How Much Precious Metals Should You Have In Your Portfolio?

Portfolios and a calculator on a desk

June 14, 2023

Diversifying your financial holdings with a precious metals portfolio is highly recommended by the vast majority of experts, and for good reason. Owning tangible assets comes with a myriad of benefits, but how much of your portfolio should be in precious metals? 

The quick and easy answer is that there’s no quick and easy answer! Conservative analysts may say that 5% of your portfolio should be allocated to precious metals, while precious metal bulls may recommend 20% or more. It’s a personal decision that can vary from person to person.

While the 5%-20% range is what you’ll most typically see thrown around, there are plenty of investors who hold the vast majority of their wealth in precious metals. Others don’t own a precious metals portfolio at all. Below, we’ll explore how much precious metals you should hold.

Four Important Factors to Consider

Let’s start by taking a look at some of the most crucial factors to consider as you determine the right figure for your portfolio.

1. Current and Future Economic Climate

What’s your view on current economic conditions? What about a year from now? 10 years? 50 years? Famously, people who foresee stormy economic weather turn to precious metals as a safe haven asset.

For example, savvy investors often buy gold when there’s a banking crisis, during periods of inflation, and during a recession

Precious metals perform especially well during uncertain economic conditions because people lose faith in fiat currency and other intangible investments, trusting that a precious metals portfolio will better retain its worth, and often even grow.

Even when economic conditions are sunny, speculation about the future plays a major role in how much of your portfolio should be in precious metals. If you’re not confident in where the economy is heading—short or long-term—owning precious metals is a great way to achieve peace of mind.

2. Your Current Investments

What does your portfolio look like right now? If there was a stock market crash, would your holdings survive?

What’s your risk tolerance? Do you have enough wealth to gamble with your finances, or are you seeking stability as a priority?

A precious metals portfolio can add that extra level of dependability you need, especially if you’re currently heavily invested in riskier investment vehicles such as cryptocurrency, for example. That said, gold bullion is not likely to skyrocket in value, but that’s not the point of gold ownership.

Simply put, if you value stability, precious metals are the historically proven standard. That’s not to say there isn’t room for growth. Many speculative investors believe that less popular precious metals like palladium, platinum, and even silver could see substantial growth in the future.

3. Industrial Use Cases

People who lack faith in intangible investments are not the only ones bullish about their precious metals portfolios. We’re currently at a unique point in time with many signs pointing to a modern-day precious metals rush.

In fact, if you ask some experts how much of your portfolio should be in precious metals, they’d give a much higher figure than the usual 5%-20%, specifically because of the rising demand for precious metals in industrial settings.

Technology is constantly evolving. Naturally, the materials required to facilitate innovation change as well. Precious metals aren’t only beautiful. They have very unique characteristics that make them absolutely essential for many industries.

For example, platinum and palladium are used to make catalytic converters that reduce vehicular pollution. Gold and silver are irreplaceable in many electronic applications. A precious metals portfolio could explode in value as more and more people realize that these finite resources are becoming increasingly scarce by the day.

4. Your Lifestyle and Financial Goals

Are you a savvy investor who’s willing to watch the charts all day, making snap decisions to maximize your return on investment? Or are you the type to bury your gold in the backyard so it’s there if an emergency arises? Maybe you’re somewhere in the middle?

Not everyone is cut out to be a day trader. Many fortunes have been lost by good people who made bad decisions. Owning a precious metals portfolio is an attractive option among all types of investors because you can set it and forget it worry-free.

Consider your willingness to monitor and maintain your financial holdings as you determine how much of your portfolio should be in precious metals. The beauty of precious metals is that they have a long history of maintaining their value. The same simply can’t be said for intangible investment vehicles.

While precious metals can be flipped to turn a quick profit in the right market conditions, that’s not their purpose. If you don’t want to stress about when to sell or hold, having a larger precious metals portfolio just makes sense. 

Which Precious Metals Should You Choose?

 A variety of precious metal coins and bars

After deciding how much of your portfolio you wish to allocate to precious metals, the next step is to break that figure down into the four major options: gold, silver, platinum, and palladium. Each metal has its own unique benefits, so you’ll want to take the time to learn about each one.

Gold: The Undisputed Classic

You can’t go wrong with gold bars or gold coins. The classics never go out of style! The vast majority of analysts will immediately recommend gold as the first and largest addition to any precious metals portfolio.

Gold has remained a reliable store of value since the ancient days. A hundred years ago, an ounce of gold bought a fine suit, and it still does today. The great thing is that you don’t have to worry about your gold losing its value. The downside is that astronomical growth is unlikely.

Silver: The Affordable Option

A major part of choosing how much of your portfolio should be in precious metals is determining the amount of fiat you’re willing and able to spend. Silver coins and silver bars are extremely attractive to investors who find the price of the other precious metals to be intimidating or unattainable.

Silver’s easy entry point isn’t the only reason to add gold’s younger sibling to your precious metals portfolio. Silver’s volatility can lead to fantastic short-term returns. Additionally, silver bulls anticipate a bright future due to the metal’s high demand in the electronics sectors.

Platinum and Palladium: The Sleeping Giants

Platinum and palladium may not be as iconic as gold and silver, but that doesn’t mean they should be ignored. As mentioned, the fact that they’re essential to the production of catalytic converters is a massive sign, and that’s just one of many use cases.

Unless you’re a serious platinum and/or palladium bull, it’s probably best to have the majority of your portfolio in gold and silver. However, even having a very small amount of them in your precious metals portfolio could lead to a very pleasing return on investment. Risk can lead to reward.

How to Buy Precious Metals

Buying precious metals is as easy as buying anything else. Just make sure you’re working with a reputable dealer. We stock all four major precious metals in bullion coins, bar formats, and numismatics.

We also offer brokerage services and stock IRA-eligible precious metals. If you’re interested in opening a precious metals IRA or converting your current IRA or former 401(k), our friendly experts will walk you through the easy process from beginning to end.

Opening a precious metals portfolio is a fantastic way to plan for your retirement and preserve your family’s wealth. There’s no better time than now!

We’re Here to Help

A person analyzing their financial portfolio

These tips will put you on the right track, but every investor is unique. How much of your portfolio should be in precious metals can vary widely from person to person. We get that. That’s why we provide personalized guidance.

At Endeavor Metals, we’re proud of our exceptional customer service. We connect with our customers on a one-on-one basis to ensure their complete satisfaction. With over 50 years of in-house experience, our precious metals specialists can provide unbiased information so you can make the right decision.

If you’re interested in starting a precious metals portfolio, check out our FAQs and our blog for more information. As a Tier 1 precious metals dealer, we’re committed to customer satisfaction, and that starts with proper research. 

Our goal is to make your precious metals acquisition an enjoyable and straightforward experience. Contact us for a free consultation today. We’ll talk about your financial goals, needs, and preferences, and then provide concrete facts.

Diversify Into a Time-Tested Store of Value

If you’re ready to take the next step and add precious metals to your financial portfolio, you’ve come to the right place. We offer a wide variety of high-quality, authentic products at competitive prices. Preserve your wealth with a precious metals portfolio today.

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