Gold, Silver and Resource Stocks

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The expected average return for physical gold and silver is just inflation while the expected standard deviation (risk) is very high. As a result, the optimum asset allocation to physical gold and silver is 0%. It is not near the efficient frontier. If you want to purchase some physical precious metals, we recommend limiting your purchase to 3-5% of your investable assets. An investment is something which pay you money. By that definition, gold is not an investment.

We recommend you use resource stocks as an inflation hedge. Investing in commodity based stocks is different than investing in commodities or commodity futures. Here are some articles to expand on these principles:

Safeguard #4: Buy Investments That Trend Upward

Investing in gold and silver coins

Mailbag: I’d like to withdraw money from my IRA to purchase physical silver.

Investing In Gold

Asset Allocation and the Efficient Frontier

How keeping your money “safe” might lose half of it in 16 years.

Hedge Inflation Risk with Hard Assets

Inflation Part 3: Protecting Yourself Against Inflation

Gold Mining Companies Glitter More Than Bullion

Invest in All Six Asset Classes

‘Go Fishing’ With Hard Asset Stocks

Limit Your Investment In Gold and Silver To Less Than 3% of your Portfolio

The Optimum Asset Allocation to Gold Is Always Zero

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Follow David John Marotta:

President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.