Gold, silver continue their descent; an interesting take on the level of commitment to precious metals in a well-balanced portfolio

Gold, silver continue their descent; an interesting take on the level of commitment to precious metals in a well-balanced portfolio by Michael J Kosares for USA Gold

Gold continued its descent but the rate of decline seemed to be slowing this morning. It is down $10 at $1856 (after yesterday’s $40 decline). Silver’s descent, however, continues at a more virulent pace. It is down 82¢ at $22.03 – a roughly 3.5% decline from yesterday (and a nearly 25% decline from its peak of $29 in early August.) We note a pick-up in the number of orders at our online purchasing portal the past two days for both gold and silver – a reminder that there are always safe-haven investors with a longer-term profile who see corrections as buying opportunities.

Investors often ask about the percentage commitment one should make to precious metals in a well-balanced investment portfolio. Analyst Michael Fitzsimmons offered an interesting take on that subject in a recent Seeking Alpha editorial, “Assuming a well-diversified portfolio (which does include cash for emergencies),” he says, “my belief is that middle-class investors (net worth under $1 million), should own at least 5-10% in gold. I also believe that as an American investor’s net worth climbs, the higher that percentage should be because, in my opinion, he or she simply has more to lose by a falling US$. For instance, an investor with a net worth of $2-5 million might have a 15-20% exposure to gold; $10 million, perhaps a 30-40% exposure.” (More on Fitzsimmons thinking in the “Chart note” below.)

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