Short answer: as much as you can!
One of my blog's readers today emailed me on how to go about buying gold quietly. I passed along my suggestions (short answer: coin shop). The question provided the spark for today's submission.
For everyone, it all depends. Some of the factors include:
(1) whether or not you own any now, and how much
(2) your net liquid wealth
(3) your being able to store it safely
(4) the balance of investments you currently have
(5) your assessments of the financial and investment landscape ahead
(6) how much your spouse will let you buy :-)
There are others, but let's go through these factors one at a time. Re (1), you would have to be VERY POOR in my book not to own any gold. Yes, yes, I understand gold is expensive. Gold can be bought in tiny quantities though if you have little money. I am not sure where, but you can buy in tiny quantities (I think you can actually get little 5 gram and even 1 gram wafers). With persistence you can find some 1/10th oz Gold Eagles, I have given them away to nephews and nieces... A 1/10th oz Gold Eagle will set you back some $175, almost anybody can come up with that. There is not really a good excuse I can think of for almost everyone not to own at least some gold, even if it is not much. And I could argue that the economy and the twisted financial system we have should push relatively poorer people INTO a gold position.
Re (2), measuring your gold value divided into your NET LIQUID WEALTH (not counting your house, car, etc., but also taking into account current liabilities) may be the key metric for most people. Let's just make up something for illustration. Let's say you have a stable job, no major financial problems now and you have $10,000 in the bank. Many personal portfolio managers (mainstream ones even!) say it's OK to have 5% - 10% of your net liquid wealth in gold. In this example, that would be $500 - $1000 in gold. MANY of us, and MANY at Zero Hedge would say this amount could be quite a bit higher (more gold), and I would agree. In this example, if you bought an oz of gold, that would work out to $1540 + $70 (say) premium (American Gold Eagle). You would then have $1540 in gold out of your $10,000 net wealth or some 15%. I am personally at around 12% of my net liquid wealth in the PMs, and gold is 75% of that (platinum, silver and palladium in declining order make up the balance). I am comfortable, for now, with 12%. That will probably go up in time though, as income arrives to me.
Re (3), I (and others) say if you do not have it in your physical possession, then you don't own it. I keep my gold in 5 different places... I would be OK with anyone holding SOME gold in a safety deposit box there at the bank, but I would probably urge most to hide most of your gold somewhere securely. Refer back to my earlier article about hiding your gold. Some of my readers came up with some great suggestions...
Factor (4) is related to (2). Gold is the best diversification there is. Diversification is important. If you already have a farm, for example, there would be less pressure from me to tell you to buy gold. A farm is a nice hard asset (also assumes you don't have burdensome taxes or mortgage on it and that it is somehow productive -- producing income). A farm, however, is not liquid. You still need gold even if you won a farm. If ALL you have are paper investments (stocks, bonds, money market accounts, etc.), then you need to go out and buy some gold immediately!
Re (5) If you believe that we are close to being royally screwed by the apparently reckless and precarious financial landscape before us, then you will sleep better owning MORE gold than if you are an optimist. I am a pessimist, that is why I hold a large amount (relatively speaking) of gold. But, I can be optimistic too! Platinum is for optimists...
It is best to have your spouse on your side! So re (6), my wife grudgingly accepts the facts that the banksters and .gov are lying to us, so she allows me to buy. Also, every time we take a vacation somewhere, I balance that expenditure by beefing up my gold holdings. In this way, I can at least keep adding to real savings even if we spend money...
(7) Silver... (I was hoping by now to have a Guest Post by an expert on silver. I will reach out to the three I know who know a lot about silver to write an article for me, I do not feel I can do silver proper justice) I really prefer gold to silver, but do recognize that silver is also a wealth preservation mechanism too. Silver is more volatile, and is used by industry. The silver experts I "know" can probably make "fundamental" arguments about how few oz of silver there currently are. If you LIKE silver well OK. Maybe the best balance would be to own more $$$ value in gold, but to own more oz of silver. Silver might be better spending money in a TEOTWAWKI as well. But, gold will carry your wealth through it (assuming that there IS a world after TEOTWAWKI...).
Even mainstream personal money advisers say it's OK to have 5% - 10% in gold! And yet how many people actually have that much? There are only TWO people I know (other than myself) who have over 5% in PMs...
And as DoChenRollingBearing is fond of saying: as money comes in, I take a part of that dough and buy GOLD with it! Sounds like pretty good advice to me...