The Peter Schiff portfolio: an evolutionary offshoot of the PP

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mathjak107
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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by mathjak107 » Sun Feb 19, 2023 4:07 am

seajay wrote:
Sat Feb 11, 2023 7:39 am
Gold continues to be a non-fiat global currency that the US dollar aspires to peg to, but that periodically has and likely will continue fail to do so reliably. Chances are that as/when divergence occurs that they will move in opposite directions. Yellen has been attempting to at least in part align US dollar with gold since 2013, following prior financial crisis type decoupling (print/spending). Failure to do so could lead to a flight from dollars. That alignment could continue for years, even decades, gold doing little, maybe even declining as strong faith in US dollars prevails. But sooner or later another decoupling will occur, always has, always will. It is at such times that portfolio 'insurance' pays. If 66 stock value halves to 33, 33 gold values doubles to 66, conceptually a 67/33 stock/gold investor could opt to go all-in, sell their gold to buy stock shares and triple up on the number of shares being held. But that's a timing call, stocks could continue to halve yet again. Simple restoration to 67/33, doubling up of the number of shares held, whilst still holding a third in gold ... is the more neutral/defensive choice.

Whilst the 'drag' cost of 'paying' for insurance (holding gold), broadly tends to be relatively light. Little different to the drag if bonds were held instead of gold.
Except gold has actually done better than bonds .

You would be hard pressed to find a time frame the last two decades or so where equities and bonds beat equities and gold
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