The GOLD scream room

Discussion of the Gold portion of the Permanent Portfolio

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buddtholomew
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Re: The GOLD scream room

Post by buddtholomew » Thu Jun 21, 2018 5:38 am

Mark Leavy wrote:
Wed Jun 20, 2018 10:16 pm
Budd,

I've seriously enjoyed your commentary. Angst is what makes us all think.

How much gold would you hold if you thought it was nothing more than a currency hedge?

I.e. Most of your assets are valued in US dollars. Imagine that gold represents a basket of all of the other world currencies. Nothing more, nothing less. Gold goes down if the dollar goes up. Gold goes up if the dollar goes down.

What percentage of your portfolio should be allocated to a dollar hedge?

Just brainstorming here...

Mark
Thanks Mark; I just don’t know the answer to your question - PP is around 20% now and overall portfolio 6.9%. Target is around 7.5%

“Gold up if dollar down” - sure; but what about International stocks as a currency hedge (VWILX holding > +40% since 2017). I’ve had success with everything but gold. Maybe one day I’ll break even.
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Xan
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Re: The GOLD scream room

Post by Xan » Thu Jun 21, 2018 9:41 am

buddtholomew wrote:
Thu Jun 21, 2018 5:38 am
I’ve had success with everything but gold. Maybe one day I’ll break even.
Isn't that exactly the PP plan? At least one asset is going to stink up the joint. You just don't know which. So far for you it's been gold.
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buddtholomew
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Re: The GOLD scream room

Post by buddtholomew » Thu Jun 21, 2018 9:46 am

Xan wrote:
Thu Jun 21, 2018 9:41 am
buddtholomew wrote:
Thu Jun 21, 2018 5:38 am
I’ve had success with everything but gold. Maybe one day I’ll break even.
Isn't that exactly the PP plan? At least one asset is going to stink up the joint. You just don't know which. So far for you it's been gold.
Yes Xan but it’s the asset that distinguishes the PP from other portfolios right - a whole 25%. I’m just screaming in the gold room, not changing anything O0
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Cortopassi
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Re: The GOLD scream room

Post by Cortopassi » Thu Jun 21, 2018 10:23 am

We should be in the Bond scream room. They are both sucking YTD

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bedraggled
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Re: The GOLD scream room

Post by bedraggled » Thu Jun 21, 2018 11:33 am

Budd,

mathjack107 reported success with the Fidelity Monitor & Insight Newsletter. He mentioned an annual gain of approximately 11% or a bit more. Sounds OK for a high net worth individual. I believe the newsletter deemphasizes gold.

The newsletter might be nice when implementing a VP.
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buddtholomew
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Re: The GOLD scream room

Post by buddtholomew » Thu Jun 21, 2018 2:35 pm

Dollar up, gold down
Dollar down, gold down
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Re: The GOLD scream room

Post by WhiteElephant » Thu Jun 21, 2018 2:54 pm

When you start a PP you know that gold can easily go down for 10-20 years. As long as one or more other assets make up for it. PP has performed exactly as expected.

It's not a portfolio to make money, it's for protecting your money.
There was a lot of talk about 'solid 3-5% real returns', but I don't think Browne ever said something like that himself. It was always about protecting what you can't afford to lose. So far the PP has done exactly that, during the 'lost decade' and this bull run.

What are your expectations Budd?
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Re: The GOLD scream room

Post by thisisallen » Thu Jun 21, 2018 3:25 pm

bedraggled wrote:
Thu Jun 21, 2018 11:33 am
Budd,

mathjack107 reported success with the Fidelity Monitor & Insight Newsletter. He mentioned an annual gain of approximately 11% or a bit more. Sounds OK for a high net worth individual. I believe the newsletter deemphasizes gold.

The newsletter might be nice when implementing a VP.
Hulbert Financial Digest independently tracks the success/failure of newsletters. It is pretty well respected (?)
This the the 20 track record of several newsletters including the Fidelity Insight one. Doesn’t look like the results that mathjak107 spoke of, although his mix may have generated more. It also shows the risk levels.

http://hulbertratings.com/20-year-scoreboard/
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buddtholomew
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Re: The GOLD scream room

Post by buddtholomew » Thu Jun 21, 2018 4:23 pm

WhiteElephant wrote:
Thu Jun 21, 2018 2:54 pm
When you start a PP you know that gold can easily go down for 10-20 years. As long as one or more other assets make up for it. PP has performed exactly as expected.

It's not a portfolio to make money, it's for protecting your money.
There was a lot of talk about 'solid 3-5% real returns', but I don't think Browne ever said something like that himself. It was always about protecting what you can't afford to lose. So far the PP has done exactly that, during the 'lost decade' and this bull run.

What are your expectations Budd?
Somehow everyone thinks the PP is doing what it is supposed to be doing. You mean it has been going up the last decade because of equities, right? I’ll believe it when I see Gold or LTT’s carry the portfolio during my lifetime that it is doing what it is designed to do.
All I see is a drag on performance.
Last edited by buddtholomew on Thu Jun 21, 2018 4:40 pm, edited 2 times in total.
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Re: The GOLD scream room

Post by pugchief » Thu Jun 21, 2018 4:38 pm

thisisallen wrote:
Thu Jun 21, 2018 3:25 pm
bedraggled wrote:
Thu Jun 21, 2018 11:33 am
Budd,

mathjack107 reported success with the Fidelity Monitor & Insight Newsletter. He mentioned an annual gain of approximately 11% or a bit more. Sounds OK for a high net worth individual. I believe the newsletter deemphasizes gold.

The newsletter might be nice when implementing a VP.
Hulbert Financial Digest independently tracks the success/failure of newsletters. It is pretty well respected (?)
This the the 20 track record of several newsletters including the Fidelity Insight one. Doesn’t look like the results that mathjak107 spoke of, although his mix may have generated more. It also shows the risk levels.

http://hulbertratings.com/20-year-scoreboard/
I found this section of the table the most interesting. The first column is the total return, annualized. Looks like gold won. Budd?
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Cortopassi
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Re: The GOLD scream room

Post by Cortopassi » Thu Jun 21, 2018 5:45 pm

I love clipping these charts. This is for all of 2000s, peak to trough. No rebalancing, 10,000 in each. A clear winner.

BUT, to budd's point, the same test for any time period 1997 and earlier to present, S&P destroys gold easily. So things are really time sensitive.

I would imagine in the matter of a short few months or years starting difference, you can have people on one side who hate gold and love stocks and vice versa just because of when they started their investing life.

So I'd rather just spread it around and accept a lower overall return, knowing I might be missing out, but also better mentally with less severe drawdowns and less concerns about most of my eggs in one basket.

ANY of the methods, 100% stocks, 60/40, PP would have been better than my haphazard investing style, as long as you are able to stick with it.

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Re: The GOLD scream room

Post by Tortoise » Thu Jun 21, 2018 7:55 pm

buddtholomew wrote:
Thu Jun 21, 2018 4:23 pm
All I see [from gold] is a drag on performance.
The PP is designed to trade some long-term performance for protection against volatility and extreme drawdowns. It's a feature, not a bug.

Just as one buys a Honda Accord instead of a Ferrari if he prioritizes reliability over flashiness, one invests in the PP instead of an all-stock portfolio if he prioritizes downside protection and stability over maximum long-term return.

Also, just as most car drivers' time is better spent driving and not constantly peeking under the hood and poking around at all the moving parts, most PP investors' time is better spent focusing on the performance of the overall portfolio and not that of its component assets.
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