Logistics of Large Quanties o' Physical Gold

Discussion of the Gold portion of the Permanent Portfolio

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dualstow
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Re: Logistics of Large Quanties o' Physical Gold

Post by dualstow » Fri Dec 23, 2022 7:37 pm

I can split this thread over the weekend if you want.

I do use online password storage and I’m not too apprehensive about it. But for the truly sensitive passwords, like a brokerage house, I encrypt the password myself before putting it online with the password management. A little less convenient, but that means that even if a hacker breached my equivalent of LastPass, they’d have nothing but gibberish in their hands. They’d have to decrypt that gibberish as well, and would probably die of old age first.
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Re: Logistics of Large Quanties o' Physical Gold

Post by SilentMajority » Fri Jan 20, 2023 7:08 pm

If you have $1M in gold, your home is probably a multi million dollar home, or at least over 1M. Unless it's a condo in a major city........ You can easily hide the gold.

Get a shovel and go in the backyard at night. It's safer there than any safety deposit box, ETF, foreign vault etc. If the doo doo really hits the fan, you can kiss all that gold goodbye. Promises will not be kept if society crumbles.
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Re: Logistics of Large Quanties o' Physical Gold

Post by seajay » Sat Jan 21, 2023 7:45 am

SilentMajority wrote:
Fri Jan 20, 2023 7:08 pm
If you have $1M in gold, your home is probably a multi million dollar home, or at least over 1M. Unless it's a condo in a major city........ You can easily hide the gold.

Get a shovel and go in the backyard at night. It's safer there than any safety deposit box, ETF, foreign vault etc. If the doo doo really hits the fan, you can kiss all that gold goodbye. Promises will not be kept if society crumbles.
With a multi-million home with a enclosed rear private field of a garden digging during the daytime is less conspicuous. At recent price 1M of gold = 500 one ounce coins stored in buried sealed tubing containing coins in water/air-tights and that's not going to melt if a house fire occurs. Being seen digging (if visible at all) during the day time is a inconspicuous gardening activity.

Primary is obscurity. Where you buy from/sell to keep records, details may be forwarded to the IRS (form 8300 https://www.irs.gov/pub/irs-pdf/f8300.pdf), if you insure gold ... etc are all sources of "this person at this address is a gold-holder". Loss/theft of that data attracting possible unwanted interest if large amounts/value is obvious. Some even broadcast their stacks on Youtube, and I suspect may also broadcast that they're off on vacation tomorrow for a couple of weeks. Potential thieves might raid when you and your family are at home, as a pencil held to a loved ones eye is a easy way to open safe's; Or trash the place whilst you're away for a week or two, emptying paint tins etc, checking plumbing, freezer contents, walls, doors, furniture, curtain rails etc. for possible hiding spaces.

The more off-radar the better. Smaller quantities. Fundamentally you're expected to keep very accurate records and even separate each individual coin to have how much was paid for that coin so you can report the gain when the coin is sold. More usually I suspect that people will tend to just cluster their stack and use a last/highest-priced in, pairing that against first out of same coin/year clusters. "I sold a coin today for $2000 which was a coin I bought a month ago at a garage sale for $2020 with loose change I had laying around at that time, I believe the garage sale was being held by a family that were moving abroad. I forgot to report the $50 capital loss to the IRS, here's the record of the $2000 sale proceeds I deposited into my bank account after that coin sale".
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Re: Logistics of Large Quanties o' Physical Gold

Post by Smith1776 » Sat Jan 21, 2023 3:42 pm

All this talk of stashed away wealth reminds me of the movie El Camino.
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Re: Logistics of Large Quanties o' Physical Gold

Post by seajay » Fri May 05, 2023 5:25 pm

The modern interpretation of the asset allocation that the Talmud advocated millennia ago has a alternative and perhaps more correct interpretation of one third in-hand, one third buried in the ground, one third in commerce. The context within which that was recorded was in regard to safety/security.

With that in mind, one third in-hand in modern day times might be gold. Commerce = stocks, buried away = government treasuries.

Prior to the ending of the gold standard in 1933 the assets might have been hard US dollars in-hand, stocks, and gold buried away into treasuries. Savers with surplus gold (or silver) coins were more inclined to hide (deposit) that gold with banks/treasury, which in turn earned interest, and where that gold could be retrieved (withdrawn) at any times within the depository terms/conditions.

As a form of "inflation bond". capacity to maintain purchase power, in terms of 3.333% 30 year SWR (return of your inflation adjusted capital via 30 yearly instalments), that historically had a 100% success rate, at least from a calendar yearly granularity perspective. For some 30 year cases ending with a residual value after 30 years of 3.333% SWR with multiples of the inflation adjusted start date portfolio value still available, as the data since 1794 in the following image indicates

Image

Similar backtest for British based data indicates a similar overall tendency, but with a single failure of a 1910 start year, where it fell a year short before all of the portfolio value had been spent relative to a 3.33% SWR, lasted just 29 years instead of 30. Pretty much aligned with the collapse of the British Empire, loss of the Pound as a world primary reserve currency, expense of literally blowing away massive amounts of money (WW1) ...etc.

On that basis, with cash buried away into the treasury, gold should be in-hand, or at least readily to hand such as buried, ideally within land that you own/control. At 2000/ounce recent prices a standard gold bar/brick is $800K value, so even at a upper 7 digit figure that's just 11 bricks, for a individual of perhaps $40M wealth, and where their private residence is more than likely capable of having 11 bricks buried/hidden away discreetly.
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Re: Logistics of Large Quanties o' Physical Gold

Post by ppnewbie » Fri May 05, 2023 10:32 pm

@seajay - Great post!
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Re: Logistics of Large Quanties o' Physical Gold

Post by D1984 » Sat May 06, 2023 12:22 pm

seajay wrote:
Fri May 05, 2023 5:25 pm
The modern interpretation of the asset allocation that the Talmud advocated millennia ago has a alternative and perhaps more correct interpretation of one third in-hand, one third buried in the ground, one third in commerce. The context within which that was recorded was in regard to safety/security.

With that in mind, one third in-hand in modern day times might be gold. Commerce = stocks, buried away = government treasuries.

Prior to the ending of the gold standard in 1933 the assets might have been hard US dollars in-hand, stocks, and gold buried away into treasuries. Savers with surplus gold (or silver) coins were more inclined to hide (deposit) that gold with banks/treasury, which in turn earned interest, and where that gold could be retrieved (withdrawn) at any times within the depository terms/conditions.

As a form of "inflation bond". capacity to maintain purchase power, in terms of 3.333% 30 year SWR (return of your inflation adjusted capital via 30 yearly instalments), that historically had a 100% success rate, at least from a calendar yearly granularity perspective. For some 30 year cases ending with a residual value after 30 years of 3.333% SWR with multiples of the inflation adjusted start date portfolio value still available, as the data since 1794 in the following image indicates

Image

Similar backtest for British based data indicates a similar overall tendency, but with a single failure of a 1910 start year, where it fell a year short before all of the portfolio value had been spent relative to a 3.33% SWR, lasted just 29 years instead of 30. Pretty much aligned with the collapse of the British Empire, loss of the Pound as a world primary reserve currency, expense of literally blowing away massive amounts of money (WW1) ...etc.

On that basis, with cash buried away into the treasury, gold should be in-hand, or at least readily to hand such as buried, ideally within land that you own/control. At 2000/ounce recent prices a standard gold bar/brick is $800K value, so even at a upper 7 digit figure that's just 11 bricks, for a individual of perhaps $40M wealth, and where their private residence is more than likely capable of having 11 bricks buried/hidden away discreetly.
Just to be sure I am not misreading things:

From 1-1-1794 to 12-31-1933 one-third (1/3rd) of the portfolio was in "hard cash" by which you mean either physical paper dollars or physical gold or silver coins, right? In other words, not cash or gold held as deposits, as bonds, or as Treasury bills (the latter of which didn't really exist anyway until 1916 or 1917 at the earliest) but rather actual physical currency/coins held in hand. Oh, and the portfolio was rebalanced to 1/3rd in each asset at the end of every year, correct?

Also, where did you get the British total return stock data from? I only know of a source back to 1870 for that particular country so if you know of anything that goes back farther I'd be all ears.

Finally, does your backtest have the value of gold jumping from $20.67 to $35 an ounce in 1933 or does it show it happening in 1934?
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Re: Logistics of Large Quanties o' Physical Gold

Post by seajay » Sat May 06, 2023 6:21 pm

D1984 wrote:
Sat May 06, 2023 12:22 pm
From 1-1-1794 to 12-31-1933 one-third (1/3rd) of the portfolio was in "hard cash" by which you mean either physical paper dollars or physical gold or silver coins, right? In other words, not cash or gold held as deposits, as bonds, or as Treasury bills (the latter of which didn't really exist anyway until 1916 or 1917 at the earliest) but rather actual physical currency/coins held in hand. Oh, and the portfolio was rebalanced to 1/3rd in each asset at the end of every year, correct?
Yes hard cash, inflation broadly tended to average 0% so cash also tended to broadly maintain purchase power. And yes, rebalanced at the end of each year back to thirds equal weightings.
Also, where did you get the British total return stock data from? I only know of a source back to 1870 for that particular country so if you know of anything that goes back farther I'd be all ears.
Bank of England and finfacts shown as data source references, but both the links I recorded some years back are now dead links.
Finally, does your backtest have the value of gold jumping from $20.67 to $35 an ounce in 1933 or does it show it happening in 1934?
President Roosevelt signed the order in January 1934, so 1934.

Measuringworth has data for gold (and others) going back to 1257, but I believe their figures are yearly averages. https://www.measuringworth.com/datasets/gold/
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