Old HB radio show about Gold

Discussion of the Gold portion of the Permanent Portfolio

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buddtholomew
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Re: Old HB radio show about Gold

Post by buddtholomew » Thu Nov 15, 2018 3:06 pm

Kbg wrote:
Thu Nov 15, 2018 11:34 am
BT,

I think Tyler (and other folks in the blogosphere) have laid out what you can expect from a PP and I see nothing that suggests the PP is acting any differently than it has historically. You give up 1% CAGR for less volatility compared to most other ports. That's the dealio. As a youngster, that is a bad strategy and I would never recommend it. Someone in their mid 50s, different story.

Pull up a LT chart of the Dow or the S&P 500, visually mark the LT bull market highs and bear market lows. Then transfer those marks over to a LT chart of gold...and that is why gold is in the PP (in my view) from an asset allocation perspective. Now some very simple trend systems will help you achieve the best of each asset class...but your Max DD is going to dial up significantly from a standard PP.

Of note, I think you will regret getting out of gold now. I'm not saying gold is or is not good over the long haul. but I'd do it at the end of the next bear market and not at the probable top of a bull market. (If you are the market timing sort.)
Of note, I think you will regret getting out of gold now. I'm not saying gold is or is not good over the long haul. but I'd do it at the end of the next bear market and not at the probable top of a bull market. (If you are the market timing sort.)

Gold didn't help much during the last bear market...it was well into the recovery before gold advanced after investors started believing in the "inflation" story that all the printing HAD to cause.
Hal
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Re: Old HB radio show about Gold

Post by Hal » Thu Nov 15, 2018 5:48 pm

LazyInvestor wrote:
Thu Nov 15, 2018 12:54 am
This is a critical point. That's why in a number of my previous posts I encouraged non-US investors to stick with a Bogleheads portfolio if they are not willing to run US PP.

In recent times, USD was strengthening and gold was not of much help for anyone from Venezuela to Canada. Most of non-US investors would have done better in recent times if they held USD instead of gold. Anyways in many developing countries people do keep USD for the purpose that gold plays for US investors.
Touche!

Have found the archived article on the Iceland PP here:

https://web.archive.org/web/20120729164 ... eland.html

Two comments though;
1. Suspect results would be similar if the USD were substituted for Gold
2.This paragraph says it all

A fridge, food, cars, gasoline, computers, clothes, and almost any other item in the stores just tripled in price as most of them are imports. So, even with a permanent portfolio you lost serious purchasing power versus imports. However, with the permanent portfolio you did win purchasing power versus local goods, services and real estate as these prices did not go up but stayed flat or went down.

I still think the US-PP is a great system, but just be aware of its limitations for non US-PP's.

LazyInvestor - will have to read your other posts closely. On the "to do list"
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Kbg
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Re: Old HB radio show about Gold

Post by Kbg » Thu Nov 15, 2018 8:37 pm

BT,

The last time gold performed this poorly was the 1990s...and why was that? I also assume you have done your homework and know that gold outperformed stocks every single year except 2004 in the previous decade thumping stocks by an average of 15% a year during that decade. Yes, 15% per year. The geomean for stocks was -.94% while gold was 14.12%.

Ok, I hereby solemnly swear that I will forever refrain from commenting on another Budd gold rant.
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