Financial advisors recommend that investors allocate 5% to 20% of their portfolio into precious metals to secure their assets and protect their money from rising inflation and a difficult world economy. Your exact percentage will vary, depending on your individual situation and investment goals.
Stocks and Precious Metals are two different asset classes. Each class has its own advantages and disadvantages, but a diversified portfolio makes you less dependent on a single asset class for overall performance. When stocks and precious metals are combined into a single portfolio, a "non-correlated" asset is created. The "non-correlated" relationships of these two classes are ideal partners! When gold is rising stocks are generally falling in value, and vice versa.
In January of 2000, Bob, Mary, and Steve each had $50,000 to create a portfolio. Bob takes his $50,000 and acquires five of the most widely held stocks (AT&T, Coca-Cola, G.E., Microsoft, and Merck). Since all of Bob’s assets are in a single "class" (stocks), he has created a "correlated" portfolio. After seven years, and trouble in the stock market, Bob has experienced a $6,343 LOSS and is left with only $43,657.
Mary wanted to diversify her portfolio by owning "two classes" of assets (stocks and gold). Mary acquired the same five stocks and also put $15,000 into gold bullion. By doing this, Mary created a "non-correlated" portfolio. Mary purchased 53.5 ounces of gold in the form of Gold American Eagle bullion coins in January of 2000 for $280 per ounce. By January of 2007, bullion prices reached $610 per ounce. Since Mary had 53.5 ounces of gold, she saw the value of her bullion go from $15,000 to $32,626, which offset the losses her stocks experienced over the same 7-year period, giving her a $13,186 GAIN!
Another investor, Steve, also decided to diversify his portfolio by acquiring "Two Classes" of assets. He selected the same five stocks and for his precious metals, instead of bullion, Steve acquired certified $10 Liberty Head coins in MS63 condition from prior to the 1933 government confiscation of gold. There are only 88 of these coins in this condition in the entire world.
As the demand for rare gold coins grew, the law of supply and demand took over and the value of these coins increased from $1,000 per coin in January of 2000 to $3,000 per coin by January of 2007 (these are actual documented prices). Steve saw the value of his $15,000 investment in certified rare coins increase 200% to $45,000 and his diversified portfolio of falling stocks and rising Investment Grade Gold Coins experienced a $25,560 GAIN, increasing his overall portfolio by 51.12% to $75,560.
If you want to be like Steve, the secret is to acquire the right coins at the right time. Though this is no easy task, working with your Metals Specialist to discuss your investment goals and objectives will enable us to recommend specific coins and portfolios that will give you the best chance of realizing the return that you're looking for.
Our Free Investors Kit will walk you through the entire process and show you case studies from different investors. We also provide the tools to help you determine the best investment strategy to pursue, based on your individual investment goals and your unique profile.