iwealth wrote:
mathjak107 wrote:
yeah , i know if you are doing it you will try to justify it with no one knows what is next , but a reasonable person who is not entrenched in gold would at least wait until some signs are in place when the trend is your friend to make a big commitment . they would likely committ no more than 10% at this point .
So you can't understand 2 things:
1) why anybody holds gold to begin with
2) if you insist on holding gold, why don't you wait for the "trend" to reverse before committing more than 10%
I think the you still fail at times to recognize your audience. Obviously you know why people hold gold around here, so that's not worth more discussion. But to point 2), what are these signs to look for to indicate lasting trend reversals? Do you have extremely specific exit/entry criteria? If not, your advice is completely unactionable. I'd take it farther and ask why not take it a step farther and do it for individual stocks? Surely there's a LOT of money to be made out there if you can accurately predict when prices will reverse and maintain that course.
For the rest of us, it's a safer bet to follow strict guidelines such as rebalance yearly or rebalance at 35/15 bands.
trends last years if they are really trends and are supported by basis so there is no need to be the first one at the gate .
what i would watch for before committing more than 10% ? signs of inflation picking up around the world , not falling in to a recession like now . i wouldn't even think about increasing while the fed is below their mandated goals . i would watch the dollar and perhaps if it fell 10-15% . i would watch wage increases and oil/ energy prices especially . . .
remember you are not looking to make a killing with the gold , as you tell me , you want it for protection . so as the need for protection shows itself you increase the level of protection . you will still be way a head of the curve .
it isn't like you wake up one morning and everything is likely to be in the crapper as far as the dollar and inflation . there are always growing signs and time to act ., especially with gold .
hoping it rises out of sheer speculation with little basis in this country by betting so much money on it so early , like it or not , that is a speculation .
but not only is it a speculation but so far 40 years of history says a poor one at that . so that is my gripe with so much gold , thinking this time is different can be very costly and i like others believe that is a flaw in the pp design . harry is human as well as a gold bug and that does not mean his thinking that this model was forever was even correct logic .
if you caught a shorter term run up in gold then yes you are happy but after 30-40 years those run ups typically level out to just the rate of inflation so down the road you may not view so much gold as such a smart use of the money unless we have some remote flyers happen but then you would be speculating on the long shot . .
rebalancing gold is not the answer as rebalancing may be taking money out of assets that typically have always produced better returns over the long haul and sinking it in to something that may track inflation at best once it levels out over the years from run ups . just way to heavy in gold all the time instead of some of the time is where i see the flaw as well as no provisions at all for dealing with long term treasury's getting crushed if rates should shoot up by shortening up maturity's . in a nut shell just to inflexible and inefficient i think for what may lie ahead with zero provisions for adjusting .
long term even a conservative fund like wellesley income surpassed the pp and it may very well keep doing it because it stays flexible .
perhaps wellesley and a 5-10% stake in gold may make more sense and perform better .
i thought it was interesting that in an interview yesterday on bloomberg radio michael cuggino when asked how the permanent portfolio was being positioned for the times ahead he said they were shortening up bond maturity's .
i know the fund broke ranks on the 4x4 concept since the beginning but they keep moving farther and farther away . not saying they did the right thing either the way they positioned the fund as really geared for more inflationary times , especially so early in the game . .