17 Mar 2024  Sergio Martin Rubio  2 mins read.


Precious Metals Portfolio Allocation

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Introduction

People often wonder, “How much gold or silver should I buy?”, but there’s no perfect answer. It depends on factors like risk, speculation, or value storage. Also, don’t forget about other metals like platinum and palladium for further portfolio diversification.

Understanding Precious Metals

The most popular precious metals are gold and silver, but we should not overlook platinum and palladium. Each of them is impacted differently, so for proper portfolio diversification, we should study all of them.

Gold is probably the most stable of all four metals, especially because it’s not used as much as the others for industrial purposes. Its price is often influenced by long-term economic decisions made by central banks.

Silver is used a lot in electronics and other industries, so changes in demand can really shake up its price.

Platinum is mostly used for catalytic converters in diesel vehicles, so impacts in the automotive sector might also affect the price of platinum. It’s also used in making chemicals, refining oil, and electronics.

Palladium is also used for catalytic converters, but mostly in gasoline-powered vehicles, as diesel vehicles emit more particles and platinum has superior performance in reducing NOx emissions. In 2022, 80% of the demand for palladium comes from the automobile sector.

Benefits of Precious Metals in a Portfolio

Precious metals can help diversify an investment portfolio and reduce overall risk. In times of uncertainty precious metals are used as store value or hedge against inflation.

Strategies for Precious Metals Allocation

A fixed percentage allocation is typically used by many investors. It consists of allocating a fixed percentage of each metal and rebalancing periodically.

A tactical allocation strategy is a more complicated method of diversifying your precious metals investments. It involves adjusting your metal holdings based on short-term market predictions or other factors.

Dollar-cost averaging is another strategy that allows investors to gradually accumulate precious metals over time.”

Fixed Percentage Allocation with Precious Metals Manager

The Precious Metals Manager app lets you choose how much of each metal you want in your portfolio. It then tells you how many ounces to sell or buy to balance your portfolio based on the current spot prices.

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