I do remember reading what Bernstein wrote in his book "Deep Risk" regarding gold. And, at the time, it caused me to write off gold an investment. Good response, though, from stuper1 here.stuper1 wrote: ↑Sat Feb 20, 2016 6:21 pmI agree that gold doesn't necessarily respond well to inflation. However, as a diversifier, I think gold definitely serves an important purpose. The retirement withdrawal calculator at portfoliocharts.com shows that your 29/35.5/35.5 portfolio could support a safe withdrawal rate of 2.8 to 3.7%. The 4x25 can support a SWR of 3.9 to 4.8%. This means that with gold in your portfolio, you can live about 33% richer in retirement, which seems quite significant.Austen Heller wrote: Bill Bernstein's book "Deep Risk", addresses your issue about gold. We talked about it here:
http://gyroscopicinvesting.com/forum/pe ... /#msg83163
My conclusion from Deep Risk was that gold doesn't really respond very well to inflation. It's not even that great of a diversifier; from 1976-2013, Bernstein finds that the normal 4x25 PP had an average return of 8.66% with a SD of 7.92%. You can get the same return with an even lower SD using the portfolio 29% stocks : 35.5% bonds : 35.5% cash ("Deep Risk", pg.16). However, gold still has useful roles, as a form of portfolio insurance, a safe-haven, and an alternative currency for holders of US dollars.
Vinny