How much should I invest in gold?

The significance of not placing all of one’s financial eggs in one basket is something that most investors are aware of and have adopted as a general rule of thumb.

Gold is a natural diversifier and safe haven asset, protecting against the possible depreciation of digital and paper fiat currencies like the U.S. dollar, the Euro, and the Pound. You should definitely own some gold at retirement, read more about how much gold you should own at retirement here. 

Gold is the best portfolio insurance you can buy. Whether or not an investor should own any gold in their portfolio is a topic of heated discussion. While some investors choose to have no gold at all, others make it a significant holding. Gold may be an excellent long-term investment, but as a rule of thumb, you shouldn’t have more than 5–10% of your portfolio invested in it.

Gold is not like stocks or bonds; hence the rules under which it is acquired will vary.

Many would-be investors ask, “How much would I earn in three years if I invested in gold or silver?” How much yearly profit can I expect to make from investing in precious metals?. Beyond your investment objectives, additional considerations should guide how much gold and silver you buy. 

Consider this: if the markets and banks were to shut for an extended period, and you couldn’t access your funds, how much gold would you need to safeguard yourself financially?

What is the place of gold in an investment portfolio?

To many investors, commodities like gold have always represented a fallback security option. Investors often go into commodities like gold at times of heightened uncertainty, rising inflation, or a downturn in the stock market.


Gold is unlike a stock in that it invests in itself or creates new value. As far as we can tell, it neither sells nor employs people. Its price is set by the market forces of supply and demand, which are related to the limited availability of the goods.

In a diversified portfolio, actual gold has its place, as savvy investors know. Gold may not have many uses in everyday life, but the precious metal is nonetheless highly sought after by investors because of its perceived inherent worth. Something of value that can’t be measured in a conventional currency. This belief leads to increased demand for gold if investors anticipate rising inflation or are concerned about the security of their other assets (such as equities or bonds).

Some people believe that gold is an excellent diversifier because of this. To understand why one must look at the asset’s low or negative correlation to other investments. 

Gold has less credit risk and volatility than stocks or other commodities, and it is uncorrelated to stocks, bonds, and commodities (except for silver; there is an occasional correlation with crude oil). Gold’s attractive attributes help it enhance a portfolio’s risk-return profile. Gold’s low correlation to other assets means that it may be used to smooth out the ups and downs of a portfolio, as diverse economic pressures affect gold’s and other financial asset prices.

A good diversifier and a safe haven/inflation hedge are almost identical. If gold weren’t a safe haven/ inflation hedge, having it in a portfolio on average (during times of upheaval) wouldn’t make much sense. If gold weren’t an excellent diversifier in regular and crucial times, then it wouldn’t be a hedge and a safe haven, either.

In conclusion, gold is a valuable diversifier since it has low or negative correlations with most other assets. Including this precious metal in your portfolio may boost its efficiency, especially when it comes to greater reward-to-risk ratios.

How much gold should I buy and how often?

The storage, security, and even liquidity of physical gold investments like bars, jewelry, and coins may be problematic. What’s more, your earnings are susceptible to fluctuations in the gold price.

Compared to alternative investment options like equities, mutual funds, fixed deposits, and other fixed-income choices, this conventional investment route is cumbersome.

For this reason, the proportion of gold in a portfolio should be low, between 10 and 15 percent.

Paper gold, such as gold exchange-traded funds, IRAs, and sovereign bonds, is another option recommended by financial advisors as an alternative to investing in actual gold.

Fortunately, there is no restriction on the amount of gold bullion one person may possess. Anyone is free to stock up on as much gold bullion as they can afford since this is not restricted by law. Gold bullion may be purchased and held in quantities limited only by one’s financial resources.

How many percent (%) of my investment portfolio should I allocate to gold?

Gold’s value tends to go down as the market rises. It is particularly successful in times of economic downturn. This is why gold is a famous portfolio addition: it serves as a hedge against inflation.

Experts recommend allocating no more than 10 percent of your portfolio to gold. If you do this, you’ll have more capacity in your investment portfolio for things like equities, bonds, P2P lending, etc.

The allocation strategies advised are:

a) 10-15%

b) 15-25%

c) 30-50%

However, you can’t treat the purchase of gold or digital money like a commodity and treat everyone equally. Your investment objectives and comfort level with risk should guide your decision-making. Identifying your risk profile is easier with the guidance of a competent financial expert or adviser.

Depending on the amount of risk you can take that should equate to the percentage you invest in gold. 

Is Gold Really Useful?

Most people think that gold has always been valued as an investment since it is used in jewelry and because it has been used as cash. Yet there is a third, less tangible, but no less genuine, quality of gold that is impossible to neglect: its mystery. Gold’s allure stems, in no little part, from its aura of mystery.

Gold may represent a finite and material entity, like currency, and a more abstract idea, like a sentiment or a collection of emotions. The psychology and character of the human experience may explain why gold has always had value.

Gold is a popular investment option because of its high value in the current day. Gold is purchased by investors who are gloomy about the economy or the stock market or who simply wish to protect their wealth from inflation.

In addition to its monetary worth, gold is highly sought after for its jewelry and ornamental uses because of its rarity, beauty, and durability. This fact has made gold a desirable commodity outside of the realm of banking and economics for ages.

Is it better to save cash or gold?

Gold could be a more secure and convenient alternative to currency for long-term financial storage. Because interest rates are still low, and your cash in the bank yields nearly nothing. When adjusted for inflation, the cash can be worth less now than when you first got it. There has also been a long-standing perception of gold’s reliability.

Will gold go up in the next 5 years?

In the next four to five years, the price of gold is expected to rise to $7,500. The eightfold spike in gold prices recorded following the stagflationary era of 1973–74 is consistent with the observations of others who have followed the precious metal for decades.

Can you get rich investing in gold? 

That’s right, you certainly can. 

A robust and high-performing portfolio may benefit significantly from the addition of gold. Gold has assisted millions of investors in weathering economic storms, realizing higher profits, and hedging against inflation.

States continually give in to the temptation to create money. Thus, it is risky to hold your money in fiat currency. Your buying power will decrease as prices grow over time.

Gold’s durability as a store of value won’t make you wealthy, but it will guarantee that your money is protected from the ravages of inflation.

Building wealth takes time and effort. To do so, one must put aside money, take precautions, and invest wisely. Gold is very abundant there.



Author: Agbaje Feyisayo
Agbaje is a financial writer for American Bullion that has covered top brands such as Microsoft, Google and Johnson & Johnson.