The Permanent Portfolio is structured so that the gold portion of the portfolio is, in a nutshell, "alt cash".
However, Harry Browne was not alive to see the era of cryptocurrencies. In his own line of reasoning, Browne said that gold was the world's "second favourite form of money". When confidence in the dollar diminishes, people flock to gold, so the idea goes.
I honestly can't believe I even typed the above passages, as 12 months ago I was the biggest cryptocurrency skeptic.
My personal 180 on the issue has been a slow turnaround, culminating a few days ago with the announcement of Libra, which I'm sure everyone on this board has heard of by now. On a prima facie level, it seems that Libra is the cryptocurrency equivalent of the dollar, while bitcoin may be the digital equivalent of gold.
I'd like to start chatting about a potential change to what we may consider the canonical Permanent Portfolio allocations:
- 25% equities
25% long term treasury bonds
I don't have answers to any of those questions, but I have been thinking on this matter a lot. Either way, I am convinced that this issue is worth considering, because the status of gold as the de facto alt cash in society may not be as strong as it once was in the coming decades.
My personal feeling is that a Libra dominated allocation to cryptocurrencies, with some exposure to others like bitcoin may be prudent in the coming years. Heck, if someone could create a basket or vehicle to hold all of them in one security, that might be the balance one needs to between the increased complexity and the desire to maintain simplicity.
Mind everyone, I am not proposing that we should all just suddenly make a major shift in the PP theory today. I'd like to simply explore what this all means, and not potentially get stuck in the past by stubbornly espousing an investing theory founded by a man who never lived to see this era. No one can know what Browne would have thought.