Setting Realistic Expectations
Physical gold and silver are not get-rich-quick investments. They're wealth insurance—assets designed to preserve purchasing power during times of monetary instability. Understanding this distinction is essential before allocating any portion of your portfolio.
Over the long term, stocks have historically outperformed gold in total return. But gold has preserved purchasing power during periods when stocks and currencies failed. The question isn't "which is better"—it's "what are you protecting against?"
Why People Own Physical Metal
Wealth Insurance
Protection against currency crises, banking system failures, or economic collapse. You hope you never need it—but it's there if you do.
Portfolio Diversification
Gold's low correlation to stocks and bonds can reduce overall portfolio volatility. When other assets fall, gold often holds or rises.
Purchasing Power Preservation
Over decades, gold has roughly maintained its purchasing power while fiat currencies have lost 97%+ of their value since 1971.
Allocation Considerations
Common Allocation Ranges
Financial advisors who recommend precious metals typically suggest:
- Conservative allocation5-10%
- Moderate allocation10-15%
- Aggressive allocation15-25%
Factors That Affect Allocation
- •Time horizon: Longer horizons can tolerate more volatility
- •Other assets: Your existing portfolio composition matters
- •Income stability: Secure income allows more insurance allocation
- •Risk tolerance: Can you hold through 30%+ drawdowns?
- •Economic outlook: Your view on inflation, debt, and currency
What We Don't Recommend
Putting Everything in Gold
Gold can underperform for years or decades. A 100% allocation exposes you to significant opportunity cost and volatility with no diversification benefit.
Using Emergency Funds
Physical metal isn't instantly liquid. Don't allocate money you might need in the next 12-24 months. Keep cash reserves for genuine emergencies.
Buying on Credit
Borrowing to buy precious metals is speculation, not insurance. Interest costs and margin calls can force you to sell at the worst possible time.
Expecting Quick Returns
Gold can drop 20-30% in months and take years to recover. If you need returns in the next 1-3 years, precious metals are the wrong asset class.
Gold vs. Silver: Choosing Between Them
Gold
- ✓More stable, less volatile
- ✓Compact—high value in small space
- ✓Lower storage costs per dollar
- ✓Central banks hold gold, not silver
- ✗Higher entry point per piece
Silver
- ✓Lower entry point for beginners
- ✓Industrial demand plus investment demand
- ✓Potentially higher upside in bull markets
- ✗Much more volatile than gold
- ✗Bulky—storage becomes a factor
Common approach: Gold for the core position, silver for diversification within precious metals.
IRA vs. Personal Possession
Precious Metals IRA
- ✓Tax-deferred or tax-free growth (Roth)
- ✓Use existing retirement funds
- ✓Professional secure storage
- ✗Annual custodian and storage fees
- ✗Can't take possession until distribution
Personal Possession
- ✓Direct physical control
- ✓No annual fees
- ✓Immediate access and liquidity
- ✗No tax advantages
- ✗Security and insurance responsibility
Many clients do both: IRA for tax-advantaged retirement savings, personal possession for immediate access and insurance against systemic risk.
Ready to Discuss Your Situation?
Every portfolio is different. We can help you think through how precious metals might fit your specific circumstances—or help you determine if they don't fit at all.
Note: Allocation percentages discussed are general observations from industry commentary and should not be construed as personalized investment advice. Individual circumstances, risk tolerance, time horizons, and financial goals vary significantly. Consult a qualified financial advisor to determine appropriate allocations for your specific situation.