I Thought Gold Would Fare Better in 2022-23

Discussion of the Gold portion of the Permanent Portfolio

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dualstow
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I Thought Gold Would Fare Better in 2022-23

Post by dualstow »

Russia invaded Ukraine in February 2022. When it became clear that this conflict was not going to end swiftly, I really thought the price of gold was going to skyrocket.

No one prays for a crisis, but while gold hasn’t done much despite all of our talk about endless money printing, I thought *this* is going to be the crisis that sends it skyward. It did go up for a while during Covid and some part of the war, but not in the way I thought it would, and certainly not for long.

Markets have proved resiient, and we should be happy about that. Who doesn’t want prosperity? Although I don’t tinker, I have never fully embraced the pp, having an outsized Variable Portfolio (vp) full of equities and more recently, 6-month treasuries. (The latter, of course, could be called a pp component if I had enough gold and long bonds to match up with it). And an outsized vp is not that different from tinkering or simply having a different portfolio.

I’m not complaining about gold or the pp, and will continue to hold. Nor am I planning on shoving everything into Invidia stock either.
I’m just wondering:
— Maybe gold has done well vs some other currencies and just not the US dollar?
— Maybe a calamity is still coming and gold will have its chance (and we’ll all be very sorry O0 )
— Maybe the pp is peforming as expected and I just haven’t looked at the numbers closely enough. (I don’t think so, though).
— Maybe I should be adding gold? (Well, rebalancing bands will take care of that).

I’m sure these ideas have been expressed here and there in other threads. Still, is anyone *happy* with gold? Or is it just like taking your medicine/ holding insurance?

At least I’m enjoying holding cash. I never thought I’d be excited about cash, but 5.4% (nominal) risk-free, short term — it’s very heartening.
Whatever your politics, this is just bad bad bad
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Re: I Thought Gold Would Fare Better in 2022-23

Post by boglerdude »

Afghanistan, Syria. Proxy wars with Russia forever.

> No one prays for a crisis

Unless it pays them to stay home.

Crypto took a bite out of gold. But it's up in other currencies https://www.bullionvault.com/gold-price-chart.do
https://goldprice.org/gold-price-charts ... -per-ounce

Ironically the people who like gold dont align with your narratives ie dont trust the Regime

I use it as insurance but dont have any now cuz overweight inflation protection from a rental (which is a PITA this month)
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Re: I Thought Gold Would Fare Better in 2022-23

Post by dualstow »

boglerdude wrote: Sun Aug 27, 2023 6:58 pm
Crypto took a bite out of gold.


Yes! Although I failed to mention it above, it’s got to be one of the biggest factors, almost the biggest.
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Re: I Thought Gold Would Fare Better in 2022-23

Post by Smith1776 »

My thinking about gold has changed somewhat indeed. I don't blame Browne, Craig, and Tex. When they wrote their respective works, cryptocurrency either didn't exist or wasn't quite what it is now. As another poster mentioned, it's possible that crypto has taken a bite out of gold. I would still peg gold as being the superior "peoples' money", as it has tangible existence, it isn't dependent on third parties, and its limited usefulness as a commodity should give it a price floor.

When I was first reading about the PP, the only real environment where 1) we had easily accessible data, and 2) gold had the opportunity to demonstrate its inflation-fighting chops was the 1970s. We now have a second period of high inflation and I'm not seeing a violent move upward. At least not yet. On the other hand, there was a big spike during 2020 when all that liquidity was being pumped into the economy due to COVID. So maybe the gold market was already "pricing in" the eventual inflation effect back then?

Who knows.

My current strategy, the All-Terrain Portfolio, uses a long/flat commodities fund that contains gold, silver, and copper within it in addition to several other commodities. Commodity baskets have a history of being an effective, albeit imperfect inflation hedge, as per the Rational Reminder episode on the matter. The fact that the fund contains gold in addition to these other commodities like cotton, soybeans, and oil, leaves me satisfied with the approach.

ccom.jpg
ccom.jpg (48.43 KiB) Viewed 31712 times

Still, I'd like a physical, tangible asset to have. So I still hold a modicum of physical gold [edit: and Bitcoin]. I call it the Spare Tire Portfolio. Since every vehicle needs to have a spare tire in case of emergencies, right? Even an all-terrain one? :D
Last edited by Smith1776 on Mon Aug 28, 2023 12:03 pm, edited 1 time in total.
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Re: I Thought Gold Would Fare Better in 2022-23

Post by dualstow »

Smith1776 wrote: Mon Aug 28, 2023 3:26 am My thinking about gold has changed somewhat indeed. I don't blame Browne, Craig, and Tex. When they wrote their respective works, cryptocurrency either didn't exist or wasn't quite what it is now.

Still, I'd like a physical, tangible asset to have. So I still hold a modicum of physical gold. I call it the Spare Tire Portfolio. Since every vehicle needs to have a spare tire in case of emergencies, right? Even an all-terrain one? :D
Oh, my stomach folows the Spare Tire portfolio. It’s the one time I give in to going with my gut. :D

Is there crypto in the All Terrain portfolio?
Whatever your politics, this is just bad bad bad
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Re: I Thought Gold Would Fare Better in 2022-23

Post by Smith1776 »

dualstow wrote: Mon Aug 28, 2023 6:30 am
Smith1776 wrote: Mon Aug 28, 2023 3:26 am My thinking about gold has changed somewhat indeed. I don't blame Browne, Craig, and Tex. When they wrote their respective works, cryptocurrency either didn't exist or wasn't quite what it is now.

Still, I'd like a physical, tangible asset to have. So I still hold a modicum of physical gold. I call it the Spare Tire Portfolio. Since every vehicle needs to have a spare tire in case of emergencies, right? Even an all-terrain one? :D
Oh, my stomach folows the Spare Tire portfolio. It’s the one time I give in to going with my gut. :D

Is there crypto in the All Terrain portfolio?
Hahahaha. My stomach does too!

The first revision of the ATP I posted on the forum had 1% in Bitcoin. After getting feedback and having some discussions I simplified things greatly and eschewed cryptocurrencies.

It's just 25% each in stocks, bonds, cash, and commodities in the ATP now. However, there’s an optional "Spare Tire Portfolio" consisting of some gold coins and Bitcoin which I'll write a chapter on.
Last edited by Smith1776 on Mon Aug 28, 2023 12:02 pm, edited 1 time in total.
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Re: I Thought Gold Would Fare Better in 2022-23

Post by Smith1776 »

https://youtu.be/_f0dns9fHFs

This Rational Reminder video entitled The Ultimate Inflation Hedge informed a decent chunk of my thinking in replacing the PP's gold allocation with a basket of long/flat commodities (which includes gold within it of course).
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Re: I Thought Gold Would Fare Better in 2022-23

Post by yankees60 »

Smith1776 wrote: Mon Aug 28, 2023 6:38 am
dualstow wrote: Mon Aug 28, 2023 6:30 am
Smith1776 wrote: Mon Aug 28, 2023 3:26 am
My thinking about gold has changed somewhat indeed. I don't blame Browne, Craig, and Tex. When they wrote their respective works, cryptocurrency either didn't exist or wasn't quite what it is now.

Still, I'd like a physical, tangible asset to have. So I still hold a modicum of physical gold. I call it the Spare Tire Portfolio. Since every vehicle needs to have a spare tire in case of emergencies, right? Even an all-terrain one? :D


Oh, my stomach folows the Spare Tire portfolio. It’s the one time I give in to going with my gut. :D

Is there crypto in the All Terrain portfolio?


Hahahaha. My stomach does too!

The first revision of the ATP I posted on the forum had 1% in Bitcoin. After getting feedback and having some discussions I simplified things greatly and eschewed cryptocurrencies entirely.

It's just 25% each in stocks, bonds, cash, and commodities now. With an optional "Spare Tire Portfolio" consisting of some gold coins which I'll write a chapter on.

An allocation to cryptocurrency that's small enough so that it doesn't dominate the portfolio's volatility is also simultaneously not large enough to warrant the extra complexity for readers I think.


Is the All Terrain portfolio aimed at just Canadians? Or, all world citizens?
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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Re: I Thought Gold Would Fare Better in 2022-23

Post by Smith1776 »

vnatale wrote: Mon Aug 28, 2023 6:41 am
Smith1776 wrote: Mon Aug 28, 2023 6:38 am
dualstow wrote: Mon Aug 28, 2023 6:30 am
Smith1776 wrote: Mon Aug 28, 2023 3:26 am My thinking about gold has changed somewhat indeed. I don't blame Browne, Craig, and Tex. When they wrote their respective works, cryptocurrency either didn't exist or wasn't quite what it is now.

Still, I'd like a physical, tangible asset to have. So I still hold a modicum of physical gold. I call it the Spare Tire Portfolio. Since every vehicle needs to have a spare tire in case of emergencies, right? Even an all-terrain one? :D
Oh, my stomach folows the Spare Tire portfolio. It’s the one time I give in to going with my gut. :D

Is there crypto in the All Terrain portfolio?
Hahahaha. My stomach does too!

The first revision of the ATP I posted on the forum had 1% in Bitcoin. After getting feedback and having some discussions I simplified things greatly and eschewed cryptocurrencies entirely.

It's just 25% each in stocks, bonds, cash, and commodities now. With an optional "Spare Tire Portfolio" consisting of some gold coins which I'll write a chapter on.

An allocation to cryptocurrency that's small enough so that it doesn't dominate the portfolio's volatility is also simultaneously not large enough to warrant the extra complexity for readers I think.
Is the All Terrain portfolio aimed at just Canadians? Or, all world citizens?
Particularly in its new simplified form it's easy for just about anyone to implement it within any country! Although the book will have a moderate Canadian focus.

25% properity: global small cap value
25% deflation: global government bond ladder
25% inflation: long/flat commodities
25% recession: t-bills

Getting back to the thread topic of gold/inflation:

The thing I know I will really need to emphasize is that only long/flat commodity funds are appropriate. Regular long only funds have too much drawdown, volatility, composition, and contango headaches to deal with.

CCOM.TO was the fund of choice for Canadians. There is a fund in the U.S. that tracks the same index with the ticker COM.

Here's is how COM compares to DBC and GSG, which are the two biggest commodity ETFs in the U.S.

dsafdsafjds.jpg
dsafdsafjds.jpg (97.65 KiB) Viewed 31682 times

I know, I know. It's not a super long time period, but this is all the data that's available. Still, particularly noteworthy is the relative size of the drawdowns in 2020.
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Re: I Thought Gold Would Fare Better in 2022-23

Post by yankees60 »

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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Re: I Thought Gold Would Fare Better in 2022-23

Post by dualstow »

That first one is not so much a gold related article as a political article. it reminds me of the strawman that so many bogleheads use: Gold coins are peddled on Fox News to angry old people so gold must be bad, no matter what your reason for buying it.

Have not looked at the second.
Whatever your politics, this is just bad bad bad
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Re: I Thought Gold Would Fare Better in 2022-23

Post by Xan »

dualstow wrote: Mon Aug 28, 2023 10:25 am That first one is not so much a gold related article as a political article. it reminds me of the strawman that so many bogleheads use: Gold coins are peddled on Fox News to angry old people so gold must be bad, no matter what your reason for buying it.

Have not looked at the second.

The second is worse, if anything.
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Re: I Thought Gold Would Fare Better in 2022-23

Post by Smith1776 »

Spare Tire Portfolio is officially 90/10 physical gold and Bitcoin in a wallet.

Thanks dualstow.
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Re: I Thought Gold Would Fare Better in 2022-23

Post by yankees60 »

dualstow wrote: Mon Aug 28, 2023 10:25 am
That first one is not so much a gold related article as a political article. it reminds me of the strawman that so many bogleheads use: Gold coins are peddled on Fox News to angry old people so gold must be bad, no matter what your reason for buying it.

Have not looked at the second.


However, tying into your disappointment with the lack of price movement of gold .... wouldn't what is being done (as described in the articles) only be increasing the demand for gold?
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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Re: I Thought Gold Would Fare Better in 2022-23

Post by dualstow »

What is being done - advertisement by shady companies?
I don’t know, and I think it could potentially turn some people off gold altogether.

If you get ripped off by a used car dealer you might still need a car.
I don’t know if victims of those companies would then seek out a kosher gold dealer or just move on.
Whatever your politics, this is just bad bad bad
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Re: I Thought Gold Would Fare Better in 2022-23

Post by yankees60 »

dualstow wrote: Mon Aug 28, 2023 11:46 am
What is being done - advertisement by shady companies?
I don’t know, and I think it could potentially turn some people off gold altogether.

If you get ripped off by a used car dealer you might still need a car.
I don’t know if victims of those companies would then seek out a kosher gold dealer or just move on.


It could be a short-term boost. The result could be that those people then buy no more gold. Or, they get smarter and less gullible and learn to buy from more reputable and trusted sources.
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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Re: I Thought Gold Would Fare Better in 2022-23

Post by Smith1776 »

The physical gold market, like any market, has its own nuances and unique characteristics which can be filled with booby traps.

Traversing any market that is unfamiliar to a given investor shouldn't be done lightly, and consultation with a reputable source should always be done prior to any transactions.
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Re: I Thought Gold Would Fare Better in 2022-23

Post by dualstow »

Put that in chapter 1, Smith! Or somewhere early.
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Re: I Thought Gold Would Fare Better in 2022-23

Post by Smith1776 »

dualstow wrote: Mon Aug 28, 2023 1:08 pm Put that in chapter 1, Smith! Or somewhere early.
Good idea. Thanks!

I was reading your guy's exchange about the gold market and thought about the first time I traded stocks. I got my clock cleaned trying to trade penny stocks. I remember the first real estate transaction I ever did. I got ripped off. The first few times I did some wheeling and dealing on Craigslist for computer parts I got similarly shellacked.

Those first couple transaction are when we are always most vulnerable. Thankfully, the experiences were informative and I know way better now. (Though still not perfect of course haha!)
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Re: I Thought Gold Would Fare Better in 2022-23

Post by dualstow »

Yep, live and learn. O0
i was excited about penny stocks as a kid but there was a parental ban on that.
By the time I started really trading for myself I had already been doing it for my Dad for a while, so I got the rookie mistakes out of my system in conversations and not real trading.
Whatever your politics, this is just bad bad bad
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Re: I Thought Gold Would Fare Better in 2022-23

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dualstow wrote: Mon Aug 28, 2023 3:06 pm Yep, live and learn. O0
i was excited about penny stocks as a kid but there was a parental ban on that.
By the time I started really trading for myself I had already been doing it for my Dad for a while, so I got the rookie mistakes out of my system in conversations and not real trading.
Very nice.

I got into penny stocks because a guy I knew in college recommended them. Soon after I learned he didn't know what he was talking about and was just trying to sound smart. Much later after that I found out he was diagnosed as a grandiose narcissist. Go figure. ::)
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Re: I Thought Gold Would Fare Better in 2022-23

Post by dualstow »

He should’ve gone into movie directing!
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Re: I Thought Gold Would Fare Better in 2022-23

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dualstow wrote: Mon Aug 28, 2023 3:37 pm He should’ve gone into movie directing!
HA! You know what's funny?? Incidentally, he did become a movie producer/director.

He claimed to have been nominated for an Academy Award, was hanging out regularly with superstars like Meagan Fox and Will Smith.

The truth was that he hadn't done anything more than direct a couple student/indie films.
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Re: I Thought Gold Would Fare Better in 2022-23

Post by dualstow »

But he is a director. I love it! ha!
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Re: I Thought Gold Would Fare Better in 2022-23

Post by Vil »

Indeed, gold is crap. Haven't met my expectations. ;D
However, given that I am posting to gyroscopic and not windmill investing, have to give a credit to the folks on which shoulders I have stepped and admit I am keeping the course. O0 My US PP is not changed since I started in 2019 (just rebalanced), and its a good portion of my savings/investments.
Well, my EU GB/PP got slaughtered even worse by changing the AA meanwhile. Its performance is abysmal also due to the fact inflation is much higher in EU and the rates did not hike accordingly. In Bulgaria for example you can get 4-5% only by investing in P2P lending - well, prime-class clients, but still there is a risk premia.
Half joke, half truth - IMHO there are 2 ways to cope with high inflation - a) have a business that forwards the inflation effects to its direct customers (and as very common practice exaggerate that effect for even more profit), and b) write financial books on how to beat the inflation...

Having said that, I am fed up reading FI books, given my performance I haven't fully understood the ones I have read and chances are very thin that I will ever understand them. Actually, last book I read on financial topics was the one written by BelangP and with a light sense of irony - I guess his portfolio is not doing extremely well those days .....
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