PP with 15% gold allocation - what to do?

[buddtholomew]

Sometimes it makes me feel as if I am the only sap who is holding 25% in GLD and TLT.

For what it's worth, I'm in the same camp as you.

But inevitably, you're not going to remain at 25% for long, save for maybe cash.

The difference for us is that we rebalance to our target allocation of 4x25. The OP is proposing a 3x25, 1x15, 1x10 allocation as their model portfolio.

[clacy]

I really wouldn't sweat the 15% limit. It's not the end of the world and to be honest it's 15% more than 99% of the other investors out there have. One thing I would suggest to compensate for currency risk is to utilize a cap weighted (low cost obviously) global stock market index fund instead of a strictly domestic one (i.e. S&P 500 or TSM). I also like Craig's suggestion about using an REIT.

So maybe go...
25% LTT
25% GSM (VT?)
25% Cash
15% Gold
10% REIT (VNQ?)

Agreed. REIT's or an energy sector fund will help provide inflation protection

[buddtholomew]

OK, so it looks like its more entertaining to tinker with the allocations.

[craigr]

My allocation is virtually identical to what Browne recommended. I have looked at the portfolio for too long to feel like modifying it. I would only consider modifications if something very fundamental were to change (e.g. we go back to the gold standard or we truly are hyper-inflationary).

If I were to stray with a VP it would likely be to wager on more stocks at the expense of volatility. But this is just a probability play because the probability is that the stock market over the long term is likely to generate greater returns at the expense of course of much higher volatility and greater risk of significant losses.

However this is just a probability estimate based on history of the U.S. markets. It doesn't mean it will happen in the future. There are plenty of markets on this planet that have languished for decades at a time in the past.

With that said, if someone's spouse is not on board you have to compromise. I'd much rather see a portfolio of stocks/bonds with even 10% gold than 0%. I have stated as much on many occasions. Even the most ardent stock bug should hold some insurance against currency emergencies in gold.

[BP]

Thanks again for the feedback and suggestions.  My spouse's preferred gold allocation is 0%, so 15% is a very big compromise allocation. 

[AgAuMoney]

Thanks again for the feedback and suggestions.  My spouse's preferred gold allocation is 0%, so 15% is a very big compromise allocation.

It sounds like the two of you are working together, which is by far the most important.

I'm concerned that a 3x85+1x15 or a 3x25 + 1x15 + 1x10 will not truly represent the PP and both you and the spouse will judge it based on that misrepresentation.

With the spouse's preference, would the 4x25 PP work for you if each of the 4 were 15% of your investable assets?  (This has been proposed earlier.)

I'd prefer to see you with that 60% of a "pure" PP and 40% VP during the trial period.  Maybe the VP looks just like a PP minus the gold (e.g. 3x33 cash/LTTs/stock), but the more you separate and manage the PP and VP separately, the more realistic the trial and the better you will be able to judge the PP on its merits/faults rather than on how your modifications altered it.

I'd even recommend the PP in its own account, but not if that would pose a significant increase in cost or other burden.

The key with a PP and VP is to not confuse the results by letting the PP subsidize the VP or visa versa without explicitly accounting that that is what you are doing.

[KevinW]

I'd even recommend the PP in its own account, but not if that would pose a significant increase in cost or other burden.

+1

My concrete advice would be to put 40% in one of Vanguard's conservative one-fund portfolios such as Target Retirement Income or LifeStrategy Conservative Growth, and the other 60% in a 4x25 in a separate non-Vanguard PP-friendly brokerage account. IMO it is important to maintain an impermeable "firewall" between a PP and VP, not just mentally, but also by situating them in different accounts.

[dualstow]

@ BP: For the first time since this thread began, I just checked and saw that while gold is still 24% of my pp, it is all of 8% of my entire holdings (pp+vp+checking account). Eight. That number will go up soon when some cash disappears and if stocks hit the rebalance point. But right now, 8.

[BP]

Thanks again folks.  All valid suggestions.  Perhaps I will just have my spouse give you folks a call and you can explain things... 

[Kshartle]

Buy her some gold jewelry that's as close to the spot price as possible.

Tie some krugerrands together with a thin gold chain.

[dualstow]

Buy her some gold jewelry that's as close to the spot price as possible.

Tie some krugerrands together with a thin gold chain.

Well, we don't know the gender of BP or her spouse. ;-)

[Reub]

Buy her some gold jewelry that's as close to the spot price as possible.

Tie some krugerrands together with a thin gold chain.

Now that's thinking outside the box!

[MachineGhost]

Buy her some gold jewelry that's as close to the spot price as possible.

http://www.heirloom24k.com/

[Ad Orientem]

Buy her some gold jewelry that's as close to the spot price as possible.

Tie some krugerrands together with a thin gold chain.

Will you marry me?

[AgAuMoney]

Buy her some gold jewelry that's as close to the spot price as possible.

Tie some krugerrands together with a thin gold chain.

Well, we don't know the gender of BP or her spouse. ;-)

Gender is secondary.  It determines the style/look of the gold jewelry but most people can wear a piece or three without drawing much if any attention.

If shopping for gold jewelry as an investment, you don't want the 18k or less garbage that is very prevalent in much of the U.S. and western Europe.  Go for 22k or 24k like they do in Asia.

At Mustafa's in Singapore I picked a 22k gold bracelet for me, and a nice gold necklace for my spouse.  Both are just shy of an ounce each.  I also picked up a few 22k gold rings from a few grams up to about 15g.  Premium for these pieces vary, but was a bit higher than for gold bullion coins.  But such is also much less likely to draw attention as currency controls tighten.  At least it doesn't draw attention as long as you keep the package well short of the 1980's Mr. T !

Dubai is another good place, perhaps the best place, to pick up gold jewelry at low premiums.

I've not been to that area since India has increased their taxes and restrictions on gold import, but it used to be fun to see all the Indians flying home from Dubai deck themselves out in all their new gold because wearing it used to be the exempt way of bringing it home. 

[dualstow]

Buy her some gold jewelry that's as close to the spot price as possible.

Tie some krugerrands together with a thin gold chain.

Well, we don't know the gender of BP or her spouse. ;-)

Gender is secondary.  It determines the style/look of the gold jewelry but most people can wear a piece or three without drawing much if any attention.

...

Why do I get the feeling an image of Mr T will soon be posted?

[MachineGhost]

Why do I get the feeling an image of Mr T will soon be posted?

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I pity you, fool![/align]