SUMMARY :

1) Our recommendations on how much to invest in gold

 

When it comes to investing, the adage ‘don't put all your eggs in one basket’ is an inescapable precept. Solid, long-term performance can only be achieved by diversifying your financial and non-financial assets. In particular, this makes it possible to smooth out risk, with one asset outperforming another in difficulty at a given point in time. 

This is particularly true in a securities or PEA account, where it is worth holding both live securities (LVMH, Air Liquide, Michelin, etc.) and ETFs that replicate either indices or commodities such as gold. 

But diversification can also involve tangible assets, such as property (unfurnished, furnished, commercial, etc.) combined with shares in forestry or wine-growing groups, or investment gold bullion. 

Provided that the investor's risk profile and time horizon are respected:

- Allocating between 5% and 15% of the total portfolio to physical gold is a good balance in terms of security, diversification and return. 

- A 5% allocation is preferable if you have a relatively short investment horizon, in order to focus on more dynamic and riskier assets, which are sources of higher returns. 

- Choose an allocation of 20% if you are mainly looking for prudence, particularly in a period of political or economic instability.

2) The factors influencing this gold allocation 

 

The allocation of a portfolio cannot in any case remain static or freeze over time, because exogenous events will necessarily occur and have a low or high impact on your gold allocation.  

This is why it is important to maintain some flexibility and liquidity to modulate and evolve the proportion of gold that you want to hold in your investment portfolio. 

Among the elements that can change the allocation, we can note:  

-  THE INVESTMENT HORIZON. If an investor has a long-term investment horizon, they can afford a slightly lower allocation because they have time to absorb possible market fluctuations. 

- THE PERSONAL OBJECTIVES SET BY THE INVESTOR. Indeed, an active young investor will rather seek the dynamism of shares and the payment of dividends to possibly generate performance. This type of investor will therefore tend to make a lower allocation in gold. On the contrary, an investor close to retirement will rather be in a logic of protecting his capital with therefore a higher allocation in gold. 

- INVESTOR RISK APPETITE. If the investor has a low risk tolerance, he will prefer to invest in physical gold to stabilize his portfolio. Conversely, a person looking for risk and rapid performance will turn to more volatile assets than gold. 

3) What are the advantages of including physical gold in your portfolio?

 

Holding physical gold in your portfolio offers a number of significant advantages:

- It protects against periods of inflation, preserving purchasing power over time.

- It preserves the value of your assets by acting as a safe-haven, offsetting the loss of value of certain assets in the event of a crisis (fall in real estate, financial crash, etc.).

- This makes it easier to reduce portfolio volatility, since physical gold is perfectly uncorrelated with other assets, notably financial (equities, bonds) or real estate.

- It provides security against counterparty risk or the risk of bankruptcy when an investment is dependent on a financial intermediary (broker, property developer, investment fund, etc.).

 

4) How do I store my physical gold?

 

Every investor in physical gold is first confronted with the problem of how to store his gold. Whether bullion bars, ingots or investment coins, the fact remains that this investment has a definite value, and securing its acquisition is not something to be overlooked.

There are several ways to store your gold, but here are the three most common:

- STORAGE YOUR GOLD YOURSELF, usually at home. This is legally possible and desired by some investors who don't necessarily trust a third party or the costs involved. While the major advantage is the immediate availability of one's gold, this storage option is not very secure.

Given the high risk of loss or theft, this storage option will often require the purchase of a highly-secured safe, also at a considerable cost. By extension, it would be wise to include dedicated insurance, as well as the installation of an alarm or video surveillance system.

- USING A SERVICE SUPPLIER SPECIALIZED IN SECURE STORAGE. In this case, the investor must accept the idea of entrusting his gold to a third party. The advantage is the peace of mind of knowing that your gold is in high security. Generally speaking, these specialized companies have highly protected premises with alarms, video surveillance and even security guards. Here again, specific insurance policies come into play.

- STORAGE IN A SECURITY BOX at a bank. This is a very common solution, offering maximum security for your gold investment. It also offers confidentiality and insurance against damage and theft. The only major drawback is the limited accessibility of your gold investment, subject as it is to the bank's opening hours.

 

Nb: from a purely practical point of view, and whatever option you choose, it's important to keep your certificates of authenticity safe and to inform a trustworthy person of the location of your gold.

 

 

5) Our advice on investing in physical gold

 

While there is no single best practice for investing in physical gold, there are a few practical recommendations to follow:

- Get information and advice from gold investment professionals like GODOT & FILS. Our experts will be able to guide you through the process of acquiring physical gold in the form of ingots, bullion or even collector's items.

- Don't buy gold at any time. Gold is bought either gradually, in small quantities, or during major downturns in the price of gold. That's why it's important to keep an eye on economic and financial trends:

  • To avoid being carried away by the euphoria of a continuous rise in gold (FOMO syndrome) 
  • To make the best possible adjustments to your gold allocation to maintain an optimal balance in your wealth strategy.

- Focus on liquid assets, particularly reference collector coins such as British Sovereigns, South African Krugerrands and LBMA-certified bullion.