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How to Prepare Your Gold & Silver Portfolio for 2021

Jeff Clark, Senior Analyst, 
DEC 18, 2020

I’ve put together a few simple strategies to employ in 2021. And sooner rather than later.

One reason is because when we get to next December, I don’t want to have any regrets (which I’ve sometimes had in the past, as you’ll see). The day of financial and monetary reckoning is getting nearer, and I want to fully capitalize on what I think is coming.

A few simple steps will help me do that. I share in case they’re useful to you, too.

Here are three specific investment strategies I plan to use in the new year…

Strategy #1: Get Ready To Buy

I noticed a trend when I was updating some charts. See if you can spot it in this table of gold and silver’s annual high and low prices.

Annual Low and High of Gold Prices

Over the past two decades, gold’s low for the year occurred in the first quarter of the year 50% of the time (the green boxes). And 70% of those occurred in January (or a third of the time overall).

For silver the yearly low has taken place in Q1 a third of the time. And like gold, 70% of those were in January.

It held true this year, too; if you bought at any time in Q1 you got a lower price than the current one.

This is useful information:

  • Half the time, gold’s best price of the year occurs during the first three months, particularly in January.

The message here is clear: if you want or need more bullion, history suggests to get ready to pounce. That’s what I’ll be doing.

Here’s what else I’m planning…

Strategy #2: Make Sure I Own Enough

I shorted the stock market in October 2008, when the S&P fell as much as 33% in one month. It was a short-term trade, and I personally booked a profit of over 50% in just three weeks!

Unfortunately, it made almost no difference to my overall portfolio.

That’s because I didn’t buy enough shares relative to the size of my total assets. My position was too small to materially impact my portfolio. In fact, it was so small that my net worth still ended the month lower.

I made the correct investment call. My timing was great. But my 5% allocation kept me from profiting.

I won’t make that mistake with my gold and silver holdings.

Heck, even long-term studies show that 20% is the optimal allocation to gold in “normal” times. This research covers the past 52 years and demonstrates the risk/reward ratio for gold in a portfolio of stocks, bonds, and gold.

Gold Allocation Risk vs. Reward: 20% is the Sweet Spot

But when you figure in gross monetary debasement, never-before-seen deficit spending, a stock market bubble, geopolitical conflicts—the list goes on—the argument to be overweight gold at this point in history is easy to make.

The bottom line is, anything less than 5% ain’t gonna cut it. If you have 5% in gold and 50% in the S&P, for example, then gold needs to rise 400% if the stock market falls 50% just to break even (assuming gold rises as much as stocks fall).

My personal strategy is to gear up for the scenario Mike has warned is coming. Even if he’s only half right I’ll prosper mightily. Either way…

  • Make sure you own enough physical gold and silver to make a material difference to your portfolio and lifestyle.

Only you can decide what that percentage is.

As for me, I will continue to accumulate for the big picture. While the current monetary system remains in place I want maximum protection and maximum profit potential. As such, gold will continue to be the largest portion of my investable assets.

Strategy #3: Think Like a Thief

It’s a little embarrassing to admit, but as I’ve confessed before, I’ve had gold stolen out of my house.

The thing is, I thought it was secure: the coins were stored in a small safe, well hidden from view, with a key kept in a separate room. I never talked about them (this was before I started writing about gold publicly), and they had been delivered discreetly.

But all the precautions I’d taken didn’t matter. The thief had searched my home with meticulous desperation. Once he found the safe it was only the work of a crowbar and hammer until my gold was gone.

I’ll never forgot the feelings of violation, anger, and confusion. I’m sure you can relate if you’ve been victim of burglary, too. And while the chances of home robbery are low, the current environment is getting worse, not better. And how bad does it get when the current monetary system begins its last convulsion?

I no longer keep any metal in my house, partly because of what happened, partly because I’m in the public eye, and partly because social unrest isn’t going away and could easily worsen. You don’t have to put all your physical holdings in professional storage, but in the current environment it seems prudent to avoid keeping it all in the house.

If you want some ideas on how to hide bullion in your house, check out How to Store Gold at Home and How to Store Silver Bars and Coins at Home. But think like a thief; how long before a determined or desperate burglar finds your hiding places? What if you’re home when it happens? What if they brandish a weapon and demand the combination to your safe? I encourage you and your one confidant to consider the answers to these questions, and see if maybe you should put some of your holdings in a professional vault. And don’t forget, we even offer mail-in storage now. If I help just one family avoid what happened to me it will be worth it.

  • Remember, there’s no replacement policy for your gold; it’s a bearer instrument, so if someone grabs it and sells, it’s gone for good. Put at least some in professional storage.

For me, I need to secure some odds and ends I have in different places and get them in professional storage—that way I can just log on and sell in a moment’s notice.

Ready For 2021?

The question I ask myself is this: what will my portfolio look like by this time next year?

You and I can’t control gold and silver prices, but we can control how we position ourselves for the volatile and turbulent period that’s ahead.

Regardless of how you feel about the price action this year, gold and silver won’t be in this range indefinitely. Mike Maloney’s research shows that gold could potentially hit $11,250/ounce three years from now.

I’m personally using these three strategies to make the most of the coming year.

What do you need to do to get ready for 2021?

(Follow Jeff on Twitter @TheGoldAdvisor)