A general rule is to limit gold to no more than 5% to 10% of your portfolio. Depending on your situation and your risk tolerance, you may be more comfortable with a larger or smaller share of gold in your portfolio. The part of your portfolio that you dedicate to precious metals will depend on your sensitivity to risk. In general, we advise our clients that between 5% and 15% of their portfolio be dedicated to precious metals.
Peter Schiff has always recommended having between 10 and 20% of an investment portfolio in physical precious metals. But how much of that percentage should be in gold and how much should be in silver? An assignment to precious metals can be an attractive risk management tool. Precious metals can be a dynamic and multifaceted protection against many forms of risk. They also have a history of mitigating investor portfolios in the face of serious market declines (chart).
This is especially useful for long-term investors looking to protect themselves against a wide spectrum of known and unknown risks. Instead, Cramer has created five groups of stocks that will protect a portfolio and, at the same time, make the most profit. To begin with, every retail investor should have no more than 10 to 15 stocks, comprised of high-yield stocks, growth stocks, speculative stocks, healthy geographic stocks, and gold. The easiest way to add gold to a portfolio is through an ETF called SPDR Gold Shares, commonly known by its symbol GLD.
Talk to your financial advisor about how to invest in popular gold or low-risk precious metal ETFs before you start investing in gold and precious metals.