Gold will rise when Fed stops raising interest rates?

Discussion of the Gold portion of the Permanent Portfolio

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seajay
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Re: Gold will rise when Fed stops raising interest rates?

Post by seajay » Sat Nov 19, 2022 1:45 pm

Kbg wrote:
Mon Sep 19, 2022 10:25 am
There are extremely good financial and economic reasons not to invest in gold…we here are in a minority and perhaps a delusional one at that.
Gold is a lifestyle choice, with its own risks and risks-reduction factors.

Consider two, each with $1M wealth where one opts for 50/50 House/TSM and the other opts for thirds each House/TSM/Gold.

Neither has to find/pay rent, they have the imputed rent benefit, where the 50/50'er has a larger/more expensive home ($500K versus $333K). The 50/50'er draws 4% SWR from their $500K stock allocation, $20K/year disposable income. The thirds'er draws 3.33% SWR from their $666K stock/gold allocation, $20K/year disposable income. Both have the same disposable income.

PV (and others such as the Trinity Study) indicates that 4% SWR applied to $500K TSM (all stock)

PV
Safe Withdrawal Rate 4.03%
Perpetual Withdrawal Rate 2.40%
90.16% survived all withdrawals

Their withdrawal rate is a SWR, in a bad case ended 30 years with the portfolio value all having been spent.

The thirds'er draws 3.33% SWR from their $666K combined TSM/Gold 50/50 which PV indicates

PV
Safe Withdrawal Rate 4.89%
Perpetual Withdrawal Rate 3.38%
99.50% survived all withdrawals

Hmm! Their 3.33% SWR is a PWR, conceptually at least sustains forever (covers longevity).

Consider also if your son marries and you gift him a $1M value wedding gift either in the form of 50/50 house/TSM or thirds house/TSM/gold. A year later they have a child, and a few years after that they separate/divorce where the Court awards the entire home and child to the mother and half the stock portfolio value along with it, he's left with 25% ($250K). Contrasted with the thirds'er losing the entire home value, half of the stock value, but keeps all of the gold that you've secured for him in your own safe/storage ... he's still left with 50% ($500K). Of the two gift options many might prefer the thirds'er choice than the 50/50'er choice.

The PP of course dilutes down both the stock and gold allocations I used in the above. Opts instead for a equal split between 50/50 TSM/bonds and 50/50 gold/bonds. if anything I'd be more inclined to say that there are sound reasons not to invest in bonds.
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Re: Gold will rise when Fed stops raising interest rates?

Post by Kbg » Mon Nov 28, 2022 3:00 pm

Are you the same seajay as on BH?
seajay
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Re: Gold will rise when Fed stops raising interest rates?

Post by seajay » Tue Nov 29, 2022 6:17 am

Kbg wrote:
Mon Nov 28, 2022 3:00 pm
Are you the same seajay as on BH?
My gaming days are long since past, ogame and Halo when I did (20 years ago), never played Bounty Hunter.
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vnatale
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Re: Gold will rise when Fed stops raising interest rates?

Post by vnatale » Tue Nov 29, 2022 7:57 am

seajay wrote:
Tue Nov 29, 2022 6:17 am

Kbg wrote:
Mon Nov 28, 2022 3:00 pm

Are you the same seajay as on BH?

My gaming days are long since past, ogame and Halo when I did (20 years ago), never played Bounty Hunter.


I think that Kbg may have meant the bogleheads forum. But that is the constant problem I'm always bringing up when anyone uses acronyms as if they are well understood by anyone reading those acronyms.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Xan
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Re: Gold will rise when Fed stops raising interest rates?

Post by Xan » Tue Nov 29, 2022 8:40 am

vnatale wrote:
Tue Nov 29, 2022 7:57 am
seajay wrote:
Tue Nov 29, 2022 6:17 am
Kbg wrote:
Mon Nov 28, 2022 3:00 pm
Are you the same seajay as on BH?
My gaming days are long since past, ogame and Halo when I did (20 years ago), never played Bounty Hunter.
I think that Kbg may have meant the bogleheads forum. But that is the constant problem I'm always bringing up when anyone uses acronyms as if they are well understood by anyone reading those acronyms.
Seajay knew what Kbg meant and was having some fun.
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Re: Gold will rise when Fed stops raising interest rates?

Post by Kbg » Tue Nov 29, 2022 1:31 pm

Been a minute since I gamed as well. I was more a Red Alert guy...I'm sure that is why I'm anti-Russian. ;-)

Three phrases that will forever be stuck in my biological memory mass...

Yes sir, moving out

Ha, Ha, Ha...take that, Kaching!

For King and Country
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