The GOLD scream room

Discussion of the Gold portion of the Permanent Portfolio

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ochotona
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Re: The GOLD scream room

Post by ochotona » Thu Jun 28, 2018 3:07 pm

buddtholomew wrote:
Thu Jun 28, 2018 2:04 pm
It looks to me like the reflation story has stalled and therefore the momentum for gold as well. Just add my opinion to the mix.
It sure seems that way.
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Re: The GOLD scream room

Post by buddtholomew » Fri Jun 29, 2018 10:09 am

Dollar -.72%, Gold +.25%
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Re: The GOLD scream room

Post by modeljc » Fri Jun 29, 2018 10:20 am

I don't think any asset class likes higher interest rates.
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Re: The GOLD scream room

Post by buddtholomew » Fri Jun 29, 2018 10:34 am

modeljc wrote:
Fri Jun 29, 2018 10:20 am
I don't think any asset class likes higher interest rates.
Except cash, enjoying a cool 2%
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Re: The GOLD scream room

Post by buddtholomew » Mon Jul 02, 2018 12:08 pm

So awesome!
Puke
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Re: The GOLD scream room

Post by ochotona » Mon Jul 02, 2018 12:26 pm

$1220, $1200 here we come
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Re: The GOLD scream room

Post by Cortopassi » Mon Jul 02, 2018 1:11 pm

We are rapidly approaching my PP low point for the year, which last occurred 5/1/2018. Quite a waste of 6+ months of time so far.

We all know by now when gold gets on a roll lower, usually always goes further than one thinks it will.

Sigh...
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Re: The GOLD scream room

Post by sophie » Tue Jul 03, 2018 8:20 am

Nope, back up to $1250 this morning. Oh well!

If prices drop again, this might be a good time to dig up those gold receipts from several years ago when you were buying at $1600+, and tax loss harvest your coins or gold bullion shares in taxable.
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Re: The GOLD scream room

Post by barrett » Tue Jul 03, 2018 10:01 am

Cortopassi wrote:
Mon Jul 02, 2018 1:11 pm
We are rapidly approaching my PP low point for the year, which last occurred 5/1/2018. Quite a waste of 6+ months of time so far.

We all know by now when gold gets on a roll lower, usually always goes further than one thinks it will.

Sigh...
Cortopassi...

I suggest spending a bit of time on the Bogleheads or MMM forums where posters often claim that they'd "love" for assets (they're almost always talking exclusively about stocks) to be "on sale" during their accumulation phase because they can then buy more shares.

It's really no different for PP assets. Better to be buying those dips in 2015 and 2016 than investing at other times. You, of course, know this. I am just offering a friendly reminder. Assuming you believe that a balanced approach will help you reach your financial goals on your timeline, I wouldn't worry much about a mediocre six months.
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Re: The GOLD scream room

Post by ochotona » Tue Jul 03, 2018 10:08 am

sophie wrote:
Tue Jul 03, 2018 8:20 am
Nope, back up to $1250 this morning. Oh well!

If prices drop again, this might be a good time to dig up those gold receipts from several years ago when you were buying at $1600+, and tax loss harvest your coins or gold bullion shares in taxable.
So... if you have a capital GAIN on bullion, you get to pay the Collectibles tax >:(

If you have a capital LOSS on bullion, do you get the enjoy the Collectibles tax rate in reverse, or do they only apply the ball and chain when you're winning? :-[
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Re: The GOLD scream room

Post by dualstow » Tue Jul 03, 2018 10:29 am

This poor forum is like a support group.
Sam Bankman-Fried sentenced to 25 years
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Re: The GOLD scream room

Post by ochotona » Tue Jul 03, 2018 10:55 am

dualstow wrote:
Tue Jul 03, 2018 10:29 am
This poor forum is like a support group.
We're all addicts, and we hate our habit and our pusher ;)

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Re: The GOLD scream room

Post by Xan » Tue Jul 03, 2018 11:10 am

ochotona wrote:
Tue Jul 03, 2018 10:08 am
sophie wrote:
Tue Jul 03, 2018 8:20 am
Nope, back up to $1250 this morning. Oh well!

If prices drop again, this might be a good time to dig up those gold receipts from several years ago when you were buying at $1600+, and tax loss harvest your coins or gold bullion shares in taxable.
So... if you have a capital GAIN on bullion, you get to pay the Collectibles tax >:(

If you have a capital LOSS on bullion, do you get the enjoy the Collectibles tax rate in reverse, or do they only apply the ball and chain when you're winning? :-[
It's treated like any other capital loss, where it can offset a capital gain somewhere else, or if there is none, can offset $3,000 (IIRC) per year of earned income.

So if you have a gain in a different collectible, you can get the "collectible rate" as your loss. Similarly, since your collectible rate is never higher than your earned income tax rate, the $3,000 offset per year is always at least as good as the collectable rate.
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Re: The GOLD scream room

Post by Cortopassi » Tue Jul 03, 2018 11:56 am

dualstow wrote:
Tue Jul 03, 2018 10:29 am
This poor forum is like a support group.
Yeah...

Barrett,

It's not the 6 months. Like Budd (and mathjak) expound on, gold has been tedious to watch and own for 7 years. Part of me still regrets ever buying that first coin in 2008. Except for a couple blips in the past 2 years, my gold holdings in aggregate have been underwater for 7 years.

People who continue to talk about it being on sale, back up the truck, etc. there's only so much I can take till I tune them all out. I am sticking with the PP because I know gold will have its day and hopefully I will be able to rebalance some gains out of it, but I certainly see the other side where a lot of gains for nearly the past decade are lost because of holding it vs. stocks.

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Re: The GOLD scream room

Post by buddtholomew » Wed Jul 04, 2018 7:50 am

Cortopassi wrote:
Tue Jul 03, 2018 11:56 am
dualstow wrote:
Tue Jul 03, 2018 10:29 am
This poor forum is like a support group.
Yeah...

Barrett,

It's not the 6 months. Like Budd (and mathjak) expound on, gold has been tedious to watch and own for 7 years. Part of me still regrets ever buying that first coin in 2008. Except for a couple blips in the past 2 years, my gold holdings in aggregate have been underwater for 7 years.

People who continue to talk about it being on sale, back up the truck, etc. there's only so much I can take till I tune them all out. I am sticking with the PP because I know gold will have its day and hopefully I will be able to rebalance some gains out of it, but I certainly see the other side where a lot of gains for nearly the past decade are lost because of holding it vs. stocks.

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Sorry Cortopassi, I know how you feel...
I wonder if there is another asset that has performed as poorly in the entire world over that timeframe.
Not a joke!
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Re: The GOLD scream room

Post by ochotona » Wed Jul 04, 2018 9:30 am

buddtholomew wrote:
Wed Jul 04, 2018 7:50 am
Sorry Cortopassi, I know how you feel...
I wonder if there is another asset that has performed as poorly in the entire world over that timeframe.
Not a joke!
Since the 2011 gold peak, oilfield services has done worse (look at XES, it peaked mid-2014). Yeah, I work in oilfield services. It's all commodities and metals, really.
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Re: The GOLD scream room

Post by buddtholomew » Wed Jul 04, 2018 9:50 am

ochotona wrote:
Wed Jul 04, 2018 9:30 am
buddtholomew wrote:
Wed Jul 04, 2018 7:50 am
Sorry Cortopassi, I know how you feel...
I wonder if there is another asset that has performed as poorly in the entire world over that timeframe.
Not a joke!
Since the 2011 gold peak, oilfield services has done worse (look at XES, it peaked mid-2014). Yeah, I work in oilfield services. It's all commodities and metals, really.
I’m sure GDX and GDXJ are in the same boat as well.
Question is whether anyone in their right mind would hold XES, GDX or GDXJ at 25% of their portfolio?

Also, all this negativity towards gold I suppose is a signal to some that we have reached the bottom. Only thing is, like Corto, I’ve heard this “back up the truck” dogma countless times before. Maybe you will be luckier than I have been.

I’m not selling and will TLH to offset short-term gains in SCV....again.
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Re: The GOLD scream room

Post by sophie » Wed Jul 04, 2018 12:20 pm

buddtholomew wrote:
Wed Jul 04, 2018 7:50 am
I wonder if there is another asset that has performed as poorly in the entire world over that timeframe.
Not a joke!
Not that SPECIFIC timeframe, but the answer to your question is: stocks!!!

In October 1965, the DJIA was 7,668. After that stocks slid until the nadir in August 1982, when it was 2,320. That's a 17 year losing streak, with a loss of almost 70% in that time. OUCH. And oh by the way that's nominal. Real losses would have been much worse.

The next time the DJIA got to the 1965 value was July 1995. That's 30 years of flat stocks, with returns no more than the dividends (~2% at best).

Lest you think that was a one-time thing, stocks did it again in our investing lifetimes. The DJIA in January 2000 was 16,301. The next time that level was reached was May 2013. That's 13 years of stocks returning no more than dividends.

And then there's the first half of the 20th century. Except for the bubblicious peak of 5,056 in 1929, the DJIA wallowed starting from its prior peak of 2,421 in 1915 until it finally regained that level (2,467) in February 1951. That's 36 years of flat stock performance.

All these events occurred for different reasons, which (IMHO) makes the phenomenon a fairly robust one that is likely to recur. So does 7 years of crappy gold performance look so bad, really? Or, do you think there are fundamental reasons why scenarios like the above can't happen again?

This is what makes me nervous about PP variants like the Golden Butterfly that are stock-heavy and backtest well because of what the stock market has been doing since 1982. I've been plenty tempted by it myself, but considerations like the above keep stopping me.
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Re: The GOLD scream room

Post by Cortopassi » Wed Jul 04, 2018 1:34 pm

Very good points, Sophie!
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Re: The GOLD scream room

Post by Cortopassi » Wed Jul 04, 2018 7:09 pm

Sophie, one point was brought up by a friend... Dow Jones, yes, nowhere from 1965 to 1982. S&P500, though, was significantly better, see the data below.

I think most all of us in the PP would invest in a wider S&P type fund, vs. a fund of just 30 stocks.

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Re: The GOLD scream room

Post by buddtholomew » Wed Jul 04, 2018 8:59 pm

That must surely change your perspective Sophie...
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Re: The GOLD scream room

Post by sophie » Wed Jul 04, 2018 9:18 pm

Point taken. Historic DJIA data was just easier to come by than S&P 500. I did find a source reporting one data point per year (Jan 1), which is probably good enough. Not quite as spectacularly bad as the DJIA, but it still shows some pretty impressive losing/flat periods.

Also let me just say...it's so easy to cherry pick indexes, stock mixes etc when you're backtesting, but that's not something you get to do for your portfolio - if portfolio A doesn't work out, you can switch to portfolio B going forward but unless you've got Hermione's Time Turner you don't get do-overs in real-life investing.

S&P 500 on Jan 1, 1966: 93.32
S&P 500 on Jan 1, 1982: 117.32, an increase of 20% total over 17 years, not counting dividends. Computing CAGR is left as an exercise for the reader.

S&P 500 on Jan 1, 2000: 1,425.59
S&P 500 on Jan 1, 2013: 1,480.14 (it was less than 1,425 in all the intervening years). That's flat for 13 years.

S&P 500 on Jan 1, 1916: 9.33
The next time the S&P 500 was over 10.0 for 3 years in a row and stayed at that level (i.e. ignoring the 1929 bubble) was 1936. That's 20 years.

So back to Budd's point...gold can certainly act like this too. Not just the recent slide but consider gold's losses 1980-2000. And, we may be in for something like this with bonds. So guess what - we all own stocks AND gold, knowing full well what can happen with each of them. Right??
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Re: The GOLD scream room

Post by Cortopassi » Thu Jul 05, 2018 8:05 am

Sophie, you know better than anyone that so much of this is psychology. "New record highs" are, and have been, touted so often on the news, and drops explained away with having isolated specific reasons, it leaves one with the fear of missing out. There is never a time to not be in the markets, according to 98% of any financial reporter and analysts, because it is their job to keep you in. Earning estimates get tweaked quietly along the way so companies rarely do not beat estimates. And so on.

You don't hear about the S&P dead period between 2000 and 2013. All you hear about is the incredible rise from the low point in 2009.

Conversely, you don't hear about the great run gold had from 2000-2011, you hear about it still being down from the peak in 2011.

If you think about it, it is amazingly one sided. Virtually any news outlet that reports market information as a short segment only ever shows Dow, S&P and Nasdaq. Completely ignoring bonds even though it is a much larger market, rarely touching the dollar and currencies, and almost never on precious metals.

Better to tune it out and stick with something you can live with!
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Re: The GOLD scream room

Post by boglerdude » Thu Jul 05, 2018 10:55 pm

Whats the media's motivation? Ad dollars from brokers?
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Re: The GOLD scream room

Post by sophie » Fri Jul 06, 2018 6:44 am

Cortopassi wrote:
Thu Jul 05, 2018 8:05 am
Sophie, you know better than anyone that so much of this is psychology. "New record highs" are, and have been, touted so often on the news, and drops explained away with having isolated specific reasons, it leaves one with the fear of missing out. There is never a time to not be in the markets, according to 98% of any financial reporter and analysts, because it is their job to keep you in. Earning estimates get tweaked quietly along the way so companies rarely do not beat estimates. And so on.

You don't hear about the S&P dead period between 2000 and 2013. All you hear about is the incredible rise from the low point in 2009.

Conversely, you don't hear about the great run gold had from 2000-2011, you hear about it still being down from the peak in 2011.

If you think about it, it is amazingly one sided. Virtually any news outlet that reports market information as a short segment only ever shows Dow, S&P and Nasdaq. Completely ignoring bonds even though it is a much larger market, rarely touching the dollar and currencies, and almost never on precious metals.

Better to tune it out and stick with something you can live with!
+1!!!

I don't really know why stocks have been blessed as the "gold standard" of the investing world. Historically, gold and real estate have fulfilled that role, like the Talmud recommends. Maybe it's just because stocks are so much more suited to investing ADHD than gold or bonds, and lots more fun to report on the news.

In traditional societies like India, China, and the Middle East, gold is still the traditional store of wealth. I think part of gold's runup in the 2000's was due to increased wealth in those countries (probably largely from US importing and outsourcing) leading to increased gold purchases. A friend from Iran who maintains a very traditional lifestyle here in the U.S. will only invest in gold bars. She buys them from a dealer in an Middle Eastern ethnic neighborhood where everyone is doing the same thing. She says she doesn't trust the stock market, considers it something relatively new and non-traditional, and therefore not safe.
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