However, one thing he was unambiguous about is that simply sticking cash in a bank account is not the same thing as holding treasuries. With the FDIC insurance fund holding approximately 1% of what it needs to cover obligations, there's little evidence that it could withstand a bank run that reached "stampede" levels.
I have consciously "bent" this rule in my own holdings. I have an HSA on which I can earn 5% interest. I also have maintained my old CD ladder that I've kept up since well before I started the Permanent Portfolio. These represent, in total, about 25% of my cash holdings. I'd always thought that this was more or less a minor peccadillo and didn't really matter so long as I kept the percentage under control. But then I caught this from MediumTex and reconsidered:
Ouch! I consider swapping TIPS for gold to be an enormous error, one so bad that it would likely wreck the PP's performance. (In fact, looking at past performance, it is clear that it would have.) Seeing CDs mentioned in the same breath made me wonder whether I am a yield-chasing psycho simply asking for trouble.MediumTex wrote: The common theme with all PP tinkering is that we will make a small tweak to the approach with the intention of making it safer, when the actual result is often just the opposite.
People want to swap gold for TIPS.
People want to put their cash into municipal bonds, CDs and agency debt.
So how do others see it? What % of FDIC exposure in CDs and HSAs do you generally consider "okay" for your own Permanent Portfolios (if any)? I'm quite fond of my old CD ladder but if I'm taking more risk (and getting less reward) than I thought, it'd be good to realize that.