Adaptive gold allocation rule

[MachineGhost]

That is such a great perspective. Thanks.

Indeed.  The question is: do you want to be the pig or the farmer?

[dragoncar]

Think of the PP as a pigpen with four feeding troughs.  When food disappears from one trough, the pigs will run to one of the other troughs.  Since there aren't any other feeding troughs, you know that most of the pigs are going to eat out of one of the four - you just don't know which one ahead of time.  Over time, the "food supply" increases only because of overall population and economic growth; the food (i.e. money) comes into the system and has to go to one of the four troughs.  That's what the PP captures:  "the return the market gives you", to quote HB.

That is such a great perspective. Thanks.

I like it way more than the boat analogy, which never made sense to me.

[MachineGhost]

I like it way more than the boat analogy, which never made sense to me.

I thought the boat analogy was about somone on here that had lost their gold when their boat sunk?

Sophie sure does have a gift for flair.

[ochotona]

I found this happy site of joy on the forum  http://www.peaktotrough.com/hbpp.cgi

I'm quite happy with 15% gold, 30% stocks, 30% 30 year Treasuries, 25% 3-year Treasuries. If we get into a extended gold bear market, then I'll be happy to rotate into a classic four-quarters allocation when the price is better. If not, I'll leave it at 15%.

I noticed if you start to lower gold AND cash excessively, then the wheels fall off the cart. It works at 15% gold, 20% cash, any lower and you fall off a cliff.

[goodasgold]

I'm quite happy with 15% gold, 30% stocks, 30% 30 year Treasuries, 25% 3-year Treasuries. If we get into a extended gold bear market, then I'll be happy to rotate into a classic four-quarters allocation when the price is better. If not, I'll leave it at 15%.

Since gold's rapid free fall in April, 2013, are we currently in a bear market, or not? It is tough to decide. The glory, puzzlement and frustration of gold is that the price of the yellow stuff is so wildly volatile that, in any given period, it is hard to figure out whether the price is aberrant or "the new normal." This is what makes gold for me the most intriguing of all the four PP assets.

[ochotona]

Since gold's rapid free fall in April, 2013, are we currently in a bear market, or not? It is tough to decide. The glory, puzzlement and frustration of gold is that the price of the yellow stuff is so wildly volatile that, in any given period, it is hard to figure out whether the price is aberrant or "the new normal." This is what makes gold for me the most intriguing of all the four PP assets.

Intriguing yes, also a PITA for anyone who wants to use it in a portfolio. I mean this in a joking kind of a way, but I'm inclined to buy a little tiny bit of DGLD, the triple-leveraged inverse gold ETF, just to partially protect the value of my physical gold holdings (which I don't have yet, but it's in the pipeline). But in their documents, the people who sell DGLD point out all kinds of probable tracking errors and risks, so I don't think you want to hold it for more than a brief period. http://www.velocitysharesetns.com/dgld