The stock market is on a roll. The S&P 500 hit new all-time highs for six sessions in a row for the first time since June 2017. The Dow has hit record highs 63 times this year, and the index is close to hitting 23,000 for the first time in history.
Stocks are soaring, but global tensions have a chance to complicate markets. Political tensions in North Korea can set markets tumbling.
Investors are already padding their portfolios, flocking to safe haven assets, just in case the markets begin to falter. Investing in gold and silver are two of the options that investors are pursuing, Tips that can help non-gold investors safeguard their portfolio include:
1. Know Market Influences on Gold
Gold can be influenced. The precious metal doesn’t have industrial uses, and this means that the market is primarily influenced by investors. The commodity is used primarily in electronics and in jewelry.
Gold is closely tied to currency strength.
Stronger currency will equate to lower gold prices. When the dollar is strong, gold tends to remain timid. Based off of this information, you’ll find that currency, and gold as a consequence, are tied to:
- Global economics
- Trade deficits
- Monetary policy
- Economic data
You can use this information to your advantage by purchasing gold when prices are low, and hoping for its value to rise during economic downturns.
2. Limit Your Exposure to Gold to Some Extent
You should use gold to help balance your portfolio from inflation, but that doesn’t mean that your entire investment portfolio should be dedicated to gold. Instead, gold should be purchased to be a balancer.
Don’t make 50% of your portfolio gold.
Instead, you want to perform a balancing act. A highly recommended diversification level would be:
- US stocks
- Foreign stocks
- Short-term investments
So, where does gold fit into the mix? Jim Cramer suggests that you have up to 10% of your portfolio consisting of gold.
3. Pursue Gold IRAs Cautiously
There are gold IRAs, but you want to proceed with caution. There’s a lot of trust that goes into gold IRA accounts, and if you can’t trust the IRA company fully, they shouldn’t be managing your account. There are a lot of companies running scams, too.
I suggest reading reviews to dig deeper into any company you use for investing. Lear Capital reviews is a good example of a page that provides all the information you want to learn about a gold IRA, including:
- Hold time (how long you’re required to hold on to the asset)
- Complaints against the company
An IRA will allow you to invest in your retirement in a smart way. This is relatively hands-off, so you can invest your money and not worry about holding the gold.
Gold, essentially, puts you at long-term currency exposure. When possible, you always want to have physical gold. Several gold-related investment companies went under during the most recent market crash, and since investors didn’t have physical gold, they lost their investment.
Gold is a physical asset, and if you’re investing in gold, make sure you have physical gold in your portfolio, too.