By Frank Holmes

NEW YORK ( TheStreet) -- Gold is a volatile asset class. This is why we tell investors to put no more than 5% to 10% of their portfolios in gold, and split that among the bullion itself and those companies tasked with exploring for and producing gold.

However, when compared to other commodities last year, gold looks relatively calm. This chart from the World Gold Council shows the annualized daily volatility for selected commodities such as copper, silver, tin and others.

As you can see, gold was the second-least volatile of the group behind livestock. In fact, the annualized daily volatility for metals like zinc, palladium, lead and nickel were more than twice that of gold.

Gold's annualized volatility came in at 16.1% in 2010, down from 21.4% in 2009. Last year's volatility is on par with that of the past 20 years, when gold's annualized volatility has averaged 15.8%, according to the World Gold Council. The annualized figures for the S&P Goldman Sachs Commodity Index and crude oil were 20.84% and 28.4%, respectively.

The latest Gold Investment Digest from the WGC highlights the risk-adjusted performance gold was able to turn in during 2010. The next chart shows gold's 29.5% return was both higher and less volatile than the likes of the MSCI Emerging Markets Index and the S&P 500.

Surprisingly, of the asset classes shown, only U.S. Treasuries were less volatile last year but only managed roughly one-sixth the return of gold.

Speaking of volatility, since peaking at a price of $1,420 on the London Exchange on Dec. 7, 2010, gold prices slid 3.7% through Jan. 14, 2011. The gold naysayers, as I affectionately call them, will likely say this is a sign gold's bull-run is over. However, the WGC points out that this is considerably less than one standard deviation move for gold. Over the past 10 years, gold's average volatility in a given month is 4.9%.

When investing in gold, it's important to remember gold's volatility. Instances like the current gold reversion provide opportunity to get more bang for your buck, which is what many gold investors are looking for in the first place.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.