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The last month, creating a rush of interest among investors who were seeking financial security amid today's economic uncertainty. Central banks are also buying the precious metal at record rates, and this institutional buying shows strong confidence in gold's value.
Financial advisors generally advise keeping gold investments to around 10% of your portfolio. But in today's economy, is this conventional allocation still best — or should it change now that the economic climate is shifting? Below, investing professionals share their perspectives on and what factors to consider when structuring your investments now.
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Jack Hanney, CEO and senior partner of Patriot Gold Group, a leading gold IRA company, believes allocations should increase at this time.
"[The traditional allocation] made sense when things were steady … but we're not in those times anymore," Hanney says. So, "[investors might want to] move closer to 20% or even 25% depending on their situation."
On the other hand, Brandon Aversano, CEO of The Alloy Market, recommends that most people maintain the conventional 10% to 15% allocation. More risk-averse investors might benefit from slightly higher percentages.
Ultimately, though, the best gold allocation depends on your financial situation, risk appetite and outlook on economic factors, experts say. As a result, there are situations in which it makes sense to increase your gold allocation — and situations in which it doesn't.
"[Consider] increasing gold in your portfolio if you have a strong conviction that gold will maintain or increase in value across time," Aversano advises.
This strategy makes sense if you expect ongoing global tensions, rising inflation or a weaker U.S. dollar.
Hanney suggests a measured approach to increasing your gold exposure.
"The smart move isn't to panic and go all in overnight," Hanney says. "I recommend dollar-cost averaging. Buy a little over time, especially when the market pulls back."
Ronnie Gillikin, president and CEO of Capital Choice of the Carolinas, a financial planning firm, offers a more tactical perspective.
"It can make sense to [increase exposure to] gold while it's up and the market is down," Gillikin says. However, he cautions against viewing current high prices as a buying opportunity for long-term growth.
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"I'd recommend maintaining the gold allocation in your portfolio if you're playing the long game and your portfolio is already diversified," Aversano says.
With this approach, gold acts as an .
Hanney echoes a similar perspective for certain investors.
"If [you have] a diversified portfolio with real assets, minimal debt and some good exposure to metals, it can make sense to stay where [you] are," Hanney says. However, he advises regular portfolio reviews since today's markets change fast.
Generally, experts see few reasons for reducing gold holdings right now.
"The only reason to cut gold exposure would be if [you] need liquidity for something urgent," says Hanney.
Adding to this, Gillikin suggests it could make sense to while it's high to capture gains.
Several economic and personal factors should influence your , according to experts, including:
Once you've determined your ideal allocation, explore three expert-recommended ways to add gold to your portfolio:
As , the ideal allocation depends on personal circumstances. Experts, including Hanney, suggest adjusting your approach based on where you are in life. For example, younger investors might want to stay around 15% while those near retirement might consider 20% or more for enhanced wealth protection.
Before making changes, consult a financial advisor who can offer gold investing advice based on your situation. As Aversano notes, the goal is to "hold enough to protect your wealth, but not so much that missing out on risk asset growth hurts your long-term returns."
