+++ How much gold makes sense in a portfolio? +++
Hello everyone,
At the beginning of 2024, I started to include gold in my portfolio and opted for EUWAX Gold II
$EWG2 (-0,3 %) in the process.
The diversification was particularly important to me in order to make myself less dependent on fluctuations in the stock market and global political events and to ensure long-term value retention.
For me, this is a sensible building block in any portfolio.
For me, diversification now also includes cryptocurrencies such as Bitcoin
$BTC (-1,52 %) and Ethereum
$ETH (-0,52 %)which have also made a significant contribution to increasing my portfolio.
Since the beginning of the year gold an impressive increase in value of almost 30 % achieved.
For me, gold and cryptocurrencies remain a long-term investment.
Current gold-all-time highs:
-In Euro: € 2,567.11
-in US dollars: $2,787.54
(Reached on 30.10.2024 -closing prices)
Diversification ⚙️
This always raises the question for me:
How much gold in a portfolio actually makes sense?
There are different strategies for this, which depend heavily on the individual investment strategy, risk appetite and market conditions.
Many experts, investment banks and investment advisors recommend a gold share of around 5-10 % of the portfolio.
Strategies for the ideal gold weighting in the portfolio
1. classic diversification (5-10%)
One allocation of 5-10 % in gold is considered a proven approach to diversify a portfolio.
(Allocation refers to the strategic distribution of assets across asset classes).
-Protection against systematic risks:
Gold often moves in the opposite direction to equities and bonds. In times of crisis, gold remains stable or increases in value.
-Limited opportunity costs:
A moderate proportion of gold hardly affects the growth potential of the portfolio, as the majority is invested in higher-yielding asset classes such as equities or bonds.
-Global hedging:
Gold not only protects against local market risks, but also against global uncertainties such as geopolitical tensions or economic crises.
Example of a balanced portfolio:
-55 % equities and ETFs
-30% bonds
-10% gold
-5% cryptocurrencies
2. defensive strategy (10-20 %)
A gold share of 10-20 % is particularly suitable for conservative investors or in times of heightened uncertainty.
-Focus on value preservation:
Gold offers stability in turbulent market phases or when risk appetite is low.
-Hedging against specific risks: A higher proportion of gold makes sense, particularly in the event of high inflation, currency devaluations or geopolitical conflicts.
Example of a defensive portfolio:
-40 % bonds
-30% equities and ETFs
-20% gold
-10% other real assets (e.g. real estate funds)
3. tactical allocation
A flexible, tactical allocation can make sense for experienced investors.
-Anti-cyclical investing:
Gold holdings are increased when risks (e.g. fears of recession) increase and reduced when markets are stable.
-Taking advantage of market cycles:
Active management makes it possible to benefit from fluctuations in the gold price.
Example:
-Stable times: 5 % gold
-In times of crisis: up to 15 % gold
Important: This strategy requires in-depth market knowledge and continuous monitoring of the economic situation and a quicker response.
Forms of gold investment
-#1 Physical gold (coins, bars): Direct control and safekeeping, but involves storage costs e.g. for a safe deposit box.
-#2 ETFs/ETCs: Easy trading and low costs.
My favorite: EUWAX Gold II
$EWG2 (-0,3 %)
EUWAX Gold II is an exchange-traded commodity (ETC) from the Stuttgart Stock Exchange that securitizes the ownership of one gram of gold from a 100-gram gold bar.
On request, the physical gold can even be delivered to the exact gram.
A particular advantage of this product is the free delivery from a quantity of 100 grams within Germany.
EUWAX Gold II also impresses with its tax structure:
As it is treated like physical gold, capital gains are tax-free after a holding period of more than one year.
In addition, there is generally no tax deduction when selling via banks or online brokers.
🔖 Savings plan options with:
- Scalable Capital
- Comdirect
- Consorsbank
- DKB Bank
3.Gold mining shares: Higher risk, but potentially higher returns.
My favorite in the gold mining sector:
Newmont $NEM (+3,02 %)
🔑
Newmont is the only gold company in the S&P 500 and scores with strategic acquisitions and low production costs (all-in sustaining costs) of currently 1.620 USD per ounce.
I hope you enjoyed this insight! I'll keep working on exciting articles for you.
How do you weight gold in your portfolio? 💬
Best regards
Michael
