Hello all

General Discussion on the Permanent Portfolio Strategy

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technovelist
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Re: Hello all

Post by technovelist » Fri Sep 13, 2013 1:17 pm

Rien wrote:
technovelist wrote:
Rien wrote:
I think it does make sense, but that is not a guarantee that it will happen in my lifetime. Humanity shoots itself in the foot all the time...

I agree about the fiat bubble, but I do not believe that we will go back to gold backing. A barter economy seems more likely to me. Showing gold or silver in such an environment may very well be a death sentence.
After a time when a new society forms gold will likely become usable again. I see investing in gold as a way to conserve wealth from here to there, but not as very usable in between.

Having said that, I also realise that it is not predictable when the fiat bubble pops. I think it may last longer than people think and the final pop may happen faster than anticipated. As to timeframes, I think bonds may go first, probably within the next 10 years. The fiat bubble may stay alive much longer than that. This depends imo mostly on our ability to keep the economic system going. And as such it is probably driven by our energy consumption. Once that goes down, its curtains. (IMO of course)
A barter economy is completely unworkable at anything above near-subsistence. You cannot calculate profit or loss without money pricing, which eliminates all large- or even medium-scale enterprises.

And if we did have a barter economy, why would showing gold or silver be a death sentence? I don't see the logic there.

The timeframe is always the hardest to get right, but this is already the longest-lasting fiat experiment, so I think it is likely to fail within our lifetime. Obviously that depends on how old we are though.  :D
Maybe barter is a bit OTT. I could certainly envision local currencies springing up. But the larger currencies like the USD and EUR would go the way of the dodo. I think an energy problem will be the trigger, and depending on who you listen to, that could be as early as next year. But I do not discount the possibility that something new will come along and rescue us "one more time".

I have read Ferfal for a while, and he describes the situation in Argentine. He writes that it is dangerous to buy or sell gold unless you really trust the other party. I think a similar situation would arise once the fiat currencies break down and are replaced with local currencies and barter.
It's dangerous to do ANYTHING in such a situation. I don't see that it would be more dangerous to use gold unless it has a very high value so that people would be willing to harm you to get it, but that is true for anything with high value.
Another nod to the most beautiful equation: e + 1 = 0
koekebakker
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Re: Hello all

Post by koekebakker » Sat Sep 14, 2013 1:21 am

It may seem that I do not like the PP, but that conclusion would be premature. The problem is an absence of alternatives.
PP may very well be "the best house in a bad neighbourhood". I simply do not seen any alternatives.
I feel the same way. There are a lot of things I don't like about the PP's 4x25 split.
But on the other hand I'm not comfortable putting 50% or more into one asset class, so what can you do?
You can create your own allocation of-course or you can call it a day and just go with the PP.

I've said before that I'll never want to put 25% of my portfolio in gold but that might just be what I'll end up doing.
Last edited by koekebakker on Sat Sep 14, 2013 6:56 am, edited 1 time in total.
frommi
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Re: Hello all

Post by frommi » Sat Sep 14, 2013 2:29 am

If most companies in the world go bankrupt or to zero, what do you want to buy with your gold?
Currently most of the large US-companies are selling their stuff all over the world, so even when the dollar collapses they won`t be out of business.

Some posts in this thread really want me to sell my gold immediately, because i am not a gold bug and i am really optimistic about the future. Whats the point of being pessimistic all over your life? Is it that the PP fetches all people who have bad experiences with stocks in 2008 or 2000/2001 and sold at the bottom? We are at about historic highs in gold, and have no real inflation currently. And it won`t come without the economy recovering.
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Rien
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Re: Hello all

Post by Rien » Sat Sep 14, 2013 7:45 am

frommi wrote: If most companies in the world go bankrupt or to zero, what do you want to buy with your gold?
Currently most of the large US-companies are selling their stuff all over the world, so even when the dollar collapses they won`t be out of business.
If the current companies go out of existence, there will be new ones to replace them.
But I do not think most companies would go out of existence, just the really big ones that need the current global economy to exist. Most companies take advantage of the global economy, but are not really depending upon it. Though their numbers will go quite a bit lower when the globalisation reverses. I fully expect most companies to handle the transition, at least to the extent that they will survive.

I believe that we will transition to a new economy, a new paradigm. Less global, much more local. Either that, or the singularitarians will be right. (In which case the economy will also change dramatically, but then we will enter nirvana, so you don't really need your investments anymore)
The transition will be harsh in some places, less so in others. During the transition it may be unsafe to declare your gold holdings to the world. After the transition it won't be a problem.

Anyway that is how I see it longer term.
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technovelist
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Re: Hello all

Post by technovelist » Sat Sep 14, 2013 8:09 am

frommi wrote: If most companies in the world go bankrupt or to zero, what do you want to buy with your gold?
Currently most of the large US-companies are selling their stuff all over the world, so even when the dollar collapses they won`t be out of business.

Some posts in this thread really want me to sell my gold immediately, because i am not a gold bug and i am really optimistic about the future. Whats the point of being pessimistic all over your life? Is it that the PP fetches all people who have bad experiences with stocks in 2008 or 2000/2001 and sold at the bottom? We are at about historic highs in gold, and have no real inflation currently. And it won`t come without the economy recovering.
You don't have to be pessimistic to buy gold. You just have to be realistic.
But if you want to sell, go right ahead. However, I think it is very likely that sometime in the next 5-10 years you will regret selling.
Another nod to the most beautiful equation: e + 1 = 0
frommi
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Re: Hello all

Post by frommi » Sat Sep 14, 2013 8:25 am

Rien wrote:
I believe that we will transition to a new economy, a new paradigm. Less global, much more local. Either that, or the singularitarians will be right. (In which case the economy will also change dramatically, but then we will enter nirvana, so you don't really need your investments anymore)
The transition will be harsh in some places, less so in others. During the transition it may be unsafe to declare your gold holdings to the world. After the transition it won't be a problem.

Anyway that is how I see it longer term.
And you want to base your investments on that thinking? Good luck!
You don`t have a realistic view of the world, money rules the world and every rich man on the planet will fight against such new "system" or "transition". All political decisions are ruled by the money and their lobby. If you want to win, just go with the flow and the money.
koekebakker
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Re: Hello all

Post by koekebakker » Sun Sep 15, 2013 1:29 am

Emotional states such as optimism and pessimism shouldn't have much to do with the way you invest.
The world doesn't care if your optimistic or pessimistic and that's the way the PP is designed.
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