Gyroscopic Investing

Didn't realize this year would be the first down year for
gold since it was down 6% in the year 2000.
That's not bad at all.
Even Alabama football can have a bad year.

There's always the chance for a "Hail Mary"...just ask Auburn.

Annie, you've got more gold threads than Rumpelstiltskin. 

dualstow wrote: Annie, you've got more gold threads than Rumpelstiltskin. 

Classic

I was thinking the gold in my portfolio had been down for at least five years.
Then I remembered I started the portfolio in early 2013.

MangoMan wrote: What do you make of this? Is it relevant to anything, or just nonsense data?

Interesting you point this chart out, it makes a good case for a bear market in gold. However:

I've studied this one on and off for a few years (including dow:silver, hui:gold, gold:silver etc), and have analyzed the numbers using fibonacci. I find this type of analysis tends to work well in accounting for the price action and plotting potential targets.

Regarding dow:gold, the low was in 1980 (Dow:gold of 1), and the high in 2000 (dow:gold of 42)

The relevant retracement level off the bottom (0.382) is dow:gold of 16, almost exactly $1000 gold. In theory if we don't crash through that point, Gold is technically still in a positive trend against the dow. The "no doubt about it, pack up your gold and go home" threshold would be fib 0.618 (dow:gold of 26), which is gold of about $611 if dow stays around 15,900.

This is all a big "if" though. The Dow is pretty frothy and in the wake of another debt ceiling debate , who knows how this is playing out!?

My concern is that gold can stay stuck or down for a very long time. So, given this fact and a scenario where the stock market is at highs and providing small growth going forward, a PP can look really flat. Not so bad if you are young enough.  If  you are entering in retirement and start depleting your money without replacing itself, this is an issue. Imagine drawing out 4% a year while your flat for say, seven years. When it starts to grow again, the principle is so far down you can't recover the starting principle number. I think the answer, if you are not going to abondon PP, its a very speculative VP and hope your right in your picks. Any comments?

Edit: bad math. Corrections coming later…

Pointed:

Is the math correct?
Lost money the first two years(real),withdrew $60,300,
and the balanced increased by $15,000?
Thanks ..

Oops, the math is indeed not correct. Correcting…

No problem.
We appreciate all your charting..

annieB wrote: No problem.
We appreciate all your charting..

Ditto.  Whatever the result, it's interesting info.

Okay, here are the more correct charts and graphs. The resilience of the portfolio is not as dramatic, but still not bad IMHO.

The situation: 600k PP, 24k/yr withdrawal rate (4%), inflation-adjusted each year. Market crash during the first year of withdrawals, leading to 4 years of negative real returns for the PP followed by 11 years of low to average performance (Note: made-up performance numbers).

Not bad. I could live with that.

Posting this result for AnnieB's benefit. Gold up 2.3% today. Certainly not a Hail Mary, but a completion and perhaps a first down.

What I've been seeing recently (the last few months) with the PP is a sawtooth pattern with quick spikes up and slower glides down, repeat as needed.

Kinda like this: |\|\|\|\

I blame gold but that's just a gut feeling :-P

Yes, I too have observed the same pattern. Unfortunately, the spikes attributed to gold are from lower lows. We now need follow through to reach higher lows, a lower high and ultimately a higher high. Say that 5 times fast 

You know Gold hit $1,180 back in late June. So it's basically up over 5% in just under six months. This is not outstanding, but to me it looks like the trend is no longer down but sideways.

I really think there is a high likelihood that it dips to a new low this month if people harvest tax losses. There should be a lot of temporary selling based on that.

These would probably be stronger hands though, selling to offset stock gains, and would re-buy early next year to maintain asset allocation so I'm not worried about it.

If Gold doesn't make a new low here in Dec I think that bodes very well for 2014. We'll see. I think there are very few speculative longs anymore with a lot of short interest. They have to cover at some point. It doesn't matter if it keeps going sideways. If they have resources tied up in the shorts, they will start covereing at some point. Hopefully margin calls and stops get blasted.

This might be 100% wishful thinking. I've bought nothing but GDX for 6 months. I just bought it again at $21.70.

Three weeks to go in 2013.
What if the portfolio goes positive after all our bitching ?
Actually,I could live with that...

annieB wrote: Three weeks to go in 2013.
What if the portfolio goes positive after all our bitching ?
Actually,I could live with that...

I think it will take a major gold rush for that. Stocks have gone so far so fast and I don't see where the pressure will come for yeilds on the 30 to fall significantly.

Now if Yellen delivers a big Xmas present and says QE going to 120 BN a month........

I think she'll be a grinch though and save that for next year.

To be honest, it doesn't really matter much to me anymore as I am comfortable with the permanent portfolio. I'm not sure when things changed for me, but perhaps it was the realization that nothing in life is certain (except death and taxes as the adage goes). I am now more focused on sticking to the plan, which involves re-balancing when appropriate, loss harvesting and minimizing taxes. The rest is not up to me after all.

Damn, I guess I will have to find something else to bitch about. There's always work and politics.

buddtholomew wrote: Damn, I guess I will have to find something else to bitch about. There's always work and politics.

Those damned Demopublictarians!

Budd, it has been fun watching you evolve on this forum.
Welcome to the mellow group. Not necessarily rich, all of us, but mellow.

Honored to a member of such a fine group. Do we have a secret handshake?

buddtholomew wrote: Honored to a member of such a fine group. Do we have a secret handshake?

It's cold season, so we have a secret fist bump routine.