For this reason, investors prefer to add gold to their portfolio — to hedge against inflation. Most estimates assume that gold investments should only make up 5-10% of your portfolio and nothing more. This ensures that your portfolio has room for other investments, such as mutual funds, stocks, P2P loans, etc. There is so much money in circulation (paper and digital) that switching to a gold standard is impractical and highly unlikely.
Some investors will use technical analysis to determine whether gold or silver is a better investment at this stage. The easiest way to add gold to a portfolio is with an ETF called SPDR Gold Shares, commonly known by the symbol GLD. It’s worth noting, however, that if your short-term outlook for the overall economy is very positive, you should keep your gold investment to a minimum, as it would be expected that the price of gold could subside as the global economy recovers and starts to grow faster. Some believe that the United States would benefit from its gold reserves if it switched to a gold standard.
However, I wouldn’t recommend more than 10%, even if you really like the fictitious security of gold. Some investors believe that gold isn’t just a hedge against inflation or a useful part of a diversified portfolio. Another interesting approach to deciding how much gold you should allocate to your investment portfolio is to measure the percentage of global financial assets that gold bars make up. Depending on your situation and risk tolerance, you may feel more comfortable with a larger or smaller share of gold in your portfolio.
First, every private investor should own no more than 10 to 15 stocks, including high-yield stocks, growth stocks, speculative stocks, a healthy geographical stock, and gold. The price of gold often moves in the opposite direction to the dollar. So if the greenback weakens, gold is likely to appreciate. Ultimately, gold can be a good addition to your portfolio, as long as you know why you’re taking it up, and it can help you achieve your long-term financial goals. Because of this view, investors tend to buy gold when they are nervous about the risks of other investments (such as stocks or bonds) or the forecast of high inflation rates.
Similarly, a report from the National Bureau of Economic Research, written by Campbell Harvey and Claude Erb (former fixed-income and commodities manager at mutual fund firm TCW Group) at Duke University, suggests that gold is a decent inflation hedge over long periods of time, measured in decades. Spreading your investment interests across stocks, real estate, and precious metals is a smart and low-risk way to manage your portfolio.
