Hong Kong Proves the PP's Mettle

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

User avatar
Smith1776
Executive Member
Executive Member
Posts: 1401
Joined: Fri Apr 21, 2017 6:01 pm

Hong Kong Proves the PP's Mettle

Post by Smith1776 » Tue Nov 19, 2019 3:16 pm

I'm busy at work so I won't be able to expound on this quite as much as I'd like to, but I figured I'd make a post about this before it slipped my mind.

The recent events in Hong Kong have made it abundantly clear that the PP and its "all weather" philosophy to investment (and even life!) is as relevant now as it ever has been.

Hong Kong has long been considered Asia's bastion of freedoms both politically and economically. A free market haven where commerce thrives that people struggle to get into -- even so much as sneaking in illegally. I remember Milton Friedman had a documentary spot about Hong Kong way back when.

However, the recent turmoil has made it clear that no bastion is impregnable to political upheaval, natural disaster, etc. Dissidents in Hong Kong are being cracked down on not just physically. Assets are being frozen, bank accounts seized, and general commerce has been breaking down. It is to the extent in which even if your account was fine, the inoperability of banks and ATMs may make the point moot.

The PP, which espouses holdings of physical gold and overseas storage provides invaluable protection in these scenarios. It's happening in Hong Kong, it can happen anywhere. The PP is one of the few investment strategies that truly is anti-fragile.
PP: 20% KILO.B | 5% SBT.B | 60% VCIP | 15% VVL/VMO/VVO/VLQ
VP: 100% XGD
Liquidity: 90 Days of Expenses Bank Cash
Physical Bullion: 5% of Net Worth Gold & Silver
Knucklehead (noun): Someone who knows the expense ratio of everything but the value of nothing.
jacksonm2
Full Member
Full Member
Posts: 78
Joined: Fri Sep 27, 2019 5:46 pm

Re: Hong Kong Proves the PP's Mettle

Post by jacksonm2 » Tue Nov 19, 2019 3:35 pm

My wife and I spent some time in Hong Kong on our way back from one of our trips to the Philippines about 9 or 10 years ago and I have to say it's really hard to believe this is even happening. My wife was an OFW (overseas foreign worker), working there as a maid from the Philippines shortly before I met her so we stayed with one of her friends. They lived in an extremely tiny and over-priced condo but overall life seemed very good and I was greatly impressed with the city.

I read HB's fail-safe investing book on the way home and I remember thinking it would be a good place to store some gold coins if we moved to the Philippines after I retired (which I have now done - retired I mean - not moved). Not any more, of course.
Last edited by jacksonm2 on Wed Nov 20, 2019 2:52 pm, edited 2 times in total.
User avatar
dualstow
Executive Member
Executive Member
Posts: 10471
Joined: Wed Oct 27, 2010 10:18 am
Contact:

Re: Hong Kong Proves the PP's Mettle

Post by dualstow » Tue Nov 19, 2019 3:57 pm

Great post, Smithers. I think about Hong Kong every day. And Taiwan.
I hadn’t thought about it with regard to the pp. Makes sense!
New York City disbanded its anticrime unit of plainclothes officers on June 15, part of a $1 billion reduction in the city’s police budget. —WSJ
User avatar
sophie
Executive Member
Executive Member
Posts: 3662
Joined: Mon Apr 23, 2012 7:15 pm

Re: Hong Kong Proves the PP's Mettle

Post by sophie » Wed Nov 20, 2019 8:04 am

Indeed - good thought for the day! It's why I really don't want to keep a lot of my gold allocation in ETF form. I wish Harry Browne were around to comment because he'd say it more intelligently than I could, but I imagine he would not favor over-dependence on gold ETFs.

It's also a cautionary tale for diversification. I've got my non-ETF gold divided between physical and Perth Mint storage...think maybe that's a good thing!
Kerby
Junior Member
Junior Member
Posts: 1
Joined: Tue Nov 19, 2019 3:47 am

Re: Hong Kong Proves the PP's Mettle

Post by Kerby » Wed Nov 20, 2019 8:23 am

Did you talk to an expert about the diversification of non-ETF gold, Sophie?
User avatar
drumminj
Executive Member
Executive Member
Posts: 250
Joined: Wed Jul 22, 2015 9:16 pm

Re: Hong Kong Proves the PP's Mettle

Post by drumminj » Wed Nov 20, 2019 8:37 am

Kerby wrote:
Wed Nov 20, 2019 8:23 am
Did you talk to an expert about the diversification of non-ETF gold, Sophie?
What would such an "expert" look like?

(Sophie, I've taken a similar approach, but not with the Perth Mint)
User avatar
sophie
Executive Member
Executive Member
Posts: 3662
Joined: Mon Apr 23, 2012 7:15 pm

Re: Hong Kong Proves the PP's Mettle

Post by sophie » Wed Nov 20, 2019 9:38 am

Kerby wrote:
Wed Nov 20, 2019 8:23 am
Did you talk to an expert about the diversification of non-ETF gold, Sophie?
Yep! The people on this board. They're about as expert as it gets!

Don't be too impressed with self-styled experts. They aren't necessarily going to make any better decisions than you could, plus your money is YOUR responsibility ultimately.
User avatar
Smith1776
Executive Member
Executive Member
Posts: 1401
Joined: Fri Apr 21, 2017 6:01 pm

Re: Hong Kong Proves the PP's Mettle

Post by Smith1776 » Thu Nov 21, 2019 1:31 am

Thanks for the thoughts, fellows.

It strikes me as interesting how fragile the seeming stability of one's home really is. It really doesn't take much -- just one event, just one knock away from equilibrium to turn a person's entire life upside down. What's worse, a return to normality is never guaranteed.

It's so very similar to the kind of hubristic thinking that people engage in when it comes to their own health and safety.

"That would never happen to me."

The thinking that causes people to not consider even the possibility of civil and political upheavals is the same blind spot that causes people to ignore the dangers of smoking, texting while driving, or eating terribly.

Putting it another way, the Harry Browne philosophy of prudence is applicable in all areas of life.
PP: 20% KILO.B | 5% SBT.B | 60% VCIP | 15% VVL/VMO/VVO/VLQ
VP: 100% XGD
Liquidity: 90 Days of Expenses Bank Cash
Physical Bullion: 5% of Net Worth Gold & Silver
Knucklehead (noun): Someone who knows the expense ratio of everything but the value of nothing.
User avatar
dualstow
Executive Member
Executive Member
Posts: 10471
Joined: Wed Oct 27, 2010 10:18 am
Contact:

Re: Hong Kong Proves the PP's Mettle

Post by dualstow » Thu Nov 21, 2019 4:20 am

Smith1776 wrote:
Thu Nov 21, 2019 1:31 am
It strikes me as interesting how fragile the seeming stability of one's home really is. It really doesn't take much -- just one event, just one knock away from equilibrium to turn a person's entire life upside down. What's worse, a return to normality is never guaranteed.
The Jews of Vienna and Amsterdam in the 1930s must’ve been blindsided by the Nazis. Even in Germany, they were laughing about Hitler when he first started making noise. Imagine, you’re going to a good school, or you’ve got a job as a doctor or playwright. You’ve lived in the country all your life.

Then, one day, it comes down to whether you have gold and who you know. Who can get you out of the country.

The Chinese cultural revolution- no escape for most.
New York City disbanded its anticrime unit of plainclothes officers on June 15, part of a $1 billion reduction in the city’s police budget. —WSJ
User avatar
Kbg
Executive Member
Executive Member
Posts: 1553
Joined: Fri May 23, 2014 4:18 pm

Re: Hong Kong Proves the PP's Mettle

Post by Kbg » Thu Nov 21, 2019 9:39 am

Call me super skeptical when it comes to the “oh, hey I’ll just get me some physical gold in another country and move there when the too ugly here line has been crossed” plan.

Way easier said then done...if you are really serious about that plan, you should be well along the process of trying to get dual citizenship or renouncing/getting citizenship elsewhere...and then understand you are now rolling the bones about your newly chosen place of residence.
User avatar
dualstow
Executive Member
Executive Member
Posts: 10471
Joined: Wed Oct 27, 2010 10:18 am
Contact:

Re: Hong Kong Proves the PP's Mettle

Post by dualstow » Thu Nov 21, 2019 9:43 am

I don’t think anyone thinks it’s easy.
And yes, by the time one realizes it’s really time to move, it may be too late. Depends on the situation, as you know.
New York City disbanded its anticrime unit of plainclothes officers on June 15, part of a $1 billion reduction in the city’s police budget. —WSJ
User avatar
jhogue
Executive Member
Executive Member
Posts: 505
Joined: Wed Jun 28, 2017 10:47 am

Re: Hong Kong Proves the PP's Mettle

Post by jhogue » Thu Nov 21, 2019 10:38 am

Read the introduction in Harry Browne's Guide to Swiss Banks, first published back in 1976.

Uncle Harry starts with a story about a Jewish family in Germany that prepared for the worst in the early 1930s by transferring their assets into gold and making deposits into then-secret Swiss bank accounts. Current events in Hong Kong -- AND the USA-- seem eerily similar.

Scoff at "preppers" and "gold bugs" all you want, but know that Senator Warren's current "wealth tax" proposal also calls for a major expansion of the IRS. Are we really supposed to believe that this measure will only be used against the so-called top 0.1%?
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
Post Reply