For the last two months we have been running a poll asking readers and clients ‘What % allocation to bullion do you prefer?’
This is an interesting question to ask, as we are frequently asked what percentage allocation to gold and silver we think investors should give their portfolios.
When you listen to portfolio managers you may hear anything ranging from ‘zero, don’t go near the stuff’ to someone such as Sprott who recommends a much more significant allocation. So, to save confusion we thought we would turn to our trusted readers and clients and ask what allocation to gold bullion bars they prefer.
Voters were given 7 options as to how they could allocate their portfolio, ranging from 0% to 80% plus. We are used to hearing a range of clients tell us that they give anything from 5% to 50% allocation, but the results from 1,000 investors went above and beyond what we expected.
We were surprised to find that the majority of voters (33%) prefer an 80% and above allocation to bullion in their portfolio.
We would not have been surprised to find that the majority of voters believe a minimum of 5% allocation should be given to gold, but in fact we found 82% of voters believe you should hold at least 20% of your portfolio in bullion.
It is important to note that, of course, those answering the poll were already predisposed to want to invest in gold and silver, but even so it was surprising to see such a huge leaning to holdings above 80%.
These gold bugs are conviction traders!
US investors hoarding gold bars
Half of the votes came from the US, whose selection unsurprisingly mirrors that of the overall result:
Brits buying gold more manically than Yanks
In a surprising contrast, those who voted in the United Kingdom were significantly more bullish when it comes how much bullion to hold. Over 44% of UK voters prefer an 80% allocation to gold, compared to just over 30% of US voters.
In contrast to the overall results, UK voters are less likely to want to allocate around 50% of holdings, which was an otherwise second most common trend in votes.
It is clear from the graphs below, that whilst the results are not consistent across countries or continents, that there is a clear desire to hold a significant proportion of gold in your portfolio.
This graph may be slightly misleading as some continents/groups of countries had only one or two countries contributing to the survey.
One finding which may be surprising to many is that the Asian countries appear to be the most cautious when it comes to gold investment, unlike western countries who appear to have a greater extreme between high allocation preferences and lower ones.
However, in India, where one may expect the preference for gold allocation to be above 80%, the majority prefer an allocation to bullion of 60-79%. Still high, but one wonders if recent import duties and a weak rupee have changed preferences.
It is interesting to see that in South America they wish to hold a minimum of 40% in bullion, but the majority prefer to hold over 80%. This is in contrast to North America where, like Australasia, they prefer to hold between 60 – 79% of their portfolio in bullion.
How much gold bullion is best?
Whilst there is quite clearly a preference to hold a large majority of your portfolio in bullion, it is clear that even those who are predisposed to invest in safe havens disagree even with each other what the correct percentage allocation to gold is.
Therefore, if you’re looking for an answer to the question ‘how much of my portfolio should I allocate to gold and silver’ we would have to say, there’s no correct answer.
It’s all about what works for you. Be sure to buy gold with that, ultimately, in mind.
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