Stuart Simonsen of Billings, MT reports on the markets, finance, and investment news. In the following article, Stu Simonsen discusses how many wealth management companies are utilizing gold investments to get their clients ahead of the inflated dollar.
Investment demand for silver is gaining ground, with many believing the metal will run higher than its gold counterpart. However, others believe that the long-loved yellow metal will remain the best way for savvy individuals to preserve their wealth. In fact, many financial planners and advisers suggest that individual investors should have enough gold in their portfolios to recover their wealth for at least 24 months.
Stuart Simonsen of Billings, MT says that silver is a good short-term trade. However, following the COVID-19 pandemic, gold is a tried-and-true wealth store, even in the face of a recession. And many other top financial analysts and CEOs agree.
The Yellow Metal Hedge
According to analysts, gold has returned roughly 6.6% every year since 1971, outperforming the S&P 500 since the same date, making the yellow metal a hedge for purchasing power.
Stu Simonsen reports that most experts can’t see silver experiencing the same growth in the long term unless an individual or government monetizes it.
After all, there are reasons why royalty, central banks, governments, and countries keep holding gold. The yellow metal has offered peace of mind in uncertain times for centuries — from the Dotcom boom to the 2008 recession. And according to Stu Simonsen, many wise-headed investors will keep using gold for its purchasing power capabilities as the years roll on.
But This Begs a Question — How Much Gold Should Investors Hold for Wealth Preservation
Stuart Simonsen of Billings, MT recommends an ultra-simple formula for investors wondering how much gold they should have to preserve their wealth. Individuals should hold enough gold to cover their living expenses for at least two years.
By figuring out projected monthly living costs, plus a few incidentals, hopeful gold investors should be able to multiply this number by 24 and put the final figure away in physical gold investments. Stu Simonsen explains that doing so will provide investors with enough funds to carry on living their preferred lifestyle amid recessions or even a depression.
However, not all investment experts believe this to be the case. As many would expect, recommendations for the amount of gold individuals should have in their portfolio vary wildly.
For instance, many financial experts note that some wealth planners suggest that individuals should hold between 10% and 20% of their net worth in precious metals – gold and silver alike.
Others agree, stating that 20% gold allocation is substantial exposure for a traditional portfolio.
On the other hand, a few free-market analysts report that the percentage should be higher, with stocks, bonds, cash, and gold taking up equal shares of a portfolio (i.e., 25% each).
In contrast, some investment specialists advocate for a much lower percentage of 4%. The thought process behind this 4% figure is a great “default” setting for portfolios, recommending individuals deviate from this allocation if they believe the worldwide investing market is wrong about the gold metal’s price.
Stuart Simonsen of Billings, MT says that with all these differing opinions, it’s no wonder that individual investors find it difficult to allocate the “correct” percentage of gold in their portfolios.
Although some formulas appear to recommend a workable method for all, making gold allocations for wealth preservation easier, even for first-time investors is key.
Still, Gold Is More Than Just a Wealth Preservation Tool
Stuart Simonsen of Billings, MT praises gold for being more than just a value store during economic downturns. He notes that utilizing precious metals can be a hedge against inflation to an extent.
However, Stu Simonsen says that this practice is met with some negativity by other analysts, citing that ever since the early 1980s, the yellow metal hasn’t displayed the best performance as an inflation hedge.
But financial analysts encourage people to look at things differently, saying that it isn’t like the tickle effect in 2010 or 2011. Instead, it’s money going into the system.
At the time writing, gold prices are down a mere 9% from their record high, prompting Stuart Simonsen of Billings, MT to make his hedge against inflation recommendation with confidence.
Diversification is Key for Ultimate Wealth Preservation
Experts agree that holding gold is a great wealth preservation method. However, individuals should consider diversifying into other markets as well. This way, an individual’s entire nest egg isn’t taken with it if one goes down.