The GOLD scream room

Discussion of the Gold portion of the Permanent Portfolio

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dualstow
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Re: The GOLD scream room

Post by dualstow » Wed Apr 26, 2017 7:50 pm

Oh, manipulate schmanipulate. Gold's gonna do what gold's gonna do. O0
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Re: The GOLD scream room

Post by dualstow » Wed Apr 26, 2017 8:34 pm

Exactly! Now stretch that information out into a newsletter. :)
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Re: The GOLD scream room

Post by grapesofwrath » Sat Apr 29, 2017 5:36 pm

I'm light on gold (~10%) and I get seduced by boglehead logic on the uselessness of the stuff but then i read some tweets and think history and other worlds and i struggle to refrain myself from getting some more... Its such torture.
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Re: The GOLD scream room

Post by ochotona » Mon May 01, 2017 1:08 pm

It is finished (my buying, that is).
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Re: The GOLD scream room

Post by Cortopassi » Mon May 01, 2017 1:18 pm

Ocho, I believe now that your buying is complete, next stop is $1200...

Damn those powers that be hating gold and such. ;D They're never going to let it rise. At least it is only a portion of the PP!

And as usual, the silver portion is getting whacked even more. Down more than 10% in 2 weeks.

Starting to feel like last year's PP performance. Big early run up, then drip drip. But at least we ran until July. This is too soon!
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Re: The GOLD scream room

Post by ochotona » Mon May 01, 2017 1:25 pm

Cortopassi wrote:Ocho, I believe now that your buying is complete, next stop is $1200...
No doubt !!!
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Re: The GOLD scream room

Post by mathjak107 » Mon May 01, 2017 1:39 pm

gold is more timing the market than time in the market
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Re: The GOLD scream room

Post by stuper1 » Mon May 01, 2017 2:37 pm

Not if you are using it as Black Swan insurance.
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Re: The GOLD scream room

Post by mathjak107 » Mon May 01, 2017 3:52 pm

well than remember you can't complain about the value dripping away once the black swan goes bye bye as typically happens over and over .
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Re: The GOLD scream room

Post by dualstow » Mon May 01, 2017 5:46 pm

ochotona wrote:It is finished (my buying, that is).
So that's what Jesus was talking about.
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Re: The GOLD scream room

Post by stuper1 » Mon May 01, 2017 10:26 pm

stuper1 wrote:Not if you are using it as Black Swan insurance.
mathjak107 wrote:well than remember you can't complain about the value dripping away once the black swan goes bye bye as typically happens over and over .

The last time I checked, any type of insurance is not free. But that doesn't mean that I don't have any insurance on my house, car, life, etc.
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Re: The GOLD scream room

Post by mathjak107 » Tue May 02, 2017 2:59 am

but we all pick and choose when and what to insure .

i own gold but i do take profits off the table every so often after a run up because of an event or swan and reduce holdings until a drop in price . if you wait for rebalancing time you will usually lose a good portion of what you gain each time .
unlike other assets like stocks and real estate which tend to respond well to time in the market , to get better performance out of gold it takes some timing of the markets . not totally in or out but i lighten up at times until i see a drop and then buy it back . wash and repeat .

but that is my style ,yours can be different . i just found if you get a nice pop in gold if i don't capitalize on it it rarely sticks around .
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Re: The GOLD scream room

Post by Cortopassi » Tue May 02, 2017 8:16 am

Who needs insurance. The market never goes down.... >:D
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Re: The GOLD scream room

Post by mathjak107 » Tue May 02, 2017 8:25 am

over the long term it really hasn't . over any typical accumulation period you would have done just fine .
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Re: The GOLD scream room

Post by Cortopassi » Tue May 02, 2017 8:37 am

If I had balls of steel, I agree completely, but every downturn I got scared out, so for me, the nice S&P rise over decades with the major bumps in the road in 2001 and 2008 didn't matter. It was the bumps that hurt badly.

Look at those magnitudes! Even the 1987 crash is merely a blip compared to the last two. If/when 2001/2008 repeats, the valley is going to be freaking huge and people will be jumping out windows. But there is so much control now, even from just 9 years ago, that it will be a sight to see when it happens and listen to the jawboning about how we have to save the economy and have to implement x and y and z measures to stabilize the all important stock market. I suspect there will be bail ins, the saving of too big to fail bansk for the good of the American people, nationalization of retirement accounts, etc. Dark vision, eh?

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Re: The GOLD scream room

Post by mathjak107 » Tue May 02, 2017 8:41 am

i was always a 100% equities investor right up until about 5 years from retiring . but i still run 40-50% equities all the time .

as i mentioned earlier there is no data that supports the fact gun shy folks even stick to more conservative models when they are down .

losing money always brings out bad investor behavior on all levels of volatility .
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Re: The GOLD scream room

Post by Cortopassi » Tue May 02, 2017 8:45 am

The only data I need is my own, and although it has only been a bit over 3 years, I feel this is a portfolio I can stick with.
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Re: The GOLD scream room

Post by stuper1 » Tue May 02, 2017 8:49 am

mathjak107,

You've done well, and I'm happy for you, but do you ever consider that maybe you were a bit lucky in the sense that when the markets were down you didn't also lose your job and have to start relying on "retirement savings" to tide you over until you could find a new job. For some people nowadays, it has taken them years to find a new job, and even then, it may not pay as well as the old job.

I think this is one of the big reasons why many people want to stay away from a 100% equities portfolio during the accumulation phase.
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Re: The GOLD scream room

Post by mathjak107 » Tue May 02, 2017 9:06 am

lost my job in 2009 .
did you know that even a retiree who was 100% equities (which i don't recommend ) would have had a very very high success rate spending down from 100% equities in both good and bad times .

the reason being the drag from cash and bonds weights things down so much in the up markets so 100% equities develops a much larger cushion .

spending down when you have high level of equities even in a down market is much a do about nothing .

100% equities has a 93% success rate over every rolling 30 year period since 1871 . a 50/50 mix is optimal and was 98% . however going out longer 100% equities takes the prize . it has beaten 50/50 in 40 year retirement periods .

in any case unless you get whacked day 1 in retirement in a very long extended downturn spending from equities is a meaning less event . those who retired in 2008 are on par with every other average group this many years in .

that is what a safe withdrawal rate is based on . it counts on bad years and you spending down . cash buffers actually hurt you and cut income compared to just rebalancing a normal portfolio to create spending cash . if that portfolio is 100% equities and diversified in those equities it really is not a problem financially. mentally is a different issue !

drops are a temporary shorter term condition and mitigating those temporary drops permanently hurts long term gains so for a long term investor short term mitigation becomes meaningless , except perhaps once again , mentally .
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Re: The GOLD scream room

Post by stuper1 » Tue May 02, 2017 11:22 am

These are interesting thoughts that I have not heard before and find to be let's say non-intuitive. I'm more familiar with phrases like "if you suffer a 50% decline, you then need a 100% increase to break even".

Do you have any good references to point me to that discuss what you're saying?

Thanks.
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Re: The GOLD scream room

Post by ochotona » Tue May 02, 2017 12:17 pm

If you look at portfoliocharts.com you will see 100% stock for retirees only works for very rich retirees who can take the drawdowns.
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Re: The GOLD scream room

Post by mathjak107 » Tue May 02, 2017 12:32 pm

wrong . the balance has no relationship to success rate .

drawing 4% inflation adjusted is mathematically the exact same success rate regardless of the amount . it is a percentage of draw based .

you can throw any balance you want in to firecalc and you will see it does not change . mathematically it can't .

what might determine what you do safely is the ratio of discretionary to non discretionary spending in your budget .

that is not wealth dependent either , it is just budget and expense related ..

if you ever needed to cut back because things were worse than the worst case scenario's planned around you may have to take a pay cut . if you planned a budget where everything is a need and not a want you can be in trouble .

in fact we have a very size-able portfolio and when we made our retirement plan we planned around staying in queens in nyc . i was able to do a budget that was almost 50% discretionary so if need be we can comfortably cut back if unexpected expenses hammer us .

on the other hand we could have taken the same budget and draw and lived in manhattan but that would have cut the ratio to a level i was not comfortable with and did not leave a good margin for cutting back .,. so in either case the lifestyle is based on the same budget but the flexibilty is what varies .

those with no discretionary spending should not be in equities at all for that matter regardless of wealth .
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Re: The GOLD scream room

Post by mathjak107 » Tue May 02, 2017 12:53 pm

stuper1 wrote:These are interesting thoughts that I have not heard before and find to be let's say non-intuitive. I'm more familiar with phrases like "if you suffer a 50% decline, you then need a 100% increase to break even".

Do you have any good references to point me to that discuss what you're saying?

Thanks.
michael kitces looked in this



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Yet a deeper look reveals that if a 2008 or even a 2000 retiree had been following the 4% rule since retirement, their portfolios would be no worse off than any of the other “terrible” historical market scenarios that created the 4% rule from retirement years like 1929, 1937, and 1966. To some extent, the portfolio of the modern retiree is buoyed by the (only) modest inflation that has been occurring in recent years, yet even after adjusting for inflation, today’s retirees are not doing any materially worse than other historical bad-market scenarios where the 4% rule worked.

Ultimately, this doesn’t necessarily mean that the coming years won’t turn out to be even worse or that the 4% rule is “sacred”, but it does emphasize just how bad the historical market returns were that created it and just how conservative the 4% rule actually is, and that recent market events like the financial crisis are not an example of the failings of the 4% rule but how robustly it succeeds!

https://www.kitces.com/blog/how-has-the ... al-crisis/
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Re: The GOLD scream room

Post by Libertarian666 » Wed May 03, 2017 2:09 pm

I can't believe that the price is about where I sold a bunch in March. What is wrong with "those people?" :P
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Re: The GOLD scream room

Post by mathjak107 » Wed May 03, 2017 2:38 pm

i bought back today what i sold at a good couple of thousand dollar difference a few weeks ago . .

wash and repeat .
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