How Much of Your Portfolio Should Be in Precious Metals?
Once you accept that gold might have a role, the real question is how much. There is no magic number, but there is a sensible way to think it through, and a case for holding none at all.
Suppose you have decided gold might deserve a place in your portfolio. The next question, how much, matters more than most people realize, because position size determines whether gold helps at the margin or dominates your results. There is no universal answer, but there is a disciplined way to reason about it.
There is no magic number
Anyone who tells you a precise, one-size figure is selling something. The right allocation depends on your age, wealth, goals, risk tolerance, and what role you want gold to play. A high earner protecting a large nest egg and a young investor building wealth have very different cases, as we noted in should you invest in gold.
The ranges people cite
Among investors and advisers who use precious metals at all, the commonly cited range is modest, often somewhere in the single digits to low double digits as a percentage of the portfolio. The logic is that this is enough for gold's diversification and crisis-insurance qualities to matter in a bad scenario, but small enough that gold's lack of yield and long flat stretches do not cripple long-run growth. Some well-known portfolio models include a fixed slice of gold for exactly this reason.
The case for zero
It is worth stating plainly: many respected investors hold no gold at all, and that is a defensible position. Their argument is that a globally diversified portfolio of productive assets, stocks and bonds, has historically outgrown gold over the long run, and that gold's lack of income makes it a drag. If you find that reasoning persuasive, owning no gold is not a mistake. This is one reason we are not in the business of telling you to buy.
How to size a position
If you do hold metals, a few habits help. Decide the percentage in advance and rebalance back to it rather than chasing the price. Count all your exposure together, physical metal, ETFs, and mining stocks, since they overlap. And remember that the costs of physical ownership argue for keeping the position meaningful enough to be worth the hassle but small enough to stay sensible. As always, a licensed adviser who knows your full picture is the right person to set a number for you.