Egyptian billionaire Naguib Sawiris says a quarter of a portfolio should be in gold

Gold is a good investment at a time when the world is concerned about inflation, Egyptian billionaire Naguib Sawiris told CNBC.

The precious metal is often touted as a hedge against rising prices and a safe-haven asset that should make up around 5% to 10% of an investor’s portfolio.

But long-time gold investor Sawiris recommends allocating much more to gold.

“I say 20% to 30%. I used to be at 50%,” the chairman and CEO of Orascom Investment Holding told CNBC’s “Capital Connection” on Tuesday. “It’s something that’s fundamental. It’s always been there.”

He has even set up a $1.4 billion gold mining fund, which was launched last month. The move was “personally motivated” because a substantial part of his net worth is in gold, he said.

Gold can act as a buffer to risks in the market, Sawiris suggested.

“Let’s say the inflation comes in and there is a crash in the stock market for any reason or the other, you know, then you will be very happy that … you have a position in gold,” he said.

Asked if he expects the stock market to decline, he said prices have been high for a “very long while” and will “inevitably” fall at some point.

Additionally, there are many uncertainties such as political instabilities and the “never-ending saga” of the Covid-19 pandemic, Sawiris said.

“I want to go sleep at night not affected by a crash on the stock market or a pandemic,” he said.

Gold isn’t immune to all market events, however. Historically, the precious metal has a mixed record on returns during inflationary periods.

It also suffered a 4% sell-off following a better-than-expected U.S. jobs report on Friday, before a “flash crash” was triggered by a lack of liquidity this week.

Sawiris acknowledged that higher interest rates, which could come as economies recover from the Covid crisis, will “eat up” gains from gold. Still, he said he’s a long-term investor in the metal.

Separately, Sawiris said his biggest concern in the Middle East region is Afghanistan. The Taliban has taken over five provincial capitals in the war-torn country as the U.S. continues to withdraws its troops.

“The U.S. and Britain have deserted the Afghani people after all these 20 years, 30 years,” he said, adding that the Afghan army is too weak to stand up against “these forces of the dark” and that foreign militaries left without a plan.

The full U.S. troop withdrawal is set to be completed at the end of August, while the U.K. in July said it has withdrawn almost all its troops from the country, according to Reuters.

“The minute the Americans left, [the Taliban is] invading the cities, and we don’t know what’s going to come up after that,” he said.

“It’s not going to be stable if we just move out like that,” Sawiris said.