All PP assets are within tolerance and I have an additional 3% to allocate to the portfolio.
SPY - 28%, GLD - 21%, TLT - 24%, CASH - 27%
Current options under consideration include:
Contribute the total to cash and wait until a rebalance band is triggered.
Contribute in accordance with the current percentages (e.g. .28*.03 to SPY, .21*.03 to GLD, .24*.03 to TLT and the balance to CASH.
Contribute 70% to the lagging asset (GLD) and the remaining 30% to CASH.
Option 2 is the least desirable as it requires multiple trades and additional expenses. Option 1 is the most conservative and Option 3 is the most gut-wrenching as it requires purchasing physical gold for the first time. Thank you and I appreciate the comments.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
Option 3, buying physical, esp. if for the 1st time, might be gut wrenching, but having it and holding it personally is pretty calming! I assume you do mean physical and not GLD.
Since you don't have any physical gold, my vote is for purchasing physical gold with the entire 3%. Unless you have a good percentage of your gold allocation in physical form, say in a bank safe deposit box, then you are missing out on some of the insurance aspects of gold for dealing with a serious financial calamity. My personal goal is to have at least 50% of my gold in physical form. Unfortunately, at present I only have about 10% in physical, so I have a long way to go.
buddtholomew wrote:
All PP assets are within tolerance and I have an additional 3% to allocate to the portfolio.
SPY - 28%, GLD - 21%, TLT - 24%, CASH - 27%
Current options under consideration include:
Contribute the total to cash and wait until a rebalance band is triggered.
Contribute in accordance with the current percentages (e.g. .28*.03 to SPY, .21*.03 to GLD, .24*.03 to TLT and the balance to CASH.
Contribute 70% to the lagging asset (GLD) and the remaining 30% to CASH.
Option 2 is the least desirable as it requires multiple trades and additional expenses. Option 1 is the most conservative and Option 3 is the most gut-wrenching as it requires purchasing physical gold for the first time. Thank you and I appreciate the comments.
Since you have no physical gold (!!!) and you're a worrywart, I'm going to let you know that it does not look like gold will be bottoming anytime soon until the ECM turning point of 2015.75. So now that you know that, if you still want to buy gold coins, you need to do it for completely different reasons than because you want it to go up. There's a lot of other virtures to holding gold. I have gold coins that I bought shortly after the peak (ECM 2011.45) and I'm comfortable with that even though I probably have a pretty substantial capital gains loss now (I haven't looked and in this case, ignorance is bliss as I don't really need to be worrying about it). You can't put a price on being able to sleep at night.
I also don't think you should rebalance back to 25% before you hit the bands. The increased transanction costs and/or lack of letting winners run reduces long-term returns. Play with Peak2Trough's backtester and you will see this.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
This doesn't seem like a monumental decision budd, I think when the benefits to different accumulation methods were examined, they didn't differ by too much. My advice would be to do whatever makes you happiest. Then drink some wine.
buddtholomew wrote:
Mike59, I assume you mean purchasing gold and raising my treasury exposure to 25%. It's difficult to add to cash and deplete to 25% at the same time
I meant distributing across TLT /GLD, I would even them out so the allocation might be 23.x or 24.x % each. As long as you're buying a lagging asset and not sitting on the sidelines I think you'll be fine...
Thank you all for the comments and suggestions. I plan to move forward with option 3 and allocate the bulk of the money to physical gold. I will have to purchase a few lots over a couple of months to remain below the 10K threshold and IRS reporting requirements.
I was all set to purchase the first batch today, but Ally requires you to fax the wire request and I do not currently have access to such an archaic piece of equipment. Credit card or PayPal increases cost by approximately 4%, so that was a non-starter. Check is an option, but the delay in receiving the shipment is almost 10 days over the other payment methods.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
Good choice. You will sleep much better at night knowing that if push comes to shove you can always walk over to your bank, sew a few gold coins into your clothing, and fly off to start a new life in some remote place. YMMV.
I promise that when you get that package you'll be very, very, happy you did. And tell us about the wondrous moment. I remember being completely awestruck with the realization that a small piece of my wealth was beyond the reach of any regulator, lawyer, or politician.
Forget the bank wire and write the check. Ally is superb at checks, savings accounts and ATMs, and you can ask no more of them. When I bought my gold, I snooped around a few sites to find the lowest markup + shipping charges, called to lock in my order, and then immediately wrote the check and mailed it. Easy peasy.
Then come back from the mailbox, kick back and have a well-deserved glass of wine!
BTW if you have that much money you might think about putting a piece of it toward your other lagging asset: Bonds.
"Democracy is two wolves and a lamb voting on what to have for lunch." -- Benjamin Franklin
