Point

“As a business owner, I would recommend allocating 10% of a retirement portfolio to gold and silver. Gold and silver offer a level of security and stability that other investments cannot match and can be a valuable hedge against inflation. While there will always be fluctuations in the market, gold and silver have proven to be excellent investments over the long term.

Of course, every investor's situation is different, and some may choose to allocate a larger or smaller percentage of their portfolio to gold and silver. But for most investors, I believe 10% is a good starting point.”

Iam Akshay, Founder, OnlineCourseing

15% is Just Perfect

“Having enough is not a feast. Why? Because it is only enough. This is why we must not depend fully on all we have saved during our active years and spend our retirement funds like it is sufficient forever. When we understand money as a concept, we will then become proactive in ways we can put it to use. Remember you won't have to work for money any more in your retirement days. You now must put your money into use, and make it work for you.

Gold and silver are worth allocating a portion of your retirement portfolio to. Whenever the economy goes down, people run to gold so the value of their money can stay intact and not necessarily diminish as a result of inflationary shocks. While silver is cheap to acquire. In fact, silver has performed relatively well and has become a steady commodity owing to its use in the manufacturing industry for the production of solar panels, electric contact batteries, etc.

What percentage of our retirement portfolio should then be allocated to these two metals, gold and Silver? 15% is just perfect. You can allocate 10% to gold because of its stability and 5% to silver because of its volatility.”

James Peterson, Marketing Manager, Nitrous Whips

My Ideal Percentage is Between 10% and 20%

“First, I think that the allocation to precious metals depends on the financial situation, objectives, and risk tolerance of each individual. Nevertheless, I believe that every portfolio should allocate a certain percentage to Gold and Silver. My ideal percentage is between 10% and 20%, and the economic business cycle is the determinant of whether I would overweight to 20% or decrease the allocation to 10%. The reason behind this theory is that when there is excessive optimism and the economy is thriving, Gold and Silver do not outperform other asset classes.

In contrast, Gold and Silver rise when economies are struggling due to their status as a safe haven. As such, during economic growth and expansion, I would decrease the allocation to a minimum of 10%, while during recessions and economic contractions, I would increase it to 20%.

When it comes to allocation between Gold and Silver, I would go with 65% (or 2/3) with Gold and 35% (or 1/3) with Silver. Silver is more volatile than Gold, and it is more linked with the use of the metal rather than a way to store value in financial distress, that's why I would allocate a lower percentage. Gold, on the other hand, is better for diversifying your overall portfolio and a hedge against inflation.” 

Toni Nasr, CFA, FRM, Fintech Analyst, Investingintheweb.com

I Mostly Hold Gold Eagles, Maple Leaves, and Krugerrands

“Due to the lack of a collapse of the stock market, this is a highly debated issue – Typically the answer is 10–20%.

Stocks are in bubble territory, many analysts will tell you the only thing keeping them high is interest rates.

In response to your question, if you're holding stocks, make sure your stop losses are extremely tight. Make sure that you don't keep cash in the bank if you have it. Also, now may be a great time to pay down any debt you have, and pick up 3 to 5% of your assets in cheap cryptocurrency. As long as you own real estate, this will take care of your real estate needs, so I will invest your cash and investment funds in gold and silver.

My personal tip is to stick to coins rather than collectors of gold and silver. As far as coins go, I mostly hold Gold Eagles, Maple Leaves, and Krugerrands. I would also recommend silver currency coins when it comes to silver, as they are easy to sell, although you might only get silver price. The future is unknown, but I doubt things will be favorable.”

Max Shak, Founder, SurvivalGearShack.com

The Takeaway

Everyone desires peace of mind, regardless of their retirement goals. If you are interested in adding gold and silver to your retirement portfolio, you can do so with a self-directed IRA. These types of accounts enable you to build your retirement portfolio that appreciates in value on a tax-advantaged basis.

As with any investment instrument, always do your due diligence. For more information, have a look at our reviews for the top gold IRA companies.

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