The GOLD scream room

Discussion of the Gold portion of the Permanent Portfolio

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pugchief
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Re: The GOLD scream room

Post by pugchief » Tue Sep 21, 2021 6:52 am

vincent_c wrote:
Mon Sep 20, 2021 9:32 pm
A lot/almost all of the alt coins are way overvalued and will drop 90%+ and a lot of bitcoin’s value in adoption is tied to that so when the altcoin bubble bursts the air in bitcoin will be released too. It’s a mistake to dismiss bitcoin just because it’s overvalued. Everyone should be a buyer at the right price. The adoption needs to be more than just speculation and get rich quick thinking but it will get there, will you be holding bitcoin when it does?
I could be wrong, but it seems like for crypto to become more mainstream it would have to become less complicated to buy, sell and hold, and it would need to be cheaper to do so as the fees now are ridiculous IMO. Until then, it seems like it's just going to be a wild roller coaster ride rather than an actual investment like gold is now.
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Re: The GOLD scream room

Post by Mark Leavy » Tue Sep 21, 2021 8:41 am

Interactive Brokers just this week made Bitcoin (and some other crypto coins) available to purchase - with very low fees and essentially zero hassle to own. I haven't bought any, but now it is a ticker on my trading app. If I were to purchase, it is held via an arrangement with Paxos, which I know nothing about. I also assume that if I were to buy it via the Interactive Brokers/Paxos relationship it would only be as investment or speculation in a different asset class. I don't imagine that once purchased, I could use the BTC for international arms dealing or buying up unabridged copies of Huckleberry Finn.

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Re: The GOLD scream room

Post by vincent_c » Tue Sep 21, 2021 10:00 am

pugchief wrote:
Tue Sep 21, 2021 6:52 am
I could be wrong, but it seems like for crypto to become more mainstream it would have to become less complicated to buy, sell and hold, and it would need to be cheaper to do so as the fees now are ridiculous IMO. Until then, it seems like it's just going to be a wild roller coaster ride rather than an actual investment like gold is now.
I agree with this.

I actually think that the usability is improving exponentially, but those improvements just may not be mainstream yet so for example if you're still thinking that fees are ridiculous or wallets are too complicated then you're probably not aware of the latest offerings.

There is always going to be a trade off between security and usability in the space and I think that's acceptable.
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Re: The GOLD scream room

Post by vincent_c » Tue Sep 21, 2021 10:03 am

Mark Leavy wrote:
Tue Sep 21, 2021 8:41 am
Interactive Brokers just this week made Bitcoin (and some other crypto coins) available to purchase - with very low fees and essentially zero hassle to own.
Does it need to be enabled?

BTW, not your keys not your coins.

The biggest difference between gold and bitcoin is that the physical bitcoin is distributed among many private wallets and there are no clearing houses so with all the derivative products on bitcoin that in effect hypothecates it, when there is a supply crunch you will want to be holding your own keys.
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Re: The GOLD scream room

Post by Mark Leavy » Tue Sep 21, 2021 10:24 am

vincent_c wrote:
Tue Sep 21, 2021 10:03 am
Does it need to be enabled?
No. The same day that I got the email, I typed in the ticker and from what I could tell, it was ready for me to push buy.
I'm not inclined to buy any, but it seems like it would be more than adequate for short term speculation if one were interested in that sort of thing.
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Re: The GOLD scream room

Post by vnatale » Tue Sep 21, 2021 7:19 pm

Mark Leavy wrote:
Tue Sep 21, 2021 8:41 am

Interactive Brokers just this week made Bitcoin (and some other crypto coins) available to purchase - with very low fees and essentially zero hassle to own. I haven't bought any, but now it is a ticker on my trading app. If I were to purchase, it is held via an arrangement with Paxos, which I know nothing about. I also assume that if I were to buy it via the Interactive Brokers/Paxos relationship it would only be as investment or speculation in a different asset class. I don't imagine that once purchased, I could use the BTC for international arms dealing or buying up unabridged copies of Huckleberry Finn.


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Re: The GOLD scream room

Post by barrett » Fri Sep 24, 2021 7:15 am

With gold down about 6% over the last 12 months and stocks up 31%, I am curious if anyone is re-balancing into gold recently.
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Re: The GOLD scream room

Post by dualstow » Fri Sep 24, 2021 9:14 am

barrett wrote:
Fri Sep 24, 2021 7:15 am
With gold down about 6% over the last 12 months and stocks up 31%, I am curious if anyone is re-balancing into gold recently.
I haven't been strictly rebalancing by the bands, but I've been trickling into gold these past couple months. Unfortunately, the last purchase was made just before the recent drop, but I have only bought 1-2 coins at a time.
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Re: The GOLD scream room

Post by dualstow » Fri Sep 24, 2021 12:37 pm

p.s. The portfolio charts entry on gold from last summer is a really good read. I tried to read a huge hardcover on gold and it bored me to tears. The pCharts entry is what I needed:

https://portfoliocharts.com/2020/08/21/ ... /#backtest
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Re: The GOLD scream room

Post by I Shrugged » Fri Sep 24, 2021 7:37 pm

barrett wrote:
Fri Sep 24, 2021 7:15 am
With gold down about 6% over the last 12 months and stocks up 31%, I am curious if anyone is re-balancing into gold recently.
It’s on my to do list.
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Re: The GOLD scream room

Post by dockinGA » Sat Sep 25, 2021 5:44 am

barrett wrote:
Fri Sep 24, 2021 7:15 am
With gold down about 6% over the last 12 months and stocks up 31%, I am curious if anyone is re-balancing into gold recently.
Not a rebalance per se, but my monthly contributions have been going to gold quite a lot recently to 'top it up'. Including last month, and early last week.
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Re: The GOLD scream room

Post by Kriegsspiel » Sat Sep 25, 2021 6:23 am

A year ago this month, my gold was at 33.5%, and now it's at about 25%. So (if my math is right), if I would have balanced out of gold back then, my gold allocation would be at about 17% right now.

Probably a case for rebalancing when you're close to the 15/35 bands and not being such a turd.
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Re: The GOLD scream room

Post by vincent_c » Sun Sep 26, 2021 7:51 pm

Kriegsspiel wrote:
Sat Sep 25, 2021 6:23 am
A year ago this month, my gold was at 33.5%, and now it's at about 25%. So (if my math is right), if I would have balanced out of gold back then, my gold allocation would be at about 17% right now.

Probably a case for rebalancing when you're close to the 15/35 bands and not being such a turd.
It may seem smart in hindsight, but the rebalancing bands are a risk management strategy so that if you needed to rebalance into the same asset twice in a row, then it still limits the damage to the portfolio.
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Re: The GOLD scream room

Post by glennds » Mon Sep 27, 2021 10:37 am

barrett wrote:
Fri Sep 24, 2021 7:15 am
With gold down about 6% over the last 12 months and stocks up 31%, I am curious if anyone is re-balancing into gold recently.
This raises a sidecar question. Why is gold down over a 12 month period of inflationary and other worries?
I think most of us would have expected a period like this to be one where gold would shine, at least a little.
Any theories?

I can offer two speculations:

1. Maybe crypto has eroded some of the gold market (or there is a growing expectation of crypto eroding the gold market in the future)?

2. Perhaps the influences that have fueled the surge in stocks have simply had the inverse effect on gold?
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Re: The GOLD scream room

Post by vincent_c » Mon Sep 27, 2021 11:57 am

glennds wrote:
Mon Sep 27, 2021 10:37 am

This raises a sidecar question. Why is gold down over a 12 month period of inflationary and other worries?
Real yields have been rising during that 12 month period. The problem people have is they think there is inflation when what they feel is CPI inflation.
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Re: The GOLD scream room

Post by barrett » Mon Sep 27, 2021 1:06 pm

vincent_c wrote:
Mon Sep 27, 2021 11:57 am
glennds wrote:
Mon Sep 27, 2021 10:37 am

This raises a sidecar question. Why is gold down over a 12 month period of inflationary and other worries?
Real yields have been rising during that 12 month period. The problem people have is they think there is inflation when what they feel is CPI inflation.
Good question, glennds! I have been wondering the same thing and I do think that crypto is in fact eroding the value of gold. Not sure what my opinion is worth though! vincent, where/how do you see real yields rising? Here is a chart of real interest rates on the 1-year treasury over time:

https://www.longtermtrends.net/real-interest-rate/

Sure looks strongly negative to me.
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Re: The GOLD scream room

Post by dockinGA » Mon Sep 27, 2021 1:24 pm

glennds wrote:
Mon Sep 27, 2021 10:37 am
barrett wrote:
Fri Sep 24, 2021 7:15 am
With gold down about 6% over the last 12 months and stocks up 31%, I am curious if anyone is re-balancing into gold recently.
This raises a sidecar question. Why is gold down over a 12 month period of inflationary and other worries?
I think most of us would have expected a period like this to be one where gold would shine, at least a little.
Any theories?

I can offer two speculations:

1. Maybe crypto has eroded some of the gold market (or there is a growing expectation of crypto eroding the gold market in the future)?

2. Perhaps the influences that have fueled the surge in stocks have simply had the inverse effect on gold?
I'm looking at some data showing gold up roughly 16% over the past 2 years. Total inflation over that time is something in the neighborhood of 7%. I'm trying to look on the bright side and realize that the explosion in asset prices last year was an aberration, and our 2021 gains were delivered earlier than expected in 2020.
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Re: The GOLD scream room

Post by vincent_c » Mon Sep 27, 2021 1:59 pm

barrett wrote:
Mon Sep 27, 2021 1:06 pm
vincent, where/how do you see real yields rising? Here is a chart of real interest rates on the 1-year treasury over time:
https://www.treasury.gov/resource-cente ... &year=2021

Depending on which part of the curve you're using, real yields are flat for 5 and 7 year and up for the 10 year.

Gold has an implicit duration which is definitely not on the order of short term rates.
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Re: The GOLD scream room

Post by glennds » Mon Sep 27, 2021 2:51 pm

dockinGA wrote:
Mon Sep 27, 2021 1:24 pm

I'm looking at some data showing gold up roughly 16% over the past 2 years. Total inflation over that time is something in the neighborhood of 7%. I'm trying to look on the bright side and realize that the explosion in asset prices last year was an aberration, and our 2021 gains were delivered earlier than expected in 2020.
You may be on to something. After all, the performance of the PP was outsized for both 2020 and 2019 (over 16% both years), so maybe it is reasonable to expect some reversion to mean, the result being a lackluster year like we are seeing (1.77% YTD, my PP).

I've been a PP investor for 9 years now, and sorry for this analogy, but it's like the presidential elections. Dems will vote Dem, Republicans will vote Republican, but in the end, the Independents will define the win because the other two largely cancel each other out.
During my PP history, Gold has been the swing vote for the overall portfolio. 2013, 2015, 2018 were all down years for my PP, and also down years for gold.

To be fair, there are aberrations, like 2014 and 2021 where gold was down yet the PP remained positive, because stocks were strong. But generally speaking, when gold is doing well, the PP does well. This is why I find myself preoccupied with trying to discern gold's future.
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Re: The GOLD scream room

Post by Ugly_Bird » Mon Sep 27, 2021 3:06 pm

barrett wrote:
Mon Sep 27, 2021 1:06 pm
I have been wondering the same thing and I do think that crypto is in fact eroding the value of gold.
I have "added" some crypto to my PP and in this case would expect the portfolio do better this year. But it did worse.
The year is not over yet and BTC is still expected to go 80k, 100k or... crash? ;-) Will see.
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Re: The GOLD scream room

Post by Ugly_Bird » Mon Sep 27, 2021 3:11 pm

glennds wrote:
Mon Sep 27, 2021 2:51 pm
You may be on to something. After all, the performance of the PP was outsized for both 2020 and 2019 (over 16% both years), so maybe it is reasonable to expect some reversion to mean, the result being a lackluster year like we are seeing (1.77% YTD, my PP).
This is exactly what I was thinking. We had two pretty lucrative PP years in 2019 and 2020. If this year is mediocre there is really nothing to complain about.
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Re: The GOLD scream room

Post by SomeDude » Mon Sep 27, 2021 3:34 pm

Ugly_Bird wrote:
Mon Sep 27, 2021 3:06 pm
barrett wrote:
Mon Sep 27, 2021 1:06 pm
I have been wondering the same thing and I do think that crypto is in fact eroding the value of gold.
I have "added" some crypto to my PP and in this case would expect the portfolio do better this year. But it did worse.
The year is not over yet and BTC is still expected to go 80k, 100k or... crash? ;-) Will see.
It could also stay flat lol.
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Re: The GOLD scream room

Post by Kriegsspiel » Mon Sep 27, 2021 5:48 pm

vincent_c wrote:
Sun Sep 26, 2021 7:51 pm
Kriegsspiel wrote:
Sat Sep 25, 2021 6:23 am
A year ago this month, my gold was at 33.5%, and now it's at about 25%. So (if my math is right), if I would have balanced out of gold back then, my gold allocation would be at about 17% right now.

Probably a case for rebalancing when you're close to the 15/35 bands and not being such a turd.
It may seem smart in hindsight, but the rebalancing bands are a risk management strategy so that if you needed to rebalance into the same asset twice in a row, then it still limits the damage to the portfolio.
I would have sold gold a year ago, and bought it now. I'm not sure what you're saying.
And as for him who lacks the courage to defend even his own soul: Let him not brag of his progressive views, boast of his status as an academician or a recognized artist, a distinguished citizen or general. Let him say to himself plainly: I am cattle, I am a coward, I seek only warmth and to eat my fill.
Solzhenitsyn, Live Not By Lies
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Re: The GOLD scream room

Post by vincent_c » Mon Sep 27, 2021 7:37 pm

Kriegsspiel wrote:
Mon Sep 27, 2021 5:48 pm
I would have sold gold a year ago, and bought it now. I'm not sure what you're saying.
I wasn't referring to any specific case, but in your case there would be no telling whether gold could have continued to go up until a second rebalancing (selling gold into the other assets). I was merely point out that the rebalancing bands effectively controls risk in the portfolio by making it such that it is rare but still within expectation that once you rebalance once into a weaker asset class that it could continue to weaken until a second rebalancing into that asset class is needed. This was in response to you said that there is a case to be made to rebalance close to the bands rather than when you hit the bands.
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Re: The GOLD scream room

Post by barrett » Wed Sep 29, 2021 4:23 pm

vincent_c wrote:
Mon Sep 27, 2021 1:59 pm
barrett wrote:
Mon Sep 27, 2021 1:06 pm
vincent, where/how do you see real yields rising? Here is a chart of real interest rates on the 1-year treasury over time:
https://www.treasury.gov/resource-cente ... &year=2021

Depending on which part of the curve you're using, real yields are flat for 5 and 7 year and up for the 10 year.

Gold has an implicit duration which is definitely not on the order of short term rates.
Can you clarify for me how you are calculating real yields for the 5, 7 and 10-year bonds, vincent? For the shorter duration issues it seems super clear that real yields are negative, but I am curious how you figure the 5 & 7 are flat and the 10-year positive. Thanks.
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