How much do you allocate to gold?

[sutebayashi]

If an asset class in my portfolio drops in value, my plan is always to buy more of it, to bring it back up to ithe desired percentage, not to sell it because it lost some value.

If I thought I might want to sell something because it was actually trash, then I wouldn't buy it in the first place. If you don't believe in gold I would not buy it in the first place. I don't buy crypto for this reason, but I could be tempted to trade it for speculative purposes possibly ..

[ChapInTokyo]

If an asset class in my portfolio drops in value, my plan is always to buy more of it, to bring it back up to ithe desired percentage, not to sell it because it lost some value.

If I thought I might want to sell something because it was actually trash, then I wouldn't buy it in the first place. If you don't believe in gold I would not buy it in the first place. I don't buy crypto for this reason, but I could be tempted to trade it for speculative purposes possibly ..

Well everyone to their own tastes.

Me, I don't believe there's intrinsic value in gold in the same way that there is intrinsic value in stock or bonds.

I rather think I will set a stop loss order at a price higher than the cost of the invested amount + fees so that if the market turns against gold I will still have my capital unimpaired. If gold continues to rise of course, I can nudge the stop loss price higher in response thus locking in a part of the gains.

[sutebayashi]

I think that's fine, I do such myself too, but it's short term trading rather than investing.

[ChapInTokyo]

I think that's fine, I do such myself too, but it's short term trading rather than investing.

Perhaps. I think if the price of gold keeps rising it’ll turn into a profitable long term allocation. On the other hand if the current enthusiasm for the metal wanes, I would not be too sorry about taking profits and increasing my US treasuries allocation again.

I’m keen to have long term growth with minimal impairment of capital, however temporary it may prove in the long term.

[northSaver]

I agree that this sounds more like trading than investing to me, but as long as you're aware of that and are comfortable spending some of your retirement time and money on it, then that's absolutely fine. Before you start, I think you should ask yourself some questions:

1. What will you set your initial stop loss to? A percentage, a fixed cash amount, or a level determined by looking at a chart?

2. What will you do if your initial stop loss is hit? Enter again, or take the loss and forget about trading gold?

3. If the price goes up, when will you set your stop loss to break even?

4. How will you feel if your initial or break-even stop loss is hit and then the price goes up without you?

5. Will you set a target "take profit" order too, or just keep moving your stop loss up until it gets hit? If a target, what will it be? If a trailing stop loss, what criteria will you use to move it, and by how much?

6. Will you enter again if your trailing stop loss gets hit and you end up in profit? If so, how?

7. If you make money, what will you do with it? Reinvest in something else or put it in your spending pot?

There are probably more. These are all questions a trader must ask themselves before they enter a trade. It's not so simple! But it's enjoyable when you win, so I'm not saying don't do it. Just be aware that it's not really investing.

As to the use of gold in an investment portfolio, this has been discussed many times on here but just to reiterate. It's not to produce yield on its own. It's to produce portfolio yield while reducing the risk. Not everyone is comfortable with 100% stocks - some people need bonds, cash, gold, property, REITs, etc. to feel comfortable. It's just another way to diversify your portfolio and weather a storm. But I agree, it's not for everyone. To each there own

Good luck with your gold journey.

[ChapInTokyo]

I agree that this sounds more like trading than investing to me, but as long as you're aware of that and are comfortable spending some of your retirement time and money on it, then that's absolutely fine. Before you start, I think you should ask yourself some questions:

1. What will you set your initial stop loss to? A percentage, a fixed cash amount, or a level determined by looking at a chart?

2. What will you do if your initial stop loss is hit? Enter again, or take the loss and forget about trading gold?

3. If the price goes up, when will you set your stop loss to break even?

4. How will you feel if your initial or break-even stop loss is hit and then the price goes up without you?

5. Will you set a target "take profit" order too, or just keep moving your stop loss up until it gets hit? If a target, what will it be? If a trailing stop loss, what criteria will you use to move it, and by how much?

6. Will you enter again if your trailing stop loss gets hit and you end up in profit? If so, how?

7. If you make money, what will you do with it? Reinvest in something else or put it in your spending pot?

There are probably more. These are all questions a trader must ask themselves before they enter a trade. It's not so simple! But it's enjoyable when you win, so I'm not saying don't do it. Just be aware that it's not really investing.

As to the use of gold in an investment portfolio, this has been discussed many times on here but just to reiterate. It's not to produce yield on its own. It's to produce portfolio yield while reducing the risk. Not everyone is comfortable with 100% stocks - some people need bonds, cash, gold, property, REITs, etc. to feel comfortable. It's just another way to diversify your portfolio and weather a storm. But I agree, it's not for everyone. To each there own

Good luck with your gold journey.

Thanks for your advice. This will be a useful list to check off while deciding on what prices to set for stop loss.

Who knows, it may be that I will find that gold prices actually bounce back after a market correction in the same way stock prices do most of the time, in which case I might get comfortable with simply buying & holding a small allocation to gold for it’s diversifying benefits without the backstop of a stop loss order…

As it is I see the current enthusiasm for gold as largely driven by distrust of the dollar denominated Treasuries and so the money flow could easily reverse if/when trust is restored.