Sektory a témata
Gold and Precious Metals in a Portfolio: Protection or Illusion of Safety?
Key takeaways
- Gold is not an earnings machine but a portfolio protector during crises and high inflation.
- Physical gold, ETCs backed by physical gold and gold-miner shares are three different things with different risks.
- Gold ETFs (miner shares) are more volatile than the gold price itself.
- Recommended portfolio allocation to gold is typically 5–10% — no more.
- Gold pays no dividends or interest; returns come solely from price movements.
Gold is a store of value, not a return-generating machine. It pays no dividend and earns no interest. Its role in a portfolio is different: it serves as an anchor in times of crisis, high inflation or currency upheaval.
Three ways to buy gold
Each route works differently:
- Physical gold (bars, coins) — the most direct form, but you need secure storage. In the Czech Republic, physical gold is exempt from VAT.
- ETCs backed by physical gold — a security backed by gold held in a vault. Traded like an ETF, but technically a debt instrument (ETC). Check the counterparty and redemption terms.
- Gold miner shares (or ETFs on miners) — track the gold price with leverage. The company carries additional operational risks, as discussed in the article on mining and commodities.
How gold behaves at different market stages
Gold has historically held its value during:
- high inflation or currency devaluation,
- geopolitical crises and armed conflicts,
- collapses of confidence in the banking system.
During periods of strong economic growth and low inflation expectations, gold returns tend to lag equities. It is therefore not a substitute for equity funds, but a diversifier.
How much gold in a portfolio
The conservative approach suggests 5–10% of the portfolio in gold as insurance. More gold provides additional protection but reduces the portfolio's long-term return potential, because gold itself generates no income. Gold is a satellite, not a core. If you want to understand how to choose between core and satellite, look at building your first portfolio.
FAQ
Is physical gold better than a gold ETC?
It depends on your preferences. Physical gold eliminates counterparty risk but requires secure storage. An ETC is more convenient and liquid, but you depend on the issuer. Both can have a place in a portfolio.
Why is gold said to protect against inflation?
Historically gold has preserved purchasing power over the long run. In the short term, however, the correlation between gold and inflation is not reliable — the gold price depends on many other factors such as real interest rates and investor confidence.
How are gold ETCs taxed in the Czech Republic?
ETCs are securities, so standard securities taxation rules apply — a three-year holding period for exemption from capital gains tax. Physical gold has a different tax regime; consult a tax adviser.