The GOLD scream room

Discussion of the Gold portion of the Permanent Portfolio

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Kriegsspiel
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Re: The GOLD scream room

Post by Kriegsspiel » Fri Aug 03, 2018 10:34 am

buddtholomew wrote:
Fri Aug 03, 2018 7:14 am
How does one focus on the portfolio and ignore Gold when it is down almost 8% with a 15% drawdown this year?
[pocket protector engage]After CAGRing 6.54% in the past couple years, the PP can be expected to regress to the mean.

Using Tyler's rolling returns calculator, the PP has had a 3 year rolling CAGR over 6% in 15/48 years, or about 31%.
4 year rolling drops to 29%
5 year 25%
6 year 16.6%
7 year 12.5%
[/pocket protector]
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buddtholomew
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Re: The GOLD scream room

Post by buddtholomew » Fri Aug 03, 2018 12:15 pm

Kriegsspiel wrote:
Fri Aug 03, 2018 10:34 am
buddtholomew wrote:
Fri Aug 03, 2018 7:14 am
How does one focus on the portfolio and ignore Gold when it is down almost 8% with a 15% drawdown this year?
[pocket protector engage]After CAGRing 6.54% in the past couple years, the PP can be expected to regress to the mean.

Using Tyler's rolling returns calculator, the PP has had a 3 year rolling CAGR over 6% in 15/48 years, or about 31%.
4 year rolling drops to 29%
5 year 25%
6 year 16.6%
7 year 12.5%
[/pocket protector]
The 3-year return may be impressive to some but the portfolio trails in comparison to the most conservative 50/50 stock/bond allocation. Gold has sucked and that’s why. There’s a billion excuses, one for each cherry picked date and time as to how great the portfolio has performed, but in reality since the 2008 crisis this has been a poor portfolio to hold.
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ochotona
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Re: The GOLD scream room

Post by ochotona » Fri Aug 03, 2018 12:59 pm

I haven't looked, but how has this portfolio done since the late 90s? Because that is where we are again with stock valuations
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Re: The GOLD scream room

Post by barrett » Fri Aug 03, 2018 1:35 pm

ochotona wrote:
Fri Aug 03, 2018 12:59 pm
I haven't looked, but how has this portfolio done since the late 90s? Because that is where we are again with stock valuations
Anything beyond a time horizon of just a few years and the PP has always been in the 3% to 6% real return range. Here is Tyler's PP heat map from his site:

https://portfoliocharts.com/portfolio/p ... portfolio/

Whether or not the 3% to 6% real return will hold true going forward, I sure can't say. My view is that current high stock valuations aren't really an effect of an economic boom, but maybe I'm just too pessimistic (Pessimistic Portfolio). ZIRP pushed plenty of money into stocks that might have otherwise stayed elsewhere. And I think stock buybacks as a result of corporate tax cuts are doing more of the same now. But the average American is way over leveraged and won't have any funds with which to buy stocks. Maybe a few rich folks at the top of the pyramid (not really the correct image, I guess) will be able to keep stock prices going up, but I am not convinced that is likely... or at least I am not willing to bet heavily on that outcome.
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Re: The GOLD scream room

Post by Cortopassi » Tue Aug 14, 2018 2:13 pm

The previous scream room post was Aug 3, 11 days ago!

Have we all moved onto the Acceptance stage?
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Re: The GOLD scream room

Post by Kriegsspiel » Tue Aug 14, 2018 2:45 pm

Gold is really sperging out. Major lame. I'm going to get drunk and play a child's game.
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Re: The GOLD scream room

Post by barrett » Tue Aug 14, 2018 3:07 pm

Cortopassi wrote:
Tue Aug 14, 2018 2:13 pm
The previous scream room post was Aug 3, 11 days ago!

Have we all moved onto the Acceptance stage?
My expectation for gold over the long haul is that it will do well in times when the USD is weak for extended periods. The link below is interesting:

https://www.macrotrends.net/1335/dollar ... -ten-years

Not sure why it says it's a ten year chart... when I pull it up I am seeing the gold/USD relationship all the way back to 1995, so almost 23 years of data. During the big run up in the 2000s, the USD was pretty weak in general. The relationship is far from being reliable in the short term but you can see, for example, that the low point in the USD in 2011 was pretty close to the high point in gold. The part of me that wants this relationship to REALLY make sense tells me that the last few hundred dollars of run up in 2010 and 2011 was largely a speculative bubble. Irrational Exuberance.

So, yeah, acceptance within this "understanding" of gold's price. As long as the stock market continues to hum along I expect gold to lag (and hopefully I'll be sensible enough to rebalance into it from time to time). Just my two cents.
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Re: The GOLD scream room

Post by Cortopassi » Tue Aug 14, 2018 3:37 pm

barrett, not sure that chart is accurate, or what info does it pull for the dollar basket? The dollar quote I use is this:

https://www.marketwatch.com/investing/index/DXY

which is currently about 96.69, but the chart is showing the dollar, at least as of a couple weeks ago at 124, which is not even close?
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Re: The GOLD scream room

Post by barrett » Tue Aug 14, 2018 4:33 pm

Cortopassi wrote:
Tue Aug 14, 2018 3:37 pm
barrett, not sure that chart is accurate, or what info does it pull for the dollar basket? The dollar quote I use is this:

https://www.marketwatch.com/investing/index/DXY

which is currently about 96.69, but the chart is showing the dollar, at least as of a couple weeks ago at 124, which is not even close?
That's an excellent damn question, Cortopassi! One sure can find all kinds of wacky gold and USD charts on the intraweb. While the absolute numbers on our two charts are quite different, they look fairly similar to me when looked at over the past three years (seems to be the only common timeframe of any meaning that I can get on both charts).

This FRED link seems to be pulling from the same basket as the first link I posted:

https://fred.stlouisfed.org/graph/?g=33vD

And on the FRED chart, the weak USD/strong gold (and vice versa) relationship holds true for the most part.
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Re: The GOLD scream room

Post by buddtholomew » Tue Aug 14, 2018 5:49 pm

I’ve always thought that a strong USD was the Achilles heal of the PP. With that in mind, I considered buying UUP until learning that the currency fluctuations were a wash over time according to Boglehead philosophy.

There is currently a positive relationship between a strong USD and SCV (not sure if this is historically true or the tariffs are contributing to domestic SC gains).

SCV has mitigated GLD losses this year and I am hopeful that holding this asset will continue to fill this void in the PP. Obviously this is the Golden Buttefly but do others see the strong USD a problem for the PP to mitigate?
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Re: The GOLD scream room

Post by modeljc » Tue Aug 14, 2018 6:16 pm

Gold is a precious metal. It so valuable that you can buy it at the cost of production! About $1100. Back up the truck. Get all you want. I do believe in PP. But it's a hard sell for all my friends. Think 1982 when interest rates were high. Went from $850 to $250. A little correction but it was a long one. Only about 20 years. All you lost was collecting the simple rate of interest. Now it is close to the cost of production. Maybe a store of value. Do you really want some! BUT if you bought it at $1900 probably not in my mind.
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Re: The GOLD scream room

Post by barrett » Tue Aug 14, 2018 7:06 pm

buddtholomew wrote:
Tue Aug 14, 2018 5:49 pm
I’ve always thought that a strong USD was the Achilles heal of the PP...
Looks like the FRED Trade Weighted U.S. Dollar Index includes includes currencies from the Euro Area, Canada, Japan, Mexico, China, United Kingdom, Taiwan, Korea, Singapore, Hong Kong, Malaysia, Brazil, Switzerland, Thailand, Philippines, Australia, Indonesia, India, Israel, Saudi Arabia, Russia, Sweden, Argentina, Venezuela, Chile and Colombia.

Don't know enough to answer your question, budd, but a strong USD would obviously be good for American companies that are importing raw materials to make stuff with. So quite possibly good for stocks while being bad for gold.

Not sure if or how this applies to the information economy though...
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Re: The GOLD scream room

Post by boglerdude » Wed Aug 15, 2018 1:51 am

Oh no, a strong currency. Those poor Swiss, cant export their chocolate and clocks :/
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Re: The GOLD scream room

Post by ochotona » Wed Aug 15, 2018 7:11 am

This thing is really breaking down today
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Re: The GOLD scream room

Post by Cortopassi » Wed Aug 15, 2018 7:43 am

When it happens it seems never ending.

My cash position is almost getting close enough for a rebalance. I sense TLT and GLD will carry the day come later this year and next. But that would be a prediction, which is >50% likely wrong.
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Re: The GOLD scream room

Post by Cortopassi » Wed Aug 15, 2018 8:00 am

Does anyone else look at lines and domes and head and shoulders and other such graphics drawn in technical analysis and call bullshit like I do? You can draw this rounding bottom in any manner you'd like and start at any year. Someone could take this same exact plot and show why silver will go down for years as well I bet.

Straight sloped lines that connect peaks and valleys to draw wedges, etc. They are all so subject to interpretation. It's like astrology.

Image
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Re: The GOLD scream room

Post by buddtholomew » Wed Aug 15, 2018 8:37 am

Where are all the “big shots”?
Calling techno...
What’s the plan?
Au still the be all end all...
I don’t think so.
It’s such a small portion of my portfolio it’s irrelevant now.
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ochotona
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Re: The GOLD scream room

Post by ochotona » Wed Aug 15, 2018 10:14 am

Good Lord why would you want to price silver in WTI? That's just silly.
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Re: The GOLD scream room

Post by eufo » Wed Aug 15, 2018 10:29 am

Lovin' it!
Don't agree with me too strongly or I'm going to change my mind
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Re: The GOLD scream room

Post by Cortopassi » Wed Aug 15, 2018 11:54 am

ochotona wrote:
Wed Aug 15, 2018 10:14 am
Good Lord why would you want to price silver in WTI? That's just silly.
Hah. I didn't even notice that. Just like the current correlation between the Yuan and gold. And the Chindian gold love trade. And seasonality.

All works. Until it doesn't.
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Re: The GOLD scream room

Post by Cortopassi » Wed Aug 15, 2018 11:55 am

And on cue, I have exceed my previous maximum PP YTD loss (from 5/1/2018)

At least TLT is up.

Is silver in single digits yet?
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Re: The GOLD scream room

Post by dualstow » Wed Aug 15, 2018 12:21 pm

In July of...2013(?) I said that maybe gold would go to 750 before it goes up to 2000.
I think I'll hang out to see if that comes true.
Would like to buy a little more gold soon.
RIP Marcello Gandini
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Re: The GOLD scream room

Post by buddtholomew » Wed Aug 15, 2018 1:18 pm

I wouldn’t even bother with Gold unless we see inflation. Not going to see much inflation with tariffs, a strong USD and rising rates.
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Re: The GOLD scream room

Post by Xan » Wed Aug 15, 2018 2:15 pm

buddtholomew wrote:
Wed Aug 15, 2018 1:18 pm
I wouldn’t even bother with Gold unless we see inflation. Not going to see much inflation with tariffs, a strong USD and rising rates.
With everyone thinking that, doesn't that make it a good time to buy?
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Re: The GOLD scream room

Post by stuper1 » Wed Aug 15, 2018 2:34 pm

Xan wrote:
Wed Aug 15, 2018 2:15 pm
buddtholomew wrote:
Wed Aug 15, 2018 1:18 pm
I wouldn’t even bother with Gold unless we see inflation. Not going to see much inflation with tariffs, a strong USD and rising rates.
With everyone thinking that, doesn't that make it a good time to buy?
No way. Much better to buy high and sell low. After all, that's what most people do.
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