The price of gold has been hovering around $1,200 for more than 6 months. This is the same level as 5 years ago, but also the same level as 2 years ago. In the meantime the price of gold went from correctly valued, to overvalued, to … The fact is that gold has been forming a bottom for the past two years and that most investors are still scared.

That is why the following question is a logical one: “How much gold should you own?”

Still, this question disregards the reason why you should be buying gold. Gold is best viewed as an insurance against monetary damage. Just like home insurance or car insurance, which protects you from damage to your home or car, gold is insurance against monetary damage. The benefit of gold is that your premium could go down instead of up, however.

Gold is insurance, in summary. You hope to never need it, but you are glad you have it when you do. As an insurance against monetary damage, gold protects you from the wobbly paper and digital fiat money system that is barely supported by governments and central banks.

You can insure yourself against the damage done by governments and central banks by buying gold. The price is not of primary importance, as a consequence. Those who want to exchange paper money for gold only to later exchange it back for paper money, completely misunderstand the purpose of buying gold.

How much gold you should be buying then is different for everyone, but if you get worried about gold dipping under the $1,000 level you probably bought too much.

The most important rule in buying gold is your comfort level. How much gold can I buy without worrying about the price every day? There is your answer.