In a time of financial uncertainty, gold stands out as a symbol of stability and worth. Many buyers look to this timeless precious metal to diversify their assets and portfolios — but how much gold should you actually have?
If you’re looking to purchase precious metals or open a Gold IRA, knowing the ideal amount of gold to own in order to align with your overall personal and financial goals is crucial.
In this article, we’ll aim to simplify the process of buying gold by answering a basic question — what’s the right amount of gold to own? By diving into the details of gold ownership, we’ll explore the important factors determining the optimal amount of gold for you to own.
What Should You Know About Gold as an Asset?
Gold is all around us, even if we don’t realize it. It’s both a status symbol and a safety net, with its value changing based on how pure it is. The price of gold can go up and down due to various factors like inflation, business earnings, supply and demand, and more.
Despite gold price fluctuations that can occur from time to time, gold generally holds its value well. In fact, gold’s worth has gone up by more than 12% in the past year, hitting record highs in the first half of 2024.
Moreover, gold’s enduring appeal as a symbol of wealth and prestige transcends geographical boundaries, uniting cultures and societies in their reverence for this precious metal. Its association with luxury and exclusivity has elevated gold to a coveted status symbol, signifying affluence and sophistication across diverse social strata.
As we watch gold’s value surge to new heights, surpassing previous benchmarks and setting fresh records, we are reminded not only of its economic significance but also of its timeless resonance as a symbol of value and cultural legacy.
In an ever-changing world marked by flux and uncertainty, gold stands as a symbol of stability and continuity.
Why Purchase Gold?
During tough times for the economy and when the market gets shaky, gold is like a solid rock you can always count on. People have always seen gold as a safe bet because it holds its value, even when things are going downhill economically.
Unlike money or stocks, gold keeps its value, making it a reliable shield against inflation and market ups and downs. It’s a universal store of wealth that has been trusted for ages, transcending borders and economic systems. Plus, it gives a sense of security and diversification in assets.
Being a non-correlated asset, it tends to move independently from other financial components, which means it can soften the blow during tough economic times.
Plus, because gold is something you can actually hold, it gives buyers confidence that it’ll hold its value in the long run. No matter if things are rough geopolitically or if the economy is shaky, the appeal of gold as a safe financial bet remains strong, offering stability in a constantly evolving financial world.
How Much Gold Is Right for You?
Gold is a popular commodity — the charts say so themselves.
In 2023, gold had the second-highest average daily trading volume in the United States. The S&P 500 Index was number one, but gold came in at a close second with $162.2 billion.
With all these stats, you might be wondering how much gold is right for you. Well, there are tons of recommendations from experts in the gold industry to help you figure that out.
Some experts say that 5% to 25% of your asset portfolio should be in commodities like gold or other precious metals — but then again, others suggest that your portfolio should have 10% or less in gold. At the end of the day, the amount of gold that’s right for you will depend on your personal goals and needs.
Gold has long been considered a safe haven asset, valued for its intrinsic worth and as a hedge against economic uncertainties. Its appeal as a store of value has persisted through centuries, making it a cornerstone for many buyers. Beyond its historical significance, gold’s performance in modern financial markets continues to attract both seasoned purchasers and newcomers seeking stability and asset diversification.
What To Consider When Buying Gold
When determining the optimal amount of gold to own, it’s essential to consider various factors, including your risk tolerance, investment objectives, and overall financial strategy. While some experts advocate for a more substantial percentage of gold holdings, others recommend a more conservative approach.
Ultimately, the decision on the ideal amount of gold exposure should align with your individual financial goals and preferences.
Personal Financial Goals
Have you ever thought about retiring? That is a common goal worldwide. The vision people carry is to live out the rest of their years without worrying about holding a steady job to bring in the money.
This is just one example of a personal financial goal. Other examples include:
- Saving for your dream house
- Paying for college tuition, either for yourself or for your family
- Having zero debt to your name
Use your personal financial goal as a driver when deciding to own gold and how much of it, whatever it may be.
Is your focus goal short-term or long-term? Deciding between long-term vesting or short-term does coincide with your personal financial goals. It also has an impact on what your risk tolerance is, which we will cover next.
Risk Tolerance
There are risk takers, and then there are those that play it safe. At the end of the day, those who are aggressive are not fond of the fact that they could lose money.
How much risk can you tolerate, especially when associated with your wallet? Do you consider yourself conservative, moderate, or aggressive with your finances?
Where your risk tolerance should be may differ from where you are. That is because risk tolerance is measured by:
- Age: How old are you, and when is your anticipated end date for your personal financial goal? This bleeds into time, as you may not need to be aggressive at a younger age as opposed to an older one.
- Time: How much time do you estimate before your portfolio has peaked and reached your personal financial goal?
- Portfolio Size: Is your portfolio already established and diversified, or are you just beginning to pour the foundation?
- Comfortability: Do you like to take risks, or do you prefer playing it safe with your purchase?
The State of the Economy
Get a sense of the current economic climate. Is a storm brewing, or is the economy stable?
When there is turbulent weather ahead, the scale tends to favor gold. Other purchases and assets may begin to sink with the size of the waves, while gold begins to show its peak prices.
The opposite occurs when the market is favorable overall.
If a financial crisis strikes, you have an advantage in owning gold or other precious metals.
Write down your monthly expenses. Compare those to the value of gold you own if you already have some. If you don’t, use this as a ruler to determine, at a minimum, how much gold you’ll need to stay grounded temporarily.
As a tangible asset with intrinsic value, gold serves as a reliable store of wealth that can safeguard against inflation and currency devaluation. Its purchasing power transcends the fluctuations of fiat currencies, offering you stability in times of market turbulence and geopolitical unrest.
By diversifying assets with gold, individuals and institutions can mitigate risks and enhance resilience in the face of unforeseen challenges. Gold’s inverse correlation with traditional financial assets makes it an invaluable tool for hedging against market downturns and preserving capital in times of crisis.
Its historical track record as a safe haven asset underscores its role as a protective bulwark for wealth preservation and long-term financial security.
Prediction of the Future Market
Being proactive is a stronger alternative than being reactive. Keep a keen eye out and follow active or potential geopolitical risks to mitigate this. If you aren’t sure of what to watch for, think about presidential elections as an example. Current events affect the volatility of the market.
Buying Precious Metals With American Hartford Gold
If you’re looking to get started with acquiring precious metals, American Hartford Gold is your trusted leader. Choose from a wide range of gold coins, bars, or a Gold IRA to safeguard your finances — especially during uncertain times.
At American Hartford Gold, we go beyond selling precious metals — you can also turn to us for a variety of resources regarding precious metals, like information on gold prices, the benefits of precious metals, and more. When you’re gearing up to add precious metals to your assets, trust us to help you get there.
Precious Metal, Precious Purchase
Gold bars, gold coins, and Gold IRAs are your main options when it comes to buying gold.
You can start small, conservatively purchasing gold and adding to your portfolio. Using the factors that define your wants, needs, goals, and those that impact the economy, how much gold you own is up to you.
Overall, gold is a valuable addition to consider in your portfolio.
Sources:
Financial assets by daily trading volume 2023 | Statista
Why Gold Is So Valuable And How The Industry Can Improve Transparency | Forbes
