Re: Why isn't gold moving?
Posted: Thu Apr 22, 2021 6:37 pm
Let's look on the bright side here -- coffee prices are still reasonable!!
Permanent Portfolio Forum
https://www.gyroscopicinvesting.com/forum/
https://www.gyroscopicinvesting.com/forum/viewtopic.php?t=12052
I did consider shortening the duration of my bond allocation as you suggested, but I don't know if I'm sold on that idea yet.buddtholomew wrote: ↑Thu Apr 22, 2021 4:38 pm “Jumping from the frying pan and into the fire” comes to mind when considering a switch from LTT to stocks. Perhaps consider shortening duration and choosing something in the 5-7 or 7-10 year range.
Inflation is not guaranteed and printing certainly hasn’t resulted in much over the last 13 years.
My sentiment for gold is actually very high. It's only low for bonds. I look at the graph of LTT interest rates for the past 30 years and see a mostly straight line going down, down, down -- now approaching zero. I just don't see that long-term trend continuing for much longer. Even if LTT rates don't go back up significantly, and they bounce around for years, LTTs would continue to provide volatility but not long-term return. They would basically become little more than a "volatility dampener" for the PP.whatchamacallit wrote: ↑Thu Apr 22, 2021 4:48 pm This must mean the PP's time to shine is soon.
Sentiment is so low for gold and bonds.
I too am having a harder time stomaching it while also just wanting to simplify.
If you are still accumulating then just leave what you have in place and just put new contributions in preferred assets.
That is my plan. Then if there is a big drop that comes to this never ending bull market you can go all in then.
I was thinking if LTT got close to 5% I would go almost all in on them. I don't know what price gold would have to be for an all in.
Tortoise wrote: ↑Thu Apr 22, 2021 8:31 pm
buddtholomew wrote: ↑Thu Apr 22, 2021 4:38 pm
“Jumping from the frying pan and into the fire” comes to mind when considering a switch from LTT to stocks. Perhaps consider shortening duration and choosing something in the 5-7 or 7-10 year range.
Inflation is not guaranteed and printing certainly hasn’t resulted in much over the last 13 years.
I did consider shortening the duration of my bond allocation as you suggested, but I don't know if I'm sold on that idea yet.
Basically, I view the PP's LTT allocation as providing two main benefits:
- Return (appreciation and interest)
- Volatility
The volatility benefit has been, and continues to be, good. That hasn't changed.
It's the return benefit that has changed. Coupon payments are now quite low, which simultaneously means the potential appreciation has dwindled significantly.
While I think the LTT piece will continue to provide a helpful smoothing effect on the PP's returns going forward, it seems like its contribution to the PP's overall long-term return is going to shrink. When the maximum upside is ~70%, how could it not?
As for ITTs, they do mitigate the problem of unlimited downside, but they don't solve the problem of limited upside.
whatchamacallit wrote: ↑Thu Apr 22, 2021 4:48 pm
This must mean the PP's time to shine is soon.
Sentiment is so low for gold and bonds.
I too am having a harder time stomaching it while also just wanting to simplify.
If you are still accumulating then just leave what you have in place and just put new contributions in preferred assets.
That is my plan. Then if there is a big drop that comes to this never ending bull market you can go all in then.
I was thinking if LTT got close to 5% I would go almost all in on them. I don't know what price gold would have to be for an all in.
My sentiment for gold is actually very high. It's only low for bonds. I look at the graph of LTT interest rates for the past 30 years and see a mostly straight line going down, down, down -- now approaching zero. I just don't see that long-term trend continuing for much longer. Even if LTT rates don't go back up significantly, and they bounce around for years, LTTs would continue to provide volatility but not long-term return. They would basically become little more than a "volatility dampener" for the PP.
As for the plan of jumping into stocks after a big drop, that's great if it pans out. But if stocks continue to achieve all-time highs for the next five years, climbing to even more dizzying heights before we finally see a big drop, that plan might not look so great. As the saying goes, "Markets can remain irrational longer than you can remain solvent."
I have skepticism for 3 of the 4 components really. Having 25% of my portfolio in cash giving me a negative real return doesnt seem so prudent. I know that historically cash has kept up with inflation but it has not in the past 12 years and the Fed seems in no hurry to make that happen again. As Tortoise said, the upside for long bonds is limited, the downside could be tremendous and really it serves only as a rebalancing asset and only so much can be gained from that. Gold is a wild card. It doesnt always move the way you would expect and to a certain extent it also serves as a rebalancing asset.Tortoise wrote: ↑Thu Apr 22, 2021 8:31 pmI did consider shortening the duration of my bond allocation as you suggested, but I don't know if I'm sold on that idea yet.buddtholomew wrote: ↑Thu Apr 22, 2021 4:38 pm “Jumping from the frying pan and into the fire” comes to mind when considering a switch from LTT to stocks. Perhaps consider shortening duration and choosing something in the 5-7 or 7-10 year range.
Inflation is not guaranteed and printing certainly hasn’t resulted in much over the last 13 years.
Basically, I view the PP's LTT allocation as providing two main benefits:The volatility benefit has been, and continues to be, good. That hasn't changed.
- Return (appreciation and interest)
- Volatility
It's the return benefit that has changed. Coupon payments are now quite low, which simultaneously means the potential appreciation has dwindled significantly.
While I think the LTT piece will continue to provide a helpful smoothing effect on the PP's returns going forward, it seems like its contribution to the PP's overall long-term return is going to shrink. When the maximum upside is ~70%, how could it not?
As for ITTs, they do mitigate the problem of unlimited downside, but they don't solve the problem of limited upside.
My sentiment for gold is actually very high. It's only low for bonds. I look at the graph of LTT interest rates for the past 30 years and see a mostly straight line going down, down, down -- now approaching zero. I just don't see that long-term trend continuing for much longer. Even if LTT rates don't go back up significantly, and they bounce around for years, LTTs would continue to provide volatility but not long-term return. They would basically become little more than a "volatility dampener" for the PP.whatchamacallit wrote: ↑Thu Apr 22, 2021 4:48 pm This must mean the PP's time to shine is soon.
Sentiment is so low for gold and bonds.
I too am having a harder time stomaching it while also just wanting to simplify.
If you are still accumulating then just leave what you have in place and just put new contributions in preferred assets.
That is my plan. Then if there is a big drop that comes to this never ending bull market you can go all in then.
I was thinking if LTT got close to 5% I would go almost all in on them. I don't know what price gold would have to be for an all in.
As for the plan of jumping into stocks after a big drop, that's great if it pans out. But if stocks continue to achieve all-time highs for the next five years, climbing to even more dizzying heights before we finally see a big drop, that plan might not look so great. As the saying goes, "Markets can remain irrational longer than you can remain solvent."
How are price increases due to supply shock being factored in? I'm not sure it's all inflation.gaddyslapper007 wrote: ↑Thu Apr 29, 2021 11:12 am The inflation is flowing into commodities we need (like oil, lumber & copper), assets the government supports (sovereign, corporate, & residential debt), & rapidly growing technology that is reshaping our world (FAANG, #Bitcoin). Gold & silver don't check any of these boxes. - Michael Saylor
https://twitter.com/michael_saylor/stat ... 5186976770
Where? Not doubting, just asking because the impression I've gotten from the housing market is that the bidding wars are fueled by people leaving cities.StinkyToes wrote: ↑Fri May 07, 2021 3:18 am
The statistics may not show it yet, but rents are rising aggressively in desirable cities.
Mostly in mid-sized cities and in the suburbs surrounding cities.I Shrugged wrote: ↑Fri May 07, 2021 8:05 amWhere? Not doubting, just asking because the impression I've gotten from the housing market is that the bidding wars are fueled by people leaving cities.StinkyToes wrote: ↑Fri May 07, 2021 3:18 am
The statistics may not show it yet, but rents are rising aggressively in desirable cities.
You’re a better man than I am, Gunga Din.Kriegsspiel wrote: ↑Fri May 07, 2021 9:54 pm I just bought a fuckload of stocks, so maybe it will balance out.
Well, I did take a little out of stock, so if you help it go down for a bit, I'll feel smarterererKriegsspiel wrote: ↑Fri May 07, 2021 9:54 pm I just bought a fuckload of stocks, so maybe it will balance out.
Gold isn’t going to be an asset of choice with only 4% inflation….gold is best for high inflation when real returns are negative on lots of assetsbuddtholomew wrote: ↑Wed May 12, 2021 8:28 am First sign of inflation and gold runs like a scared chicken with its head cut-off. Up 5% in the last month after a 20% pull-back isn’t very comforting (just like the PP overall).
I bought more at the recent lows after selling at the highs.
You're correct. I forgot.I Shrugged wrote: ↑Tue May 18, 2021 9:43 amThey are too busy fretting over the PP component that is going down. They are all supposed to go up. Every year. You should know that.