Gyroscopic Investing

Gold down 4.5% (CAD).  Silver down 7% (CAD).  Stocks down 1% (TSX)

Yet, for some reason this doesn't bother me at all.  In fact it puts a smile on my face.  What has the Permanent Portfolio done to me?!

I need to trick myself into getting upset about this -- I should be terrified!

This kind of stuff happens with volatile assets.

When you look at a 10 year chart, though, these things rarely show up at all.

Usually Gold spikes when Bernanke speaks. It's actually kind of refreshing that he crashed the Gold market this time!

TheStreet: Gold Prices Plummet as Bernanke Dashes Hopes of More Stimulus

I'm actually kinda excited.  I needed to buy gold this week for my portfolio, and it just got a lot cheaper.  I'll probably put in my order today.

Just when you think that the portfolio is performing as expected, you have a retracement in an asset that erases months of gains. I'll never understand the perspective that the pull-backs are "healthy".

buddtholomew wrote: Just when you think that the portfolio is performing as expected, you have a retracement in an asset that erases months of gains. I'll never understand the perspective that the pull-backs are "healthy".

Today's decline is giving back three weeks of overall PP gains.

Gumby wrote: Usually Gold spikes when Bernanke speaks. It's actually kind of refreshing that he crashed the Gold market this time!

Thanks Gumby.  I had no idea why gold tanked...just randomly clicked on the kitco site.

Maybe I shouldn't make fun of the fear this can have on people, but I was thinking back to how much this would have upset me before I adapted adopted the PP.  Now I get a sick joy out of watching these assets jump around.

Tyler, I agree this might be a good spot to pick up some gold if you're under 25%.  The 60-day-moving average and 200 day moving average are starting to merge.  This could either be a shake-out before the next big leg up, or it could turn over and die.  Either way I'm covered.

http://jessescrossroadscafe.blogspot.com/ says that it is "because it was first day notice when holders of paper futures give notice to the exchange that they intend to take delivery the claims they hold from the Comex warehouse."

Last night Harvey Organ said:

    "This is the first time in quite a while that gold and silver rose big time a day before first day notice. The bankers try and influence our longs not to take delivery so they generally raid. Today was different."


Well, Harvey spoke too soon; it really wasn't different. The metals rallied higher yesterday, and then were smacked down in a very calculated and violent bear raid today.

I really don't know anything about all of this but I do suspect that it is just a dip that is handy if you are buying but will iron out even if you aren't.

stone wrote: http://jessescrossroadscafe.blogspot.com/ says that it is "because it was first day notice when holders of paper futures give notice to the exchange that they intend to take delivery the claims they hold from the Comex warehouse."

Last night Harvey Organ said:

    "This is the first time in quite a while that gold and silver rose big time a day before first day notice. The bankers try and influence our longs not to take delivery so they generally raid. Today was different."


Well, Harvey spoke too soon; it really wasn't different. The metals rallied higher yesterday, and then were smacked down in a very calculated and violent bear raid today.

I really don't know anything about all of this but I do suspect that it is just a dip that is handy if you are buying but will iron out even if you aren't.

Not sure if I buy that.  It seems that gold tanked right around the same time Bernanke was speaking.  If he is actually serious about limiting QE, then this could be painful for gold (and stocks).  Although I have no doubt that he is lying, and QE will continue as expected.  What a funny game this whole thing is.

Gosso wrote: Tyler, I agree this might be a good spot to pick up some gold if you're under 25%.  The 60-day-moving average and 200 day moving average are starting to merge.  This could either be a shake-out before the next big leg up, or it could turn over and die.  Either way I'm covered.

You're right, with the PP either way you are covered.

I wouldn't worry about picking up some gold in my PP unless my gold exposure was flirting with 15%.

FWIW, in my VP I did buy some gold stocks and silver today. 

murphy_p_t wrote: HB Reader...why are you favoring mining equities over the metal @ this time for your VP?  I ask because they have massively underperformed the metals during the 11 year bull market...a few years ago, having observed this, I backed off adding $$ to the equities & leaned heavily to the metal itself

Sounds like you're buying high and selling low 

HB Reader, you're right about not rebalancing until gold hits 15%, but personally I'm still accumulating so I buy the lagging asset and bring them back to 25% that way.

murphy_p_t wrote: HB Reader...why are you favoring mining equities over the metal @ this time for your VP?  I ask because they have massively underperformed the metals during the 11 year bull market...a few years ago, having observed this, I backed off adding $$ to the equities & leaned heavily to the metal itself

You are certainly right about the last 11 years or so, but that underperformance is one of the reasons I think gold stocks are undervalued.

In my experience, years of lagging behind the actual metal itself is one (but obviously not the only) precondition to a bull market in these stocks.  Most investors know the actual business of discovering and producing gold is fraught with risk and instinctively shy away from mining companies, but that is exactly what sets up some spectacular bull markets.  We are talking about the VP here.       

Interesting to look back at this thread from February. Check out the original post. The graph here is current, no longer from February. Look out below?!!

What caused the spike? My theory is that it is because I have been waiting for the gold price to drop before doing a large semiannual purchase! What to do now? Wait until it goes higher or suck it up and try to be more agnostic next time?

BearBones wrote: Interesting to look back at this thread from February. Check out the original post. The graph here is current, no longer from February. Look out below?!!

What caused the spike? My theory is that it is because I have been waiting for the gold price to drop before doing a large semiannual purchase! What to do now? Wait until it goes higher or suck it up and try to be more agnostic next time?

Ignore individual asset movements.

It will drive you crazy, especially if you think of yourself as a very intelligent person.

These volatile asset price movements eat intelligent people for breakfast.

I think that highly intelligent people often struggle more at investing than others because they are so accustomed to being able to master things easily and improve upon the techniques of others.  When it comes to investing, though, it seems like high intelligence is not of much use unless one has that rare ability to be consistently successful as a speculator.  To me, it's better to find a good strategy like the PP and stick with it through the ups and downs and be willing to accept the returns that the strategy provides without feeling the need to constantly tinker with it.

I think that part of what makes leaving an investment strategy alone and letting it work is that there are so many other areas of life where tinkering is tremendously valuable.  We just have this urge to tinker that is often rewarded in other areas.  When it comes to investing, though, where the game is basically rigged against most small investors, tinkering just seems to make it worse.

MediumTex wrote: I think that part of what makes leaving an investment strategy alone and letting it work is that there are so many other areas of life where tinkering is tremendously valuable.  We just have this urge to tinker that is often rewarded in other areas.  When it comes to investing, though, where the game is basically rigged against most small investors, tinkering just seems to make it worse.

This is so very true. 

Just find something else to do. 

So true indeed. Honestly, I hang out here mostly for the intellectual stimulation! Once your PP is off the ground, it mostly takes care of itself.

TennPaGa wrote:

Pointedstick wrote: Once your PP is off the ground, it mostly takes care of itself.

That's what she said.