Rethinking the Permanent Portfolio

Discussion of the Gold portion of the Permanent Portfolio

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gaddyslapper007
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Re: Rethinking the Permanent Portfolio

Post by gaddyslapper007 » Fri Jun 21, 2019 8:07 am

Libra is pegged to US dollar. (AKA not a gold replacement) Facebook will be the bank. Government will regulate / have oversight over facebook as they are subject to money transmission rules and somewhat accountable for their users actions. (KYC Regulations) They are a better PayPal now. (maybe)

"Cryptocurrency's" are a distraction. While maybe most may have been created with good intentions to offer something better / or more than Bitcoin can offer where that strength lies a weakness takes its place....too many to elaborate on. (also with second layer scaling Bitcoin can compete with whatever advantage other cryptos may have...if deemed worthy)

Bitcoin has been in existence for ~10 years (50% as long as the Euro has been existence!). It dwarfs other cryptos in much more than price and market cap. metrics.

I'll leave you to the rabbit hole of other crypto's to figure out for yourself...….but be forewarned. You'll come full circle back to BTC.
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Re: Rethinking the Permanent Portfolio

Post by gaddyslapper007 » Fri Jun 21, 2019 8:17 am

Kbg wrote:
Fri Jun 21, 2019 7:57 am

When any crypto begins to wrack up serious transaction value, governments will be involved. Anyone who does not believe this I think is delusional.
This I agree with....the question becomes WILL they do anything about it?
- If yes, ....CAN they do anything about it?
- - Government CANNOT control Bitcoin.


Government CAN create laws to make using it illegal....and as always its up to people to decide. Price would surely suffer either way.
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Re: Rethinking the Permanent Portfolio

Post by Kriegsspiel » Fri Jun 21, 2019 8:38 am

Kbg wrote:
Fri Jun 21, 2019 7:57 am
I am a bit of a history buff and currently I am listening to a podcast on Byzantine history. Earlier this week the podcast was talking about an emperor who printed/pressed gold coins that were 1/16 less than the previous standard, called them a different name, and forced everyone to accept them at the same value as the larger coin. However, it was standard practice to simply weigh gold as all gold pieces would wear down over time and merchants bought and sold in terms of weight not face value of the coin. Accordingly, the attempt had zero impact.
Please mention the name in the podcast thread, I'm still looking for more good podcasts.
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Re: Rethinking the Permanent Portfolio

Post by dualstow » Fri Jun 21, 2019 8:47 am

Didn’t Harry brush aside worries of gold price manipulation?
I haven’t listened to the Money Talk archives in a few years, but I think so.
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Re: Rethinking the Permanent Portfolio

Post by Kbg » Fri Jun 21, 2019 9:30 am

Kriegsspiel wrote:
Fri Jun 21, 2019 8:38 am
Kbg wrote:
Fri Jun 21, 2019 7:57 am
I am a bit of a history buff and currently I am listening to a podcast on Byzantine history. Earlier this week the podcast was talking about an emperor who printed/pressed gold coins that were 1/16 less than the previous standard, called them a different name, and forced everyone to accept them at the same value as the larger coin. However, it was standard practice to simply weigh gold as all gold pieces would wear down over time and merchants bought and sold in terms of weight not face value of the coin. Accordingly, the attempt had zero impact.
Please mention the name in the podcast thread, I'm still looking for more good podcasts.
https://thehistoryofbyzantium.com

It’s available at the usual places for podcasts and is a direct spinoff of Mike Duncan’s History of Rome. I don’t think it’s as good as Duncan’s podcasts (History of Rome & Revolutions) or Dan Carlin’s podcasts but it gets a solid B. Lazlo Montgomery’s China History Podcast is very good and I also like the BBC’s In Our Time. I like the last one because it’s 45 minutes of learning about random things I would probably not otherwise learn about. I used to listen to quite a few trading/investing/personal finance podcasts but after a while they all started sounding the same and are fairly superficial.

I’ve mentioned it elsewhere I think but my favorite ever single podcast is Planet Money’s “Why Gold” episode

https://www.npr.org/sections/money/2011 ... t-why-gold

It’s so original, interesting, entertaining and funny.
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Re: Rethinking the Permanent Portfolio

Post by gaddyslapper007 » Fri Jun 21, 2019 1:06 pm

dualstow wrote:
Fri Jun 21, 2019 8:47 am
Didn’t Harry brush aside worries of gold price manipulation?
I haven’t listened to the Money Talk archives in a few years, but I think so.
yes he did. from what I recall...something along the lines of too large of a market / too many people to influence to hold the manipulation.
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Re: Rethinking the Permanent Portfolio

Post by pugchief » Fri Jun 21, 2019 1:27 pm

gaddyslapper007 wrote:
Fri Jun 21, 2019 8:07 am
Facebook will be the bank.
No one in their right mind can think this is a good idea. They have proven time and again that they can't be trusted.
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Re: Rethinking the Permanent Portfolio

Post by Tortoise » Fri Jun 21, 2019 1:31 pm

As an empirical test, let's observe the price behavior of gold vs. various cryptocurrencies in response to the next period of major uncertainty (market crash, secular bear market, global crisis, major war or terrorist attack, etc.).

My feeling is that our technologically-based financial system (including cryptocurrencies) has some inherent fragility, and in a period of extreme uncertainty where the reliability and safety of the technology is questioned, people may temporarily flock to gold while everything is getting sorted out.
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Re: Rethinking the Permanent Portfolio

Post by pmward » Fri Jun 21, 2019 1:45 pm

Tortoise wrote:
Fri Jun 21, 2019 1:31 pm
As an empirical test, let's observe the price behavior of gold vs. various cryptocurrencies in response to the next period of major uncertainty (market crash, secular bear market, global crisis, major war or terrorist attack, etc.).
So far, cryptos seem to be fairly correlated to stocks from what I have seen. Crypto actually led the decline in 2018, it started to drop and stocks soon followed. Similarly, both cryptos and stocks have been recovering in unison this year. It appears to perform as a risk asset not a defensive asset, at least in recent years. We will have to see if these corrections change or hold.
Last edited by pmward on Fri Jun 21, 2019 1:46 pm, edited 1 time in total.
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Re: Rethinking the Permanent Portfolio

Post by Smith1776 » Fri Jun 21, 2019 1:45 pm

Image

I found Speck's arguments for gold price manipulation to be strong. He cites Fed and other central bank meeting minutes and juxtaposes them with market data, timing, and the sheer volume of transactions. It appears that in many cases the only parties with the wherewithal to manipulate the gold price to the extent that has happened is central bank type entities.

The passage I highlighted above from FOMC meeting minutes is from Speck's book. It is one of many in his train of analysis that I find very compelling.
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Re: Rethinking the Permanent Portfolio

Post by Smith1776 » Fri Jun 21, 2019 1:54 pm

Additionally, just some thoughts about Bitcoin and its value.

I used to be part of the crowd that thought that Bitcoin was a poor form of money because it had nothing "backing" it. Also, countless cryptocurrencies can be newly created or forked off of existing ones. Why the heck should Bitcoin be given any credence as a store of value? Gold is actually rare. Its rarity is not enforced by software, but enforced by the laws of nature. It also has thousands of years of history as a monetary asset.

I've changed my tune. Why is Facebook valuable? I'm a programmer myself -- I even specialize in information systems. I could code up a social networking platform quite easily. However, it wouldn't be worth much because of network effects. Facebook is valuable because of the size and scale of the existing network. A billion plus people are on Facebook. Everybody knows the name, and it's part of the zeitgeist of society. In Warren Buffet parlance that's the "moat".

The same is true for Bitcoin. Sure, it doesn't have anything "backing" it, but it's valuable because of network effects. The size, scale, number of developers working on it, recognizability, degree of acceptance, and similar factors are what give it value. To that extent am I no longer troubled by the lack of physical backing.
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Re: Rethinking the Permanent Portfolio

Post by dualstow » Fri Jun 21, 2019 1:57 pm

thank you, gaddyslapper
---
pugchief wrote:
Fri Jun 21, 2019 1:27 pm
No one in their right mind can think this is a good idea. {Facebook} have proven time and again that they can't be trusted.
I know that Facebook is using a separate entity ("Calibri?") for Libra, but it is deliciously ironic that one of the selling points of bitcoin was anonymity. It's even more safely anonymous than cash in that you don't have to be present for the transaction, and you don't have to send someone in your stead to send or receive payments.

I don't know whether or not Facebook/Calibri will have the gall to make you use your real identity to trade in libras, but if they do, can we still call it a cryptocurrency? I say take out the crypto- prefix.
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