Rebalancing is a strategy that involves periodically adjusting the allocation of assets in a portfolio to maintain a desired level of risk and return. When it comes to investing in physical precious metals, rebalancing can be a useful way to manage risk and potentially increase returns over time.
Here's how to rebalance your physical precious metals investments:
Determine your target allocation: Start by determining your target allocation for precious metals. This should be based on your investment goals and risk tolerance. For example, you may want to allocate 10% of your portfolio to gold and 5% to silver.
Calculate your current allocation: Next, calculate your current allocation of precious metals. This will give you a starting point to work from.
Compare your current allocation to your target allocation: Compare your current allocation to your target allocation. If your allocation is below your target, you may want to consider buying more precious metals. If your allocation is above your target, you may want to consider selling some of your holdings.
Determine the amount to buy or sell: Once you've determined whether you need to buy or sell, calculate the amount to buy or sell to bring your allocation back in line with your target. For example, if you currently have 12% of your portfolio allocated to gold and you want to bring it back to 10%, you may want to sell some gold to bring your allocation back in line.
Execute the trade: Once you've determined the amount to buy or sell, execute the trade. If you're buying, make sure to purchase from a reputable dealer and store your precious metals securely. If you're selling, consider working with a trusted advisor to ensure that you're selling at the right time and getting a fair price.
Repeat regularly: Rebalancing is a long-term strategy that requires regular attention. You should aim to rebalance your precious metals holdings at least once a year, or more frequently if market conditions warrant it.
Rebalancing your physical precious metals holdings can help you to manage risk and potentially increase returns over time. However, it's important to keep in mind that rebalancing requires discipline and a long-term investment horizon. Market fluctuations can be unpredictable, and it's important to have a clear understanding of your investment goals and risk tolerance before investing in physical precious metals. Working with a trusted advisor can help you to develop a rebalancing strategy that's tailored to your unique financial situation and goals.
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Disclaimer: Investing is a personal choice. You make your own decisions on when and how to invest. You can make money and you can lose money investing. The statements made on this website are opinions and past performance is no indication of future performance or returns. Precious metals, like all investments, carry risk. Gold, silver and platinum coins and bars may appreciate, depreciate or stay the same depending on a variety of factors. WJ Gold PMI cannot guarantee, and makes no representation that any metals purchased will appreciate at all or appreciate sufficiently to make customers a profit. The decision to purchase or sell precious metals, and which precious metals to purchase or sell are the customer's decision alone, and purchases and sales should be made subject to the customer's own research, prudence and judgement. WJ Gold PMI does not provide investment, legal, retirement planning, or tax advice. Individuals should consult with their investment, legal or tax professionals for such services.