The ideal percentage of Gold in a portfolio

Discussion of the Gold portion of the Permanent Portfolio

Moderator: Global Moderator

Post Reply
User avatar
Tyler
Executive Member
Executive Member
Posts: 2066
Joined: Sat Nov 12, 2011 3:23 pm
Contact:

The ideal percentage of Gold in a portfolio

Post by Tyler » Tue Mar 28, 2017 4:48 pm

Someone forwarded this article to me, and I thought I'd pass it along. The conclusion should not be too surprising to anyone here. 8)

http://proactiveadvisormagazine.com/gol ... portfolio/
User avatar
dualstow
Executive Member
Executive Member
Posts: 14232
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The ideal percentage of Gold in a portfolio

Post by dualstow » Tue Mar 28, 2017 5:14 pm

Nice. I'm reading Part I.
Sam Bankman-Fried sentenced to 25 years
Libertarian666
Executive Member
Executive Member
Posts: 5994
Joined: Wed Dec 31, 1969 6:00 pm

Re: The ideal percentage of Gold in a portfolio

Post by Libertarian666 » Tue Mar 28, 2017 8:57 pm

Very interesting. HB was pretty smart!
User avatar
Dieter
Executive Member
Executive Member
Posts: 655
Joined: Sat Sep 01, 2012 10:51 am

Re: The ideal percentage of Gold in a portfolio

Post by Dieter » Tue Mar 28, 2017 9:59 pm

Tyler wrote:Someone forwarded this article to me, and I thought I'd pass it along. The conclusion should not be too surprising to anyone here. 8)

http://proactiveadvisormagazine.com/gol ... portfolio/
Actually, is surprising when it's not on this forum and not 0%. :)
grapesofwrath
Associate Member
Associate Member
Posts: 46
Joined: Thu Jul 14, 2016 5:57 am

Re: The ideal percentage of Gold in a portfolio

Post by grapesofwrath » Wed Mar 29, 2017 12:57 pm

If the start date of their analysis was a few years (i.e.76-80) later my guess is it would suggest a lower allocation.
(Would be interesting to hear Desert comment on that)
User avatar
Hal
Executive Member
Executive Member
Posts: 1349
Joined: Tue May 03, 2011 1:50 am

Re: The ideal percentage of Gold in a portfolio

Post by Hal » Wed Mar 29, 2017 5:34 pm

Another article along the same lines...

http://actuary-info.blogspot.com.au/201 ... escue.html

Hal
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: The ideal percentage of Gold in a portfolio

Post by ochotona » Wed Mar 29, 2017 9:04 pm

The Ned Davis Three-Way Portfolio is a trendfollowing cashless HBPP, and it can go 100% into gold! (temporarily)

http://mebfaber.com/2015/06/16/three-way-model/
boglerdude
Executive Member
Executive Member
Posts: 1313
Joined: Wed Aug 10, 2016 1:40 am
Contact:

Re: The ideal percentage of Gold in a portfolio

Post by boglerdude » Thu Mar 30, 2017 1:36 am

What does it cost mine gold? Does that limit how high it can go?
grapesofwrath
Associate Member
Associate Member
Posts: 46
Joined: Thu Jul 14, 2016 5:57 am

Re: The ideal percentage of Gold in a portfolio

Post by grapesofwrath » Thu Mar 30, 2017 6:19 am

ochotona wrote:The Ned Davis Three-Way Portfolio is a trendfollowing cashless HBPP, and it can go 100% into gold! (temporarily)

http://mebfaber.com/2015/06/16/three-way-model/

My read of this was 1/3 each of stocks, bonds and gold, but with the asset being replaced by t-bills when it didn't have momentum. Meb Faber likes his momentum. I think it suffers from recency bias particularly for USA. The past does not indicate the future. The clear ups-downs of SP500 model well with momentum but that advantage appears to disappear with eg non-US markets. I also think there is an inherent risk by not eg. being in bonds if stocks suddenly tank. And then the tax implications from the churn of frequency short trades when markets going side ways....
Libertarian666
Executive Member
Executive Member
Posts: 5994
Joined: Wed Dec 31, 1969 6:00 pm

Re: The ideal percentage of Gold in a portfolio

Post by Libertarian666 » Thu Mar 30, 2017 8:57 am

boglerdude wrote:What does it cost mine gold? Does that limit how high it can go?
The supply of "new" gold from mining every year is only a percent or two of the overall supply because most gold isn't consumed but stored. This is quite unlike all non-monetary commodities, where the new supply comprises most of the available stock at any time.

It is also very difficult and expensive to increase gold mining output, and there is only so much gold to be mined.

For both of these reasons, mining supply has little to do with the gold price.
User avatar
ochotona
Executive Member
Executive Member
Posts: 3353
Joined: Fri Jan 30, 2015 5:54 am

Re: The ideal percentage of Gold in a portfolio

Post by ochotona » Mon May 01, 2017 1:24 pm

My latest thinking... thinking about the amount of gold to have as # of ounces per million dollars in a portfolio.

I'm after Desert Portfolio levels, 10%, so I'm thinking... 80 ounces per $1 million. Keep that constant over time.

Then how much gold costs becomes less important. It fades a bit.
User avatar
dualstow
Executive Member
Executive Member
Posts: 14232
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The ideal percentage of Gold in a portfolio

Post by dualstow » Mon May 01, 2017 5:50 pm

??? But that's not a constant, right?
Shouldn't the US$ price or one's home currency price matter more?


Separately, my dream of having my weight in gold is not going to happen. Too rich for my blood. O0
Sam Bankman-Fried sentenced to 25 years
Libertarian666
Executive Member
Executive Member
Posts: 5994
Joined: Wed Dec 31, 1969 6:00 pm

Re: The ideal percentage of Gold in a portfolio

Post by Libertarian666 » Wed May 03, 2017 2:04 pm

dualstow wrote:??? But that's not a constant, right?
Shouldn't the US$ price or one's home currency price matter more?

Separately, my dream of having my weight in gold is not going to happen. Too rich for my blood. O0
Then perhaps you should go on a diet. :P
User avatar
dualstow
Executive Member
Executive Member
Posts: 14232
Joined: Wed Oct 27, 2010 10:18 am
Location: synagogue of Satan
Contact:

Re: The ideal percentage of Gold in a portfolio

Post by dualstow » Wed May 03, 2017 3:06 pm

Ha! Well, the way I see it, it's more fun to buy some spanikopitas from Trader Joe's anyway. AND cheaper. O0
Sam Bankman-Fried sentenced to 25 years
Post Reply