How much Gold do you own and why?

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Finridge
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Re: How much Gold do you own and why?

Post by Finridge »

Toons wrote: Thu Jul 29, 2021 10:39 am None
Non producing Asset


:happy
Came here to say this.
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GRP
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Re: How much Gold do you own and why?

Post by GRP »

25% in gold. The permanent portfolio just makes sense.
Almost nothing turns out as expected.
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HanSolo
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Re: How much Gold do you own and why?

Post by HanSolo »

docL wrote: Tue Aug 03, 2021 2:51 pm
HanSolo wrote: Mon Aug 02, 2021 8:41 pm
What did you look at to make your assessment?

Broad stock indices (especially US) show pricing at high extremes, according to commonly-used valuation metrics (Iike market cap to GDP ratio).

Fiat instruments are also priced at high extremes, or as recent articles put it, interest rates are at 5,000-year lows (which is the mathematically equivalent statement).

So I think 000's assessment is fairly well-supported by current market realities that we can look at directly.
I do not debate that by many metrics, stock indices appear expensive compared to historical norms. However, when you factor in things like interest rates they are not quite so expensive as they appear at first glance.
If the only way one can conclude that one asset class (stocks) is not priced for a wildly optimistic future like we haven't seen in our lifetimes (in terms of high growth) is by saying that its valuations are consistent with another asset class (bonds) that's priced for a wildly optimistic future like we haven't seen in our lifetimes (in terms of low inflation), it's not a very strong argument.
So while there can certainly be inflation shocks and social disruptions in the future, it is not like that isn't well known.

I try not to get in the business of forecasting the future.
Me neither. But when the market prices in extreme optimism, one needs to decide whether or not they agree with that view before they make purchases in that market. I'm not saying it's wrong to buy in that case, just that it's better to be aware, and decide if one is OK with the inherent prognostication that the market is already doing. Caveat emptor.

All things considered, I'm not seeing a strong argument against what 000 said.
JackoC wrote: Tue Aug 03, 2021 3:28 pm But it's less clear stock valuation *relative* to the 'riskless' curve is all that optimistic.
See my first comment above.
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seajay
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Re: How much Gold do you own and why?

Post by seajay »

Dregob wrote: Tue Aug 03, 2021 5:25 pm
seajay wrote: Sun Aug 01, 2021 4:42 am "I prefer Gold to Dollars, as it enabled me to become a multi-trillionaire" ... Mr Zimbabwe

"Gold isn't a investment" ... Jack Bogle. No, its a currency. A tier 1 asset within central banks, that many hold as part of their reserves. Unlike fiat currencies that over time tend to see more notes being printed (a form of micro-taxation that devalues all other notes in circulation) gold is finite. With fiat currencies you have to invest if you are to have any hope of that currency not losing purchase power (inflationary devaluation). As part of that Jack Bogle once said that many investors only received 40% of the investment total returns after costs, taxes, hidden expenses, fees ...etc., where investors take 100% of the risk for less than 40% of the reward ... citing a example of 8% total rewards, 50 year investment period/lifetime where the investor received just 6% after costs/taxes (47 gain factor reduced to 18 gain factor).

Go into a shop in London and offer to pay for $50 value of goods in US Dollar currency and the checkout will most likely say sorry. Offer a golden eagle that has a legal tender value of $50 as payment and they'd be far more inclined to make the exchange knowing that the gold commodity value of that ounce of gold was worth far more than $50 i.e. gold is a globally recognised/accepted currency.

Should investors hold currencies/cash? Well stuff 66% gold, 33% US Dollars under a mattress in 1792 and rebalance back to 67/33 weightings yearly, and of recent that would still have the same purchase power for a UK resident, entirely offset over 200 years of UK inflation. Just holding hard currencies alone however isn't investing, investing involves swapping some or maybe all of cash/currencies for shares/bond certificates/whatever. Exchange all of the US$ for US bonds, half of the gold for stock shares, and collectively that bond/stock/cash (gold) asset allocation tended to out-run inflation in a relatively consistent manner.

Image

"Gold doesn't fit" Well with policies/practices of ... start early, live below one's means, regularly save, broad diversification, simplicity, and sticking to one's investment plan regardless of market conditions ... and whether including or excluding cash/currencies/gold as part of that fits or not and IMO it fits.
I'd love to see the graph with the axis/starting point set to 1975!
5.27% annualised real from a 1975 start date
Image
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Re: How much Gold do you own and why?

Post by seajay »

Finridge wrote: Wed Aug 04, 2021 12:51 am
Toons wrote: Thu Jul 29, 2021 10:39 am None
Non producing Asset
Came here to say this.
IIRC 50/50 stock/gold yearly rebalanced across the 1980's/1990's ended with 6 times as many ounces of gold in your safe. Whilst the price declined the accumulation of more ounces offset that and more. Somewhat similar to how bond price declines/higher yields offset. Over other periods it swings the other way around, again similar to bonds, lower yields higher prices/higher yields lower prices -> fewer ounces higher prices/more ounces lower prices. Broadly in a manner opposite to stocks, fewer ounces, more stock shares, or few shares, more ounces of gold. Gold alone is unproductive, put to work such as via blending with other assets and rebalancing, and that's a similar comparison to buying a farm and leaving it idle, or working the farm. Left idle and the value might just pace inflation, such as the increase in the price of farmland, put to work and the farm can yield dividends in addition to the increase in the price of farmland. More of a hedge as well as the price can spike opposite to stocks, rather than bonds that more tend to just dilute down declines in stock values. 2002 when stocks declined -20% total loss, total bonds gains +8%, gold gains +25%

Generally investment gains can arise out of price appreciation, income production, volatility capture. Bond investors might target income, Options traders might target volatility. Growth investors might target stocks. Better is perhaps to diversify across all three rather than concentration into one alone.
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Re: How much Gold do you own and why?

Post by JackoC »

HanSolo wrote: Wed Aug 04, 2021 4:23 am
If the only way one can conclude that one asset class (stocks) is not priced for a wildly optimistic future like we haven't seen in our lifetimes (in terms of high growth) is by saying that its valuations are consistent with another asset class (bonds) that's priced for a wildly optimistic future like we haven't seen in our lifetimes (in terms of low inflation), it's not a very strong argument.
I think relative valuation of stocks and 'riskless' is actually quite relevant though to the specific statement I responded to, which was:

"Broad stock indices and fiat instruments are priced under the prevailing market assumption that the developed world will never experience serious inflation or social upheaval of any kind ever again in our lifetimes."

A prevailing assumption that serious inflation is much less likely than in the past would show up in very low (negative) real expected returns on 'riskless' assets. Check, the market does seem to make that assumption.

A prevailing assumption that serious social upheaval of any kind is much less likely than in the past OTOH should show up in an especially narrow expected equity risk premium (expected return of stock minus expected return of 'riskless'). That does not seem to be true of market prices. The equity risk premium appears normal-ish. One might muster some evidence it's compressed but it's much less clearly abnormal than 'riskless' rates are.

I think this is a straight forward observation and distinction to make, except to the extent the original poster meant 'social upheaval' on a scale that would threaten the creditworthiness of rich world govt bonds. But when in the past (modern era) could we see spread built into govt bond yields for credit risk? So I would stick with my statement that current market takes a manifestly unusual view toward future inflation and real rates (normalish inflation expectation, 2.38% TIPS breakeven in 10 yrs, but expecting the Fed to need to conduct consistently loose monetary policy to achieve it, significantly negative real Fed Funds rate for 10 yrs, which would justify buying 10 yr TIPS at -1.19% real yield: a historically extreme combination) but 'social upheaval' risk should be seen more in the equity risk premium, and that's not extreme in either direction.
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Re: How much Gold do you own and why?

Post by Maverick3320 »

HanSolo wrote: Mon Aug 02, 2021 1:51 am
phantom0308 wrote: Mon Aug 02, 2021 1:40 am It’s been said over and over again, but I guess it needs to be repeated. Gold isn’t an inflation hedge. It doesn’t perform better when inflation is high and worse when inflation is low. Commodities in general have poor expected returns and even worse risk adjusted returns.
To whom were you responding?

I was responding to the line of discussion where gold was being considered not as an investment but as a store of value, and as such, it may have some advantages over some other choices in that space (i.e., other commonly-used stores of value, such as cash equivalents and short-term bonds), especially when held on a long-term basis. The point isn't what beats inflation and what doesn't, but what are the advantages and disadvantages of the various available choices.

That needs to be repeated as well.
What advantage does gold have as a store of value?
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Re: How much Gold do you own and why?

Post by seajay »

Maverick3320 wrote: Wed Aug 04, 2021 10:20 am What advantage does gold have as a store of value?
Under-mattress value is one - not having to be put to work, earn 'rewards' that involve costs and taxes.

Some central banks, Fed, Bank of England ... etc. target a 2% inflation rate. Inflation can be considered as just another form of taxation ...

http://warrenbuffettoninvestment.com/ho ... -investor/
The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislatures. The inflation tax has a fantastic ability to simply consume capital. It makes no difference to a widow with her savings in a 5% passbook account whether she pays 100% income tax on her interest income during a period of zero inflation, or pays no income taxes during years of 5% inflation. Either way, she is “taxed” in a manner that leaves her no real income whatsoever. Any money she spends comes right out of capital. She would find outrageous a 120% income tax, but doesn’t seem to notice that 6% inflation is the economic equivalent.
... and if gold broadly tended to offset that then you wouldn't have to invest money to earn a return that you might pay taxes and costs on ...etc. in order to maintain purchase power. Gold however doesn't offset inflation consistently and is very variable at doing so, but nonetheless it might still be held as part of a broader portfolio that could alleviate the amount of 'gains' you otherwise had to achieve when investing $'s (or whatever currency).

Image

All US$'s for instance and those $'s might have to earn a net 7.4% gain to offset the loss of gold purchase power. That might entail having to earn perhaps 10% gross return prior to deductions of cost/taxes.

50/50 US$/gold and if the net gain required is 3.4% then for the 50% US$'s perhaps invested in stocks then a 6.8% net gain would cover that.

As a 50/50 partner to gold stocks were generally better than bonds, stocks provided a better albeit broad/vague degree of multi-year inverse correlation to gold.

For many investing is about putting aside money that could otherwise have been spent today with a view to spending that money at a later date. Governments don't want you sleeping on a mattress stuffed full of notes, they'd rather that money was spent to generate economic activity. As a incentive they in effect print/spend money, such that each new note printed/spent devalues all other notes in circulation, a form of micro-taxation that benefits the 'counterfeiter' at the expense to others. They can't however print gold.
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HanSolo
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Re: How much Gold do you own and why?

Post by HanSolo »

JackoC wrote: Wed Aug 04, 2021 8:58 am A prevailing assumption that serious social upheaval of any kind is much less likely than in the past OTOH should show up in an especially narrow expected equity risk premium (expected return of stock minus expected return of 'riskless').
That appears to be the same argument that docL was making, and I disagreed with it. My opinion is that it's not a strong argument to say Market A is not wildly overvalued just because it's in line with Market B, which is also wildly overvalued. Since that comparison is dubious, you need another metric to confirm your assessment (like estimate of net present value of the assets in question). If you can't come up with any, you need to question your assessment.
Maverick3320 wrote: Wed Aug 04, 2021 10:20 am
HanSolo wrote: Mon Aug 02, 2021 1:51 am I was responding to the line of discussion where gold was being considered not as an investment but as a store of value, and as such, it may have some advantages over some other choices in that space (i.e., other commonly-used stores of value, such as cash equivalents and short-term bonds), especially when held on a long-term basis. The point isn't what beats inflation and what doesn't, but what are the advantages and disadvantages of the various available choices.
What advantage does gold have as a store of value?
In addition to what seajay just wrote, check the chart that was posted upthread (on the first page, by retired@50) and compare the gold line to the USD line. Getting paid interest on your cash is better, see the T-Bills line on the chart. But T-Bills haven't performed too well since before the Depression. And they're even worse on an after-tax basis (which the chart doesn't show). Again, I'm looking at the longer term. While gold can underperform in shorter periods, so can anything else.
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JackoC
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Re: How much Gold do you own and why?

Post by JackoC »

HanSolo wrote: Wed Aug 04, 2021 2:37 pm
JackoC wrote: Wed Aug 04, 2021 8:58 am A prevailing assumption that serious social upheaval of any kind is much less likely than in the past OTOH should show up in an especially narrow expected equity risk premium (expected return of stock minus expected return of 'riskless').
That appears to be the same argument that docL was making, and I disagreed with it. My opinion is that it's not a strong argument to say Market A is not wildly overvalued just because it's in line with Market B, which is also wildly overvalued. Since that comparison is dubious, you need another metric to confirm your assessment (like estimate of net present value of the assets in question). If you can't come up with any, you need to question your assessment.
I don't know if it was the same argument somebody else was making. Maybe not, because you've failed to address my actual point though quoting it. As I answered you first time, I am NOT saying market A isn't overvalued, generally, because it's not overvalued relative to Market B. I'm responding to the specific claim that the market is now priced for 'no serious inflation problem or major social upheaval' (as compared to 'normal', presumably, no market will ever be priced to make you whole in anywhere near a worst case, that's what risk is). The potential for a serious inflation problem should show up in both 'riskless' bond prices and stock prices. The potential for 'social upheaval' should mainly show up in risk asset prices and not in 'riskless' bond prices. Or again, unless you or the other poster can show me a past time when any 'social upheaval' risk premium could be seen in US govt bond prices, not in a very long time (maybe first half of the 19th century?) at least. Therefore, the market's read on 'social upheaval' risk, specifically, should be seen in the equity risk premium. But the equity risk premium is not obviously out of line with past history. IOW I do not see strong evidence that the stock market is priced for less 'social upheaval' risk than it was in the past. It *is* priced for a low interest rate environment where investors are satisfied with low absolute returns on risk assets because the alternative in 'riskless' assets is lower still. Both the 'riskless' bond and stock markets would therefore IMO sell off heavily if the consensus changed to expectation of higher inflation and/or non-negative real 'riskless' rates. I don't believe however there's any evidence the stock market is priced much differently wrt 'social upheaval' risk than it has been generally in the past. You'd have to show why I'm wrong there, not just repeat the A v B thing which is not addressing my actual point.
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Re: How much Gold do you own and why?

Post by seajay »

HanSolo wrote: Wed Aug 04, 2021 2:37 pmcheck the chart that was posted upthread (on the first page, by retired@50) and compare the gold line to the USD line. Getting paid interest on your cash is better, see the T-Bills line on the chart. But T-Bills haven't performed too well since before the Depression.
Pre 1930's and money was gold, convertible at a fixed rate. Given gold is finite that broadly meant 0% inflation, but there were periods of high inflation/deflation that tended to cluster. Made more sense to covert gold into money/cash and deposit/invest that money in T-Bills, as that was like the state paying you for it to securely store your gold and with broad 0% inflation the interest paid was in effect a real rate of return.

From 1931 UK, 1933 US you had to make a choice as convertibility ended. In the US holding investment gold was outlawed - pushing you towards staying with T-Bills rather than gold. But you could have substituted silver to similar overall effect/outcome. But PM's went from relatively stable (same as money) to relatively volatile. A stock/PM barbell served similar to 1 and 20 year treasury barbell, combines to a central bullet.

This chart is from a UK investors perspective (UK inflation, GB Pounds), but when both stock and gold values were readjusted to US$ the pattern/trend would remain much the same

Image

1975 and US investors could again hold investment gold, since the start of 1976 50/50 stock/gold has yielded 5.86% real i.e. that since 1930's longer term trend continues to persist (this PV chart is in US$/US inflation)

Image

This is for BRK/GLD 50/50 that PV has limited data to back from 2005 due to GLD. 7.54% annualized real since then and not a cent of interest/dividends that might otherwise involved taxable events. I hold that myself as my 'cash' holdings. I feel no need for bonds as stocks already reflect being short bonds i.e. via Corporate Bonds (being long or short bonds broadly washes) and I see no point in buying stocks and also buying the bonds that they also issue - unproductive use of capital.

Some like to shift bond risk over to the stock side, maybe hold 75/25 stock/T-Bills instead of 67/33 stock/bonds. You could alternatively swap out T-Bills for gold. Historically that broadly washes, 'noise' type differences.
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Re: How much Gold do you own and why?

Post by HanSolo »

JackoC wrote: Wed Aug 04, 2021 2:55 pm I don't know if it was the same argument somebody else was making. Maybe not, because you've failed to address my actual point though quoting it. As I answered you first time, I am NOT saying market A isn't overvalued, generally, because it's not overvalued relative to Market B. I'm responding to the specific claim that the market is now priced for 'no serious inflation problem or major social upheaval'
Since you put 'riskless' in quotes, it appears that you recognize that Treasuries are not riskless. Credit risk is very low. Other risks remain. In fact, the risk of suffering a real loss in Treasuries is a near certainty, considering their expected performance after taxes and inflation. If we put 'riskless' in quotes, we may as well put everything else in quotes as well.

Since you disagree with the above-mentioned claim, what price level on the S&P 500 do you think would reflect the pricing-in of the above? If you disagree with 000's assessment, it would be interesting to know how far off you think it is, according to your own assessment.

Second, is there anything other than comparison to the fixed-income market that confirms your assessment?
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Re: How much Gold do you own and why?

Post by Dregob »

Code: Select all

[img][/img]
seajay wrote: Wed Aug 04, 2021 6:04 am
Dregob wrote: Tue Aug 03, 2021 5:25 pm
seajay wrote: Sun Aug 01, 2021 4:42 am "I prefer Gold to Dollars, as it enabled me to become a multi-trillionaire" ... Mr Zimbabwe

"Gold isn't a investment" ... Jack Bogle. No, its a currency. A tier 1 asset within central banks, that many hold as part of their reserves. Unlike fiat currencies that over time tend to see more notes being printed (a form of micro-taxation that devalues all other notes in circulation) gold is finite. With fiat currencies you have to invest if you are to have any hope of that currency not losing purchase power (inflationary devaluation). As part of that Jack Bogle once said that many investors only received 40% of the investment total returns after costs, taxes, hidden expenses, fees ...etc., where investors take 100% of the risk for less than 40% of the reward ... citing a example of 8% total rewards, 50 year investment period/lifetime where the investor received just 6% after costs/taxes (47 gain factor reduced to 18 gain factor).

Go into a shop in London and offer to pay for $50 value of goods in US Dollar currency and the checkout will most likely say sorry. Offer a golden eagle that has a legal tender value of $50 as payment and they'd be far more inclined to make the exchange knowing that the gold commodity value of that ounce of gold was worth far more than $50 i.e. gold is a globally recognised/accepted currency.

Should investors hold currencies/cash? Well stuff 66% gold, 33% US Dollars under a mattress in 1792 and rebalance back to 67/33 weightings yearly, and of recent that would still have the same purchase power for a UK resident, entirely offset over 200 years of UK inflation. Just holding hard currencies alone however isn't investing, investing involves swapping some or maybe all of cash/currencies for shares/bond certificates/whatever. Exchange all of the US$ for US bonds, half of the gold for stock shares, and collectively that bond/stock/cash (gold) asset allocation tended to out-run inflation in a relatively consistent manner.

Image

"Gold doesn't fit" Well with policies/practices of ... start early, live below one's means, regularly save, broad diversification, simplicity, and sticking to one's investment plan regardless of market conditions ... and whether including or excluding cash/currencies/gold as part of that fits or not and IMO it fits.
I'd love to see the graph with the axis/starting point set to 1975!
5.27% annualised real from a 1975 start date
Image
Image


Starting date with $10,000 in each portfolio was 1975. Log scale. Posted to show what can be done by picking a favorable window for an analysis.
000
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Re: How much Gold do you own and why?

Post by 000 »

HanSolo wrote: Wed Aug 04, 2021 4:23 am If the only way one can conclude that one asset class (stocks) is not priced for a wildly optimistic future like we haven't seen in our lifetimes (in terms of high growth) is by saying that its valuations are consistent with another asset class (bonds) that's priced for a wildly optimistic future like we haven't seen in our lifetimes (in terms of low inflation), it's not a very strong argument.
Exactly.
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Re: How much Gold do you own and why?

Post by halfnine »

Dregob wrote: Wed Aug 04, 2021 7:34 pm

Code: Select all

[img][/img]
seajay wrote: Wed Aug 04, 2021 6:04 am
Dregob wrote: Tue Aug 03, 2021 5:25 pm
seajay wrote: Sun Aug 01, 2021 4:42 am "I prefer Gold to Dollars, as it enabled me to become a multi-trillionaire" ... Mr Zimbabwe

"Gold isn't a investment" ... Jack Bogle. No, its a currency. A tier 1 asset within central banks, that many hold as part of their reserves. Unlike fiat currencies that over time tend to see more notes being printed (a form of micro-taxation that devalues all other notes in circulation) gold is finite. With fiat currencies you have to invest if you are to have any hope of that currency not losing purchase power (inflationary devaluation). As part of that Jack Bogle once said that many investors only received 40% of the investment total returns after costs, taxes, hidden expenses, fees ...etc., where investors take 100% of the risk for less than 40% of the reward ... citing a example of 8% total rewards, 50 year investment period/lifetime where the investor received just 6% after costs/taxes (47 gain factor reduced to 18 gain factor).

Go into a shop in London and offer to pay for $50 value of goods in US Dollar currency and the checkout will most likely say sorry. Offer a golden eagle that has a legal tender value of $50 as payment and they'd be far more inclined to make the exchange knowing that the gold commodity value of that ounce of gold was worth far more than $50 i.e. gold is a globally recognised/accepted currency.

Should investors hold currencies/cash? Well stuff 66% gold, 33% US Dollars under a mattress in 1792 and rebalance back to 67/33 weightings yearly, and of recent that would still have the same purchase power for a UK resident, entirely offset over 200 years of UK inflation. Just holding hard currencies alone however isn't investing, investing involves swapping some or maybe all of cash/currencies for shares/bond certificates/whatever. Exchange all of the US$ for US bonds, half of the gold for stock shares, and collectively that bond/stock/cash (gold) asset allocation tended to out-run inflation in a relatively consistent manner.

Image

"Gold doesn't fit" Well with policies/practices of ... start early, live below one's means, regularly save, broad diversification, simplicity, and sticking to one's investment plan regardless of market conditions ... and whether including or excluding cash/currencies/gold as part of that fits or not and IMO it fits.
I'd love to see the graph with the axis/starting point set to 1975!
5.27% annualised real from a 1975 start date
Image
Image


Starting date with $10,000 in each portfolio was 1975. Log scale. Posted to show what can be done by picking a favorable window for an analysis.
While your point is still valid it looks like you linked to the linear version of the chart and not the log scale version.
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Re: How much Gold do you own and why?

Post by seajay »

halfnine wrote: Thu Aug 05, 2021 12:58 am
seajay wrote: Image
Dregob wrote: Wed Aug 04, 2021 7:34 pm I'd love to see the graph with the axis/starting point set to 1975!
seajay wrote: 5.27% annualised real from a 1975 start date
Starting date with $10,000 in each portfolio was 1975. Log scale. Posted to show what can be done by picking a favorable window for an analysis.
Image
While your point is still valid it looks like you linked to the linear version of the chart and not the log scale version.
In the context of the original image and Dregob's apparent dislike of investment gold, Dregob's posted image makes the differences between cash/gold/stock thirds look more bitter when compared to all-stock with the added twist of linear scaled suggestion of being log scaled. In most gold discussion threads there are those that feel the need to express their disdain of investment gold.

Fundamentally including rare/precious assets within a portfolio as 'investments' is subjective. Art such as rare paintings are held by some as investments. If a meteor of solid gold was mined then the price of gold might collapse and other rare/precious alternatives held instead. As-is much multi-generation wealth has been passed on via land, art, gold ... Old-Money mantra is "a-third, a-third, a-third" in reflection of that. Physical in-hand assets that generate no ongoing interest/dividends taxable events. At the other end there may be those that just 'invest' in peer-to-peer, venture capital and/or bitcoins - which others might equally question as whether that's investing or not.

There are risks in concentrating into single currencies that all eventually decline relative to gold and seeking to invest in stocks and/or bonds, incurring costs and taxes whilst doing so, in the hope of offsetting and more the natural devaluation of the currency such as via targeted 2% inflation (devaluation) rates. Diversifying to include alternatives reduces concentration risk, and concentration risk can be one of the greatest risks.
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Re: How much Gold do you own and why?

Post by JackoC »

HanSolo wrote: Wed Aug 04, 2021 3:39 pm
JackoC wrote: Wed Aug 04, 2021 2:55 pm I don't know if it was the same argument somebody else was making. Maybe not, because you've failed to address my actual point though quoting it. As I answered you first time, I am NOT saying market A isn't overvalued, generally, because it's not overvalued relative to Market B. I'm responding to the specific claim that the market is now priced for 'no serious inflation problem or major social upheaval'
Since you disagree with the above-mentioned claim, what price level on the S&P 500 do you think would reflect the pricing-in of the above? If you disagree with 000's assessment, it would be interesting to know how far off you think it is, according to your own assessment.

Second, is there anything other than comparison to the fixed-income market that confirms your assessment?
[OT comment removed by admin LadyGeek] Instead I'd like to broaden it back to the subject of this thread, gold, in case others are interested. Let's look at how the market is apparently pricing three things and how they relate to gold.

Inflation: the 10 yr TIPS breakeven is 2.35% (8/4 Fed Daily Yield Curve). The all time geometric average inflation rate since inception of the Fed in 1913 ~3.1%, last 30 yrs ~2.3%. The market is not expecting very low inflation by historical standards of the fiat money era, though it's not expecting high inflation.

Real 'riskless'* rates: the 10 yr TIPS yield is -1.16%. That's extraordinarily low. We can't directly observe real rate expectations before TIPS existed, but it's highly doubtful IMO *expected* 10 yr real US govt bond returns were ever negative before recent years. *Realized* 10 yr nominal bond real returns have been negative when inflation was higher than expected but unlikely IMO the pre-TIPS nominal 10 yr was ever priced for a negative *expected* return.

Stock risk: inherently fuzzier but again the equity risk premium would appear to be within historical range, not priced extraordinarily either way, for the risks which stocks have that 'riskless' bonds don't also have (ie. inflation and/or real riskless rate changes).

Now look at gold. Gold will probably tend to do better if inflation is much higher than expected. Some people contest this but I think it's likely. However the market isn't pricing in very low inflation, so gold is probably no more attractive in this respect than usually.

To take the 3rd thing 2nd, gold will probably also do better in cases where the realized return of stocks minus the realized return of 'riskless' bonds comes out far below the expected equity risk premium now ('social upheaval' or many other, more prosaic, things). But again here, stocks seem about historically priced for those risks, the ones stocks have but 'riskless' bonds don't. So again gold is probably no more attractive than usual.

But for the thing that's actually priced far out of whack with history, real 'riskless' rates, gold will tend to do *poorly* if real 'riskless' rates normalize to positive, sharper competition for gold from real (inflation adjusted) credit 'riskless' bonds and cash.

So gold retains some usefulness (extremely high inflation or very bad social scenario's are always possible) but it's not a good hedge against the thing that's most out of whack with history now in the market, expected real 'riskless' rates being negative, if that were to normalize.

*'riskless' is short for 'credit riskless'. We assume that but don't ultimately know it, and debating it freely would get 'political' by the standards of this forum. And debating it while muzzling oneself is pointless. So let's just assume it for argument's sake. It doesn't refer to duration risk, etc.
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Re: How much Gold do you own and why?

Post by peskypesky »

question for the experts: How has gold done relative to stocks during the last few market crashes, i.e. the 2008 financial crisis, the .com crash?

I'm interested in gold not just as a possible hedge against inflation, but as an asset which might weather a big market crash better than stocks.
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Re: How much Gold do you own and why?

Post by minimalistmarc »

Finridge wrote: Wed Aug 04, 2021 12:51 am
Toons wrote: Thu Jul 29, 2021 10:39 am None
Non producing Asset


:happy
Came here to say this.
Me too
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Re: How much Gold do you own and why?

Post by jimbomahoney »

GRP wrote: Wed Aug 04, 2021 1:28 am 25% in gold. The permanent portfolio just makes sense.
Ditto.

20% Gold
5% Silver

It's an uncorrelated diversifier and insurance against tail risk.
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Re: How much Gold do you own and why?

Post by RoadagentMN »

Come on Man ! does any Boglehead have a long term memory ? This subject was beat to death in the 70's and 80's

One of the 70's masters of doom- Howard Ruff - the Ruff Report
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Re: How much Gold do you own and why?

Post by HanSolo »

[Response to removed comments removed by admin LadyGeek]

If we are to consider the question (the one that you apparently took issue with), what S&P value would reflect the pricing-in of the assumption that "the developed world will never experience serious inflation or social upheaval of any kind ever again in our lifetimes", 000 has indicated that 4400 (current level) is within that range. If your answer to that question is, "I don't have an answer, but 000's answer is wrong", that appears to be a strawman. What I'm "not willing or able" to do is argue against a strawman.

If, for example, you think that 5200 would qualify, then you and I might actually be in agreement, because I think it's possible that 000 could have been off by 20%.

In the absence of knowing your assessment, I don't know if I can agree or disagree with it.
Instead I'd like to broaden it back to the subject of this thread, gold, in case others are interested.
I agree that it's a good idea to address what the OP asked for, if that's what you mean.
Stock risk: inherently fuzzier but again the equity risk premium would appear to be within historical range, not priced extraordinarily either way, for the risks which stocks have that 'riskless' bonds don't also have (ie. inflation and/or real riskless rate changes).
There are many ways to assess valuations in the stock market (for example, Buffett likes market-cap-to-GDP; and there are many others). Is there anything other than comparison to the fixed-income market that confirms your assessment?
So gold retains some usefulness
It has for me. I have a "stocks/bonds/reserves" allocation model. I consider "reserves" as including cash instruments (CDs, money markets, etc., not only USD but also foreign), T-Bills, diversified holdings of high-quality short-term bonds, and precious metals. My heaviest accumulation period was the 1990s. My allocation to "reserves" has done better by including precious metals than if I hadn't.

So, to address the OP's question, that usefulness is why I hold it.
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Re: How much Gold do you own and why?

Post by seajay »

peskypesky wrote: Thu Aug 05, 2021 12:01 pmHow has gold done relative to stocks during the last few market crashes, i.e. the 2008 financial crisis, the .com crash?

I'm interested in gold not just as a possible hedge against inflation, but as an asset which might weather a big market crash better than stocks.
As a guide, based on the assumption of silver instead of gold up to 1975, gold from 1976, in reflection of investment gold being prohibited in the US between the 1930's and mid 1970's, and back to the 1930's for all 10 year periods since then (yearly granularity), 75/25 stock/PM worst 10 year period (after inflation) = +24% gain over the ten years, for all-stock -34%. For a investor drawing a 4% SWR over such a decline that equates to a difference of a portfolio value of 79% of the inflation adjusted start date portfolio value at the end of the ten years compared to 34% for all-stock. In other words SWR risk was lower. The cost of that 'insurance' was that the median 10 year gain (accumulation, with no SWR included) saw a 6% 10 year annualized real gain instead of 7.7% for all-stock.

Specifically for the dot com and financial crisis periods ...

10 year real gain factors
year range, 75/25 stock/gold, all-stock

1995-2004 1.834 2.408
1996-2005 1.630 1.866
1997-2006 1.682 1.797
1998-2007 1.620 1.415
1999-2008 1.299 0.734
2000-2009 1.388 0.764
2001-2010 1.725 1.020
2002-2011 1.849 1.141
2003-2012 2.068 1.691
2004-2013 1.942 1.724
2005-2014 1.960 1.766
2006-2015 1.806 1.716
2007-2016 1.739 1.680
2008-2017 1.820 1.965
2009-2018 1.959 2.904
2010-2019 1.961 2.962
2011-2020 1.987 3.060

Respective median's 1.82 and 1.72

Those figures are total real values with no SWR withdrawals included.

Double whammy of starting in 1999 and ending at the end of 2008 (pre dot com to into the financial crisis 10 years) saw all stock total real gain factor around -25% down, whilst 75/25 stock/gold gained around +33%. Factor in 4% SWR withdrawals on top of that -25% all-stock decline and obviously the value would have been deeper down for all-stock.

I referenced 75/25 stock/gold in the above as personally I consider 50/50 stock/gold to be a barbell of two extremes that combine to a central bullet, i.e. a volatile 'bond' like holding, so 75/25 stock/gold might be considered as a relatively more volatile 50/50 stock/bond like combination.
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Re: How much Gold do you own and why?

Post by seajay »

HanSolo wrote: Thu Aug 05, 2021 8:57 pmI have a "stocks/bonds/reserves" allocation model. I consider "reserves" as including cash instruments (CDs, money markets, etc., not only USD but also foreign), T-Bills, diversified holdings of high-quality short-term bonds, and precious metals.
For me, bonds/cash-deposits generate regular taxable income flows, whilst I could reduce that tax that would eat tax-exempt space that might otherwise be used for the likes of stocks. Gold legal tender coins incur no income nor capital gains taxes. Combined with something like BRK-B shares that also pay no dividends and 50/50 BRK/Gold barbell is my 'cash' - near immediately redeemable (T+3 with a credit card infill) zero coupon yield. Somewhat like a positive real yield/inflation 'bond' where in contrast alternatives such as inflation bonds after negative real yields, costs and taxes fair poorer by comparison. When your 'cash' earns 7.5% real since 2005 there's less need to increase risk on the 'growth' side.

I am in drawdown and draw a monthly SWR. Login and sell some shares of the higher valued at that time three days ahead of transferring that 'wage' to my regular spending account. Click the Monthly Returns tab in the above link and often one or the other will be up, sometimes both are up, sometimes both are down. I see that as broadly washing, sometimes you'll be selling some at above average levels, sometimes below average levels, overall neutral/washes. Irregular/unexpected additional withdrawals are again just T+3 away.

I split gold between funds (ETF) and physical were the tighter spread gold fund is more for trading/rebalancing whereas physical gold is more locked away core gold holdings.

Not being a US resident US stock provides stock + FX gain/losses, so in effect when buying stuff I have the options to pay in domestic currency, stocks, US dollars or gold.
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Re: How much Gold do you own and why?

Post by JackoC »

HanSolo wrote: Thu Aug 05, 2021 8:57 pm [Response to removed comments removed by admin LadyGeek]

2. If we are to consider the question (the one that you apparently took issue with), what S&P value would reflect the pricing-in of the assumption that "the developed world will never experience serious inflation or social upheaval of any kind ever again in our lifetimes", 000 has indicated that 4400 (current level) is within that range. If your answer to that question is, "I don't have an answer, but 000's answer is wrong", that appears to be a strawman. What I'm "not willing or able" to do is argue against a strawman.
[OT comments removed by admin LadyGeek]

2. But, let's try one more time. The claim by 000 is that '[market pricing says] the developed world will never experience serious inflation or social upheaval'. I'm distinguishing between those two things. I'm distinguishing between 'serious inflation' and 'social upheaval', and bringing in a third factor, real 'riskless' rate expectations. I keep repeating because this seems to where you stop paying attention to my explanation and yourself repeat 'you're saying the stock market is normally priced overall because it is relative to the bond market'. No. The market's outlook on inflation and future *real* 'riskless' rates should be embedded in both 'riskless' bond prices and stock prices. The market's outlook on 'social upheaval' is presumed not to be reflected in '[credit] riskless' bond prices, because they are assumed credit riskless. It should only be embedded in stock prices, between those two asset classes.

Therefore we should look at what is unusually priced among inflation expectations, real 'riskless' rate expectations and stock-only risk factor expectations (including but not limited to 'social upheaval'). From which we see, my last post, that inflation expectations are not priced unusually, the expected equity risk premium is not priced very unusually (covering the basket of risks applying to stocks but not 'riskless' bonds so including 'social upheaval'), but real 'riskless' rates (which affect both bond and stock prices) are priced very unusually. It's a pretty simple, and I'd add pretty standard, way of breaking out risks and pricing in different parts of the market. It does not equate to the statement 'the stock market is priced normally *overall* because it is wrt the bond market'.

I would have thought it too elementary to further explain, but maybe not: 'riskless' bonds don't have a random connection to the stock market. They are the two main choices (*the* two choices in classic CAPM view). Assuming inflation and 'social upheaval' (and all other stock-specific) risk expectations were constant but TIPS yields went from +2% to -1.2%, you'd expect in theory stock market expected return to also drop something like 3.2%, so if the CAPE was 17 (implied real return 1/17=5.8%) you'd expect it to go up to 38 (1/38=2.6%=5.8%-3.2%). That's not a statement that the stock market isn't more expensive at 38 than 17. It's simply trying to identify the *source* of the high valuation, which right now appears to be mainly the extraordinarily low real yield on low risk assets. I don't see evidence that high stock valuation now mainly stems either directly from optimistic inflation expectations or from unusually optimistic 'social upheaval' expectations.

And again more directly relevant to the thread, it's apparent from this AM's big sell off in gold (2%+) on strong job report that gold has also been priced on very low expectation of future real 'riskless' rates, so won't help much if those were to normalize.
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Re: How much Gold do you own and why?

Post by HanSolo »

[Response to removed comments removed by admin LadyGeek]

I'm willing to assume it's possible we're in agreement, per the below.
HanSolo wrote: Thu Aug 05, 2021 8:57 pm If we are to consider the question... what S&P value would reflect the pricing-in of the assumption that "the developed world will never experience serious inflation or social upheaval of any kind ever again in our lifetimes", 000 has indicated that 4400 (current level) is within that range.

If, for example, you think that 5200 would qualify, then you and I might actually be in agreement, because I think it's possible that 000 could have been off by 20%.
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Re: How much Gold do you own and why?

Post by LadyGeek »

I removed some contentious comments. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

... At all times we must conduct ourselves in a respectful manner to other posters.
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Re: How much Gold do you own and why?

Post by seajay »

JackoC wrote: Fri Aug 06, 2021 10:18 amAnd again more directly relevant to the thread, it's apparent from this AM's big sell off in gold (2%+) on strong job report that gold has also been priced on very low expectation of future real 'riskless' rates, so won't help much if those were to normalize.
Investors tend to be rewarded for taking on risks, such as price volatility.

Compare REIT/Gold, Dow/Gold, Gold/Silver ...etc. ratios and historically they've been very volatile. Dow/Gold of around 1 in 1980, 40 in 1999 for instance. Trading those ranges could yield good/great rewards and a simple trading method is to target % weight assets and rebalance back to those target weightings periodically, which has the tendency to have added when relatively low, reduced when relatively high.

Of more recent Dow/Gold was moderately high, Dow/Silver was higher, Gold/Silver was also relatively high. Indicative of silver being worst value than Gold but with both being relatively low compared to Dow (stocks) valuations. You might predict that gold could relatively outperform both silver and stocks, however more generally its better to simply rebalance back to target weightings and accept what occurs as more often predicting and deviating/biasing away from target weightings can prove to have been a incorrect prediction.

Some investments might provide rewards via both price appreciation and dividends (stocks). Others might just pay interest (cash deposits/treasury bills). Yet others provide rewards via volatility (Traded Options traders often target such rewards). To some extent the risk/rewards should all be similar/equal as if that were not the case then all investors would tend to converge on the consistently better choice.

Historically when 'riskless' such as T-Bills have done poorly, lagged inflation after taxes to levels where they've even seen value halved or more, so gold has tended to do well (when real yields are negative investors might rotate into gold). When gold has performed poorly, stocks did well. When stocks performed poorly so cash and gold did OK/well. Collectively tends to smooth overall portfolio volatility. When you're generally rewarded for taking on price volatility risk, diversifying has the tendency to lower the overall portfolio wide risk as individual assets might spike/decline to different magnitudes, may even see one up as another is down ...etc. Predicting such directions/magnitudes/correlations is largely futile. Just diversify and trade (rebalance) to partake in the rewards that more often are provided.
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Re: How much Gold do you own and why?

Post by peskypesky »

seajay wrote: Fri Aug 06, 2021 6:48 am
peskypesky wrote: Thu Aug 05, 2021 12:01 pmHow has gold done relative to stocks during the last few market crashes, i.e. the 2008 financial crisis, the .com crash?

I'm interested in gold not just as a possible hedge against inflation, but as an asset which might weather a big market crash better than stocks.
As a guide, based on the assumption of silver instead of gold up to 1975, gold from 1976, in reflection of investment gold being prohibited in the US between the 1930's and mid 1970's, and back to the 1930's for all 10 year periods since then (yearly granularity), 75/25 stock/PM worst 10 year period (after inflation) = +24% gain over the ten years, for all-stock -34%. For a investor drawing a 4% SWR over such a decline that equates to a difference of a portfolio value of 79% of the inflation adjusted start date portfolio value at the end of the ten years compared to 34% for all-stock. In other words SWR risk was lower. The cost of that 'insurance' was that the median 10 year gain (accumulation, with no SWR included) saw a 6% 10 year annualized real gain instead of 7.7% for all-stock.

Specifically for the dot com and financial crisis periods ...

10 year real gain factors
year range, 75/25 stock/gold, all-stock

1995-2004 1.834 2.408
1996-2005 1.630 1.866
1997-2006 1.682 1.797
1998-2007 1.620 1.415
1999-2008 1.299 0.734
2000-2009 1.388 0.764
2001-2010 1.725 1.020
2002-2011 1.849 1.141
2003-2012 2.068 1.691
2004-2013 1.942 1.724
2005-2014 1.960 1.766
2006-2015 1.806 1.716
2007-2016 1.739 1.680
2008-2017 1.820 1.965
2009-2018 1.959 2.904
2010-2019 1.961 2.962
2011-2020 1.987 3.060

Respective median's 1.82 and 1.72

Those figures are total real values with no SWR withdrawals included.

Double whammy of starting in 1999 and ending at the end of 2008 (pre dot com to into the financial crisis 10 years) saw all stock total real gain factor around -25% down, whilst 75/25 stock/gold gained around +33%. Factor in 4% SWR withdrawals on top of that -25% all-stock decline and obviously the value would have been deeper down for all-stock.

I referenced 75/25 stock/gold in the above as personally I consider 50/50 stock/gold to be a barbell of two extremes that combine to a central bullet, i.e. a volatile 'bond' like holding, so 75/25 stock/gold might be considered as a relatively more volatile 50/50 stock/bond like combination.
Thank you for the detailed explanation...but that went completely over my head.

I just need a simple answer, how did gold do vs the S&P 500 during the .com crash and the financial crash?
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Re: How much Gold do you own and why?

Post by secondopinion »

Always passive wrote: Thu Jul 29, 2021 10:33 am I know that gold is a highly controversial investment. There are many opinions, from Buffett's very negative to those that hold 25% following the Permanent Portfolio strategy.
I happen to own a bit less than 5% and wonder if I should not increase it to 10%.
For those that believe in this asset, what is the reason that you believe in it?
I would appreciate your comments!
Gold does not generate anything, but it does have value. Unlike the point of view that it is worth hardly anything in investing (equating it to cryptocurrency), it has inherit value for its industrial use; so there is something backing it. As a result, it does not rely on greater fool theory to have use in a portfolio; it just needs the hypothesis that it holds its value in relation to currency (or better) to be true. But one should not do it if that means tons of fees; that defeats the purpose. Risky, yes. Pointless, no.

I have no gold, but that is a portfolio choice at the moment.
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Re: How much Gold do you own and why?

Post by ThereAreNoGurus »

secondopinion wrote: Tue Aug 10, 2021 10:22 pm
Always passive wrote: Thu Jul 29, 2021 10:33 am I know that gold is a highly controversial investment. There are many opinions, from Buffett's very negative to those that hold 25% following the Permanent Portfolio strategy.
I happen to own a bit less than 5% and wonder if I should not increase it to 10%.
For those that believe in this asset, what is the reason that you believe in it?
I would appreciate your comments!
Gold does not generate anything, but it does have value. Unlike the point of view that it is worth hardly anything in investing (equating it to cryptocurrency), it has inherit value for its industrial use; so there is something backing it. As a result, it does not rely on greater fool theory to have use in a portfolio; it just needs the hypothesis that it holds its value in relation to currency (or better) to be true. But one should not do it if that means tons of fees; that defeats the purpose. Risky, yes. Pointless, no.

I have no gold, but that is a portfolio choice at the moment.
I know you're not making the claim that gold is like cryptocurrency, but since you mentioned it, it is quite different. With precious metals (gold, silver, etc.,) there is a finite set, but with crypto, anybody can come-up with a new crypto-"currency" which means not only can supply vary tremendously, but in my view, puts it in the musical chairs category (unless a specific crypto gets government backing, or other such exceptions). But with metals, it's a relatively fixed supply.
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Re: How much Gold do you own and why?

Post by kimura king »

delete
Last edited by kimura king on Fri Oct 01, 2021 8:19 pm, edited 1 time in total.
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Re: How much Gold do you own and why?

Post by ThereAreNoGurus »

kimura king wrote: Tue Aug 10, 2021 11:19 pm Bitcoin and Etherium fans will actually argue that they both are harder to produce over time and only a certain amount can be mined, therefore, have built-in scarcity. I don't buy it (pun intended).
haha...good pun.... Even if Bitcoin and Etherium have a fixed supply, the bigger picture is that other crypto's can come along. Nothing to stop people from using them, especially if the competition offers lower transaction fees or whatever for processing/buying/selling, etc. But as mentioned with precious metals nobody is going to create a new one... or at least it will be unlikely.

That's why to me, crypto's are the worst of both the commodity and currency worlds from an investment standpoint (black market transactions... different matter of course).
Trade the news and you will lose.
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Re: How much Gold do you own and why?

Post by revhappy »

Always passive wrote: Thu Jul 29, 2021 10:33 am I know that gold is a highly controversial investment. There are many opinions, from Buffett's very negative to those that hold 25% following the Permanent Portfolio strategy.
I happen to own a bit less than 5% and wonder if I should not increase it to 10%.
For those that believe in this asset, what is the reason that you believe in it?
I would appreciate your comments!
I also hold 5% gold in my networth and I plan to just keep topping it up bi-annually to keep it at 5% of my networth.

Few reasons:
1)I am from India and in our culture gold is a big part. If not anything else, I would convert it to jewelry and give it to my wife and daughter. So it serves as a consumption item.

2)I am from India, the currency is pretty stable, but still it is an EM so holding 5% in gold may not be such a bad thing from a scenario like what happened to Turkey recently

3)Central banks hold gold, there must be some reason why they do that. Ray Dalio holds gold. Many of the Roboadvisors I know hold gold as a way of diversification.

So 5% is a level which wont hurt so much if you got it completely wrong. Yet, it serves as some amount of portfolio stabilizer/insurance. So the rest of my portfolio I can be a bit more adventurous.
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Re: How much Gold do you own and why?

Post by secondopinion »

ThereAreNoGurus wrote: Tue Aug 10, 2021 10:36 pm
secondopinion wrote: Tue Aug 10, 2021 10:22 pm
Always passive wrote: Thu Jul 29, 2021 10:33 am I know that gold is a highly controversial investment. There are many opinions, from Buffett's very negative to those that hold 25% following the Permanent Portfolio strategy.
I happen to own a bit less than 5% and wonder if I should not increase it to 10%.
For those that believe in this asset, what is the reason that you believe in it?
I would appreciate your comments!
Gold does not generate anything, but it does have value. Unlike the point of view that it is worth hardly anything in investing (equating it to cryptocurrency), it has inherit value for its industrial use; so there is something backing it. As a result, it does not rely on greater fool theory to have use in a portfolio; it just needs the hypothesis that it holds its value in relation to currency (or better) to be true. But one should not do it if that means tons of fees; that defeats the purpose. Risky, yes. Pointless, no.

I have no gold, but that is a portfolio choice at the moment.
I know you're not making the claim that gold is like cryptocurrency, but since you mentioned it, it is quite different. With precious metals (gold, silver, etc.,) there is a finite set, but with crypto, anybody can come-up with a new crypto-"currency" which means not only can supply vary tremendously, but in my view, puts it in the musical chairs category (unless a specific crypto gets government backing, or other such exceptions). But with metals, it's a relatively fixed supply.
Right. Metals can be used as a material for something useful; cryptocurrency do not share that feature.
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Re: How much Gold do you own and why?

Post by Thesaints »

revhappy wrote: Wed Aug 11, 2021 12:33 am 3)Central banks hold gold, there must be some reason why they do that.
By and large, they can't sell it.
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Re: How much Gold do you own and why?

Post by HanSolo »

Thesaints wrote: Wed Aug 11, 2021 12:48 pm
revhappy wrote: Wed Aug 11, 2021 12:33 am 3)Central banks hold gold, there must be some reason why they do that.
By and large, they can't sell it.
What's your source?

This article refers to central banks being both buyers and sellers of thousands of tonnes of gold over the years... that sounds pretty "by and large" to me!

Why Do Central Banks Buy Gold?
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Re: How much Gold do you own and why?

Post by seajay »

Gold was re-promoted back to being a Tier 1 asset in recent years (every $ value counts rather than lower tiers where only partial value counts).

International settlements used to occur in part via gold bars being moved between country cages within the Bank of England in reflection of deficit/surplus international trades.

Back in the day some used to try and out-run daily price fixes (morning/afternoon) flagging, if you could signal to say Paris from London quicker then you'd have foresight to trade ahead of the crowd. Nowadays the time advantage races are measured in nano seconds, and where some have bored holes literally through hard rock/mountain to gain a speed advantage of shorter routing of fibre optic cables over a longer route over the mountain. Its also a reason why London has a square mile financial hub, all the big players having similar distance/time delay lag.

I believe that London still trades more US$/day than even the US. FX trading traverses Tokyo, London, New York with multiples of the entire stock market value traded each day, and where being central London ends up doing the most trading (other side of the globe is mostly water).

Whilst the EU would like to inherit that, the EU is just a part of Europe, became 15% smaller in population since the UK left, 25% economically smaller, and has socialist tendencies (such as a relatively high risk of introducing transactions taxation on FX trades).

Fundamentally central banks hold gold for historic reasons, and as part of holding a range of 'currencies'. If your domestic currency falters you want other currencies to hand in order to pay the bills or be at risk of seeing even further domestic currency value decline.
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Re: How much Gold do you own and why?

Post by revhappy »

Coincidently, just read this.

https://www.moneycontrol.com/news/busin ... 23691.html

India's central bank has bought record amounts of gold. There are lots of dollars being printed and those dollars flow out of US and land with overseas central banks and they dont know what to do with yields so low, so they might consider accumulating gold, instead.
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Re: How much Gold do you own and why?

Post by SquirrelEater »

Yes. Physical. 1/10 coins at that.
Think gold, fiat US dollars, or fiat Afghanis (Afghan currency) is most useful in Kabul right now? Which is most likely going to get you on a plane or smuggled away from harms way?
Gold is for scary times. I hope it is always an armchair commando discussion topic for me and not of practical importance.
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Re: How much Gold do you own and why?

Post by seajay »

ThereAreNoGurus wrote: Tue Aug 10, 2021 11:37 pm
kimura king wrote: Tue Aug 10, 2021 11:19 pm Bitcoin and Etherium fans will actually argue that they both are harder to produce over time and only a certain amount can be mined, therefore, have built-in scarcity. I don't buy it (pun intended).
haha...good pun.... Even if Bitcoin and Etherium have a fixed supply, the bigger picture is that other crypto's can come along. Nothing to stop people from using them, especially if the competition offers lower transaction fees or whatever for processing/buying/selling, etc. But as mentioned with precious metals nobody is going to create a new one... or at least it will be unlikely.

That's why to me, crypto's are the worst of both the commodity and currency worlds from an investment standpoint (black market transactions... different matter of course).
Old Money, generational wealth, opts to hold land, rare artworks, gold. Those with wealth hold such as wealth preservers, Mark Twain ... buy land as they ain't making any more of it; Paintings by dead artists, gold ... finite and as such if your family need to sell some to raise cash then another will pay to add some to their collection, broadly offsets inflation.

As you say, virtual scarcity can be virtually replicated unlimited amounts of times. Valueless other than the greater-fool (Ponzi) value.
Whakamole
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Re: How much Gold do you own and why?

Post by Whakamole »

I am glad I bought more. PMs are still a small percentage of my portfolio. What did Bogle say if you are concerned about high inflation - up to 5%?
GP813
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Re: How much Gold do you own and why?

Post by GP813 »

I own gold and silver coins and bullion. It's a hobby I enjoy that also builds or at the very least preserves wealth.
JonFund
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Re: How much Gold do you own and why?

Post by JonFund »

I don't own any gold in my portfolio. It generates no income (i.e., dividends, interest), and contrary to popular belief, it has historically not been a good inflation hedge, unless you're looking over a period of at least 100 years.
secondopinion
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Re: How much Gold do you own and why?

Post by secondopinion »

JonFund wrote: Thu Oct 14, 2021 9:28 am I don't own any gold in my portfolio. It generates no income (i.e., dividends, interest), and contrary to popular belief, it has historically not been a good inflation hedge, unless you're looking over a period of at least 100 years.
Very often, you have to pay to hold it; so it is actually incurring a negative income.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
One More Thing
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Re: How much Gold do you own and why?

Post by One More Thing »

seajay wrote: Wed Aug 04, 2021 11:39 am They can't however print gold.
Financial institutions can issue ETFs not backed by physical gold however.
Nicolas
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Re: How much Gold do you own and why?

Post by Nicolas »

Just my wedding ring, $15 fifty years ago. It’s 14K.
seajay
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Re: How much Gold do you own and why?

Post by seajay »

Prefer two thirds US, one third gold to either thirds each of US/global ex-US/10 year T (or US/global ex-US/TBM) whilst broadly they all tend to be comparable.

Whilst some dislike the absence of regular dividends/interest, others might prefer the absence of regular taxable events arising out of dividends/interest.
chw
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Re: How much Gold do you own and why?

Post by chw »

None. I view it like tangible crypto currency. It's purely a speculative asset that does not produce anything.
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ApeAttack
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Re: How much Gold do you own and why?

Post by ApeAttack »

I recently inherited 1.5 oz of gold coins. I would like to sell them, but I'm too lazy to go to local dealers.

Maybe I'll keep them as some long-shot hedge against the unknown since they cost me nothing. I would've never bought them myself.
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