Gold has been extremely hot recently. Domestic jewelry gold prices have broken through 1400 yuan/gram, spot gold converted to RMB has also surpassed 1000 yuan/gram, and spot gold in New York has even risen above $4400 per ounce, continuously hitting new all-time highs. Every time such scenes occur, investors' reactions are particularly interesting—on one side is the anxiety of "Oh my God, it's rising again, should I chase?", and on the other side is the caution of "It's so high, be careful of risks." It seems like two viewpoints are fighting, but in fact, they share the same underlying question: how should gold be allocated?

Recently, many people have been asking this question. You will find that many investors are actually swinging back and forth between "wanting to allocate" and "daring not to allocate," and this contradictory state is very real.

From the perspective of asset allocation, gold is indeed very important, but the key is to understand its true role. Many people think that allocating gold is for making money and increasing returns, but that's not quite right. The core mission of gold in a portfolio is one thing: hedging. When stocks, bonds, and other traditional assets fluctuate, gold often moves inversely or remains stable, thereby enhancing the overall risk resistance of the portfolio. Its value lies in stability, not growth.

To figure out how to allocate gold, you first need to understand how it is priced.

**The Logic of Gold Pricing**

Gold is essentially a store of wealth, unlike stocks or bonds that generate cash flow. It has no interest or dividends; its value is more derived from the market’s re-pricing—meaning, based on different macro environments, people reassess how much it’s worth.

Historically, the core factors influencing gold prices mainly include several dimensions: first is the strength of the US dollar. When the dollar appreciates, gold is usually suppressed; when the dollar depreciates or expectations of Fed rate cuts emerge, gold tends to rise. Second is real interest rates. When nominal interest rates minus inflation turn negative or stay very low, the opportunity cost of holding non-interest-bearing gold decreases, making gold more attractive. Third are geopolitical risks and recession expectations—greater uncertainty makes people more inclined to hold gold as a "safe-haven asset."

**Gold’s Temperament**

The characteristic of gold as an asset is that it is particularly "independent." Most of the time, when stocks fall, gold tends to rise or at least does not decline in sync. This inverse relationship is what makes it most valuable in a portfolio. But it’s also important to recognize: although gold is a safe haven, it can also retreat. Historically, gold has experienced declines from its highs, sometimes quite significantly.

Looking at the long term, gold’s overall return is actually moderate. Its main role is truly "hedging" and "insurance," not a "money-making" tool.

**How to Allocate Gold in a Portfolio**

The key question is: how much should you allocate?

There’s no absolute answer, but a basic approach exists. If your portfolio is heavily weighted in equities (stocks, funds, etc.), a common practice is to allocate about 5%-15% to gold. The specific proportion depends on your risk tolerance. The more you fear volatility, the higher the allocation can be; the more you can tolerate fluctuations, the lower the proportion.

Another important point: don’t chase the high. When gold hits new all-time highs, it’s often at a high point, and the attractiveness of allocation is actually lowest at this time. Conversely, during corrections or when prices are relatively subdued, the value of allocation is greater. This requires patience and discipline.

Additionally, there are different ways to allocate gold. You can choose physical gold, gold ETFs, gold funds, etc., each with its advantages and disadvantages. Gold ETFs are highly liquid, relatively low-cost, and more convenient for ordinary investors.

Finally, a suggestion: combine your gold allocation with your overall asset allocation plan. Gold is not an isolated investment; it’s part of the portfolio. Regularly review and moderately adjust your allocation, which is more reliable than chasing highs and selling lows.