Gold in a balanced portfolio

 

Should you diversify with gold?

Maybe the question is Should you add gold to your portfolio? Or should gold play some role in a well balanced portfolio? Gold has served as a store of value for over 5000 years, but it has gone through very long periods where it has lost value. It’s good at protecting against inflation and is a currency hedge. But it does not have any yield, and if you take physical possession there will be storage fees etc. Some of the professional money managers say you should have between 5%-10% of your portfolio in precious metals, others have suggested up to 25%. I think that is a little too aggressive.

I have always owned a small portion of gold, and have a few cold coins that were purchased back in the 1990’s when the price was around $300 an ounce. In addition, we have gold receipts (ETR) in our registered accounts just in case things get bad and governments start going bankrupt. I’ve noticed there has been a low or negative correlation between gold and other assets, especially equities and bonds. Gold helps smooth out our portfolio when the market gets choppy. We only have about 2% of our total investable assets in gold as it produces no yield and we are still trying to grow our portfolio. It is even a smaller portion of our net worth. I am optimistic, even though I believe there will be a recession in the next few years. It won’t be all doom and gloom even though it might feel like it. We hold gold for insurance purposes, not as an investment.

Here is a YouTube Video. It is 25:55 min long. Mike Maloney explains money, currency and Gold. It is worth watching !!

If you are interested I have written a post Here about YouTube copyright policies.

 

 

Comments

  1. Mike Malone videos are good . I watched the series when they first came out. 2% holding in Gold will not make much difference to your portfolio if you are looking at it as an insurance policy. At any given time I hold 10% + in my portfolio.

    • Thanks Justin, the video’s are worth watching you need a little more time as they are each 30 minute ish. For the 2% question, I watch things pretty closely and would add to my position if things change. I am also looking more for income at this stage of my journey and gold has no yield.

    • I use Canadian mint ETF (mnt.to) it’s on the Toronto stock exchange but any gold bullion ETF will do the same.

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