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How Much Gold Should A Person Buy As A Percentage Of Their Wealth?

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Published : August 11th, 2011
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There’s plenty of opinion out there on this question, but most advisors appear to recommend somewhere between 5% and 30%.

Kevin McElroy of Wyatt Investment Research, on the other hand, isn’t inclined to put a hard and fast number on it.

He suggests there’s a ‘simple metricthat will ensure you have the bare minimum of gold or silver that you might need in a worst-case-scenario.”

Here’s Kevin’s rule of thumb for people considering this issue:

“Look at your budget for your monthly living expenses. Stuff like food, water, transportation, clothes, heating oil, etc. Add it all up to find your average monthly cost of living. Multiply that number by six, and then buy a mix of gold and silver bullion equal to that six month estimated cost.

Why six?

Assume we enter into a real life, 'as seen on TV' currency crisis, with food riots and long lines at the gas station, wheelbarrows filled with cash to buy a loaf of bread, etc. In this circumstance I estimate that at the VERY least, you'll want to have enough gold and silver to cover six months' worth of your living expenses.

Six months would give you enough time to figure out the next step - whether that's moving in with relatives across the country, or finding a new home in a different area - even moving overseas, or starting a large garden or small business that would be in demand in the aftermath of a currency crisis.

Hopefully, six months of living expenses isn't more than 5% of your net worth - it's probably also an affordable amount to get started with.

Anything more than that six month supply is extra security for your bottom dollars.

I wouldn't advise putting more than 30% of your net worth in gold or silver. That's way too many of your eggs in one basket.”

Read Kevin McElroy’s post A Gold and Silver Buyer's Guide Part II in full here.




Stephen Ward

The Perth Mint Blog




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