Gyroscopic Investing

MachineGhost wrote: I posted a simple gold timing system in another thread.  The biggest risk of the "adolescent" HBPP is that it is very suspectible to real interest rates rising.  If gold is in a bubble that is only halfway done but decides to tank 50% as we go into the double dip recession (as in the late 70's), then the LT bonds will still go up to compensate.  But everything will tank and the pressure will be on the ST bonds if real rates start rising.  That is the risk at the ultimate end of the gold bubble.

MG

TripleB wrote: I've been having bad feelings towards gold recently. It's not actionable to me, and I'm maintaining my PP. Makes me glad I have a bit of a VP. I wonder if having a modest VP (10% to 20% of total portfolio) helps to maintain PP in the long term because I can make minor moves as I feel appropriate, while having the bulk of my money isolated from what could be a stupid decision.

MG,

Can you please point me to the post where you outlined the gold timing method?

I read a great article several months back that discussed real interest rates and how they affect gold prices.  It seemed to make a lot of sense.

Thanks

MachineGhost wrote: That is the risk at the ultimate end of the gold bubble.

Why do you think there is a gold bubble?

I hear a lot of people saying this, and not just about gold, but also about LTT's. 

IMO, when an asset is in a true bubble very few people recognize it. 

AdamA wrote:

MachineGhost wrote: That is the risk at the ultimate end of the gold bubble.

Why do you think there is a gold bubble?

I hear a lot of people saying this, and not just about gold, but also about LTT's.  

IMO, when an asset is in a true bubble very few people recognize it.  

It seems like the nature of a bubble is that it is only identifiable as a bubble after it pops.  Until it pops it's just a big round thing.

Is Lady Gaga a bubble?  Maybe, but you could have said the same thing about Madonna 20 years ago and she proved to be a lasting cultural presence and not just a pop music "bubble."

To paraphrase Forrest Gump, maybe the deal with bubbles is that "bubbles are as bubbles do."

Thats nonsense.  A lot of people recognize they are in a bubble, but think they can get out before it pops.  Thats how they justify participating.

I don't think gold is in a bubble yet.  Bubbles are the latter, more parabolic, mania stage of a long-term trend.  A frenzy.  An orgy.  We haven't seen diddley-shit yet.  When the shoe shine boy is talking about juinor resource gold stocks, you'll know...

LT Bonds are not in a bubble because historically long-term interest rates have averaged 2-3%.  However, if you believe there will be mean reversion back to the stagflationary 70's where real interest rates were negative and the bond market did not anticipate the "unexpected" cost-push inflation, then LT Bonds are in a bubble in the sense we're already at the top.

We will see LT bonds being crushed when "inflation" arrives in the latter half of this decade.  I don't think it will play out like in the 70's though.  We're stagflationary now, but there is no demand-push inflation which would drive up the price of real assets on top of the hoarding and cost-push inflation.  So I think we will see cost-push inflation AND demand-push inflation AND economic growth simultaneously.  The Fed will have to completely screwup in taking back the monetary base for there to be continual hoarding (always a possibily if those fringe economists currently making a lot of blog malarky float to the top).  Up until that point, gold has the potential to go into the mother of all bubbles.

MG

AdamA wrote:

MachineGhost wrote: That is the risk at the ultimate end of the gold bubble.

Why do you think there is a gold bubble?

I hear a lot of people saying this, and not just about gold, but also about LTT's. 

IMO, when an asset is in a true bubble very few people recognize it. 

*jab jab*

How do you feel about gold now?

The PP has gotten me really looking into the various asset classes, and FOFOA (google it) has some really convincing arguments for gold.

Khisanth wrote: *jab jab*

How do you feel about gold now?

The PP has gotten me really looking into the various asset classes, and FOFOA (google it) has some really convincing arguments for gold.

I like all of the PP assets.

Each has its day in the sun and night in the doghouse.

MediumTex wrote:

Khisanth wrote: *jab jab*

How do you feel about gold now?

The PP has gotten me really looking into the various asset classes, and FOFOA (google it) has some really convincing arguments for gold.

I like all of the PP assets.

Each has its day in the sun and night in the doghouse.

And while each is a thoroughbred (the best in its class), we benefit enormously from the overall mix and the clarity of the strategy.

I guess that makes the PP a mutt. 

MG, what makes you think that all of the monetary expansion we are seeing will ever result in CPI inflation? If all of the freshly printed trillions go to people who deploy them to put people out of work and keep them out of work and poor, then the monetary expansion could both cause wage and CPI deflation and at the same price cause massive gold price inflation. That needn't be tempory. It could be a thousand year long depression .

melveyr wrote: I guess that makes the PP a mutt. 

Yes.  A very good mutt with plenty of hybrid vigor.

The pp is an Australian cattle dog, alert and intelligent, keeping the wandering livestock within the boundaries.

The only bad feeling I'm having about gold is why I didn't buy more of it.

This thread is a great example of why it's important to stay true to the PP's allocation recommendation and to not tinker by trying to time individual assets.

GLD is up almost 12% since the OP posted his concerns.

TripleB, if you want to cure your fear of gold, check out kingworldnews.com...there are regular guests who have been unabashed bulls, as is Eric King himself. Be careful, you may turn into a goldbug!