The answer to that question may be one of the biggest decisions any investor will have to make. Keep in mind that the question is no longer whether or not you should buy gold and silver but which type of metal and how much.
Because studies have shown that having portfolio diversification with gold, silver, and platinum can have a significant effect on lowering risk and offering a higher return on assets. (As platinum tends to be more volatile than gold and silver, it may be best for only those investors with a deep experience in metals to invest in platinum.) The renowned U.S. firm Wainwright & Co. Economics Inc. looked at the value of gold in a retirement portfolio as a protection against inflation and this was their conclusion: “… an U.S. equities portfolio in which 15% of the assets are diverted to gold bullion would be effectively immune from damage due to a rising gold price and that is… equivalent to immunity from inflation.”
Gold and Silver Ratio?
According to a study by the U.S. firm Ibbotson Associates, investors can potentially improve their balance of risk and reward with a precious metals exposure of 7.1% in conservative accounts, 12.5% in moderate accounts, and 15.7% in aggressive accounts. In their study precious metals can include silver or platinum, but more generally they mean gold.
As to what gold and silver ratio you should have in your portfolio, the answer to this question is dependent entirely on your particular investment goals and objectives. Many experts believe the chances are far better that the price of silver could double, triple, or even quadruple before gold doubles in price. Traditionally, the price ratio for silver to gold has been 17 to 1. As of this writing, that ratio is 72 to 1. Many believe that silver is grossly undervalued. Also keep in mind the many industrial uses of silver, especially in electronics, that will always keep demand high.
It’s also true that silver tends to move more in price, both up and down. One protection afforded by gold’s higher price is that its price tends to be more stable than other metals. The rule of thumb is this: If you’re looking for a higher return and are willing to handle the risk exposure, then silver may be for you. If you’re looking for something more stable and conservative, then gold may be the ticket. In both cases it is recommended that investors prepare to hold their metals for three to five years, longer is even better. Precious metals are best as a longer term investment.
We believe successful investors are willing to do their homework and educate themselves. Before you invest any of your money, make sure to do your own due diligence and get the best information available. You can begin this process by downloading a FREE Gold and Silver Investing Guide that will help answer many of your questions about gold and silver investing.
This gold investing guide will provide answers to questions like these:
Providing answers to questions like these and others our guide offers many important money saving tips. This guide has helped teach many of our clients how to invest in gold like an expert. If you’d like to save precious time and possibly thousands of dollars, you need to read this today!