The GOLD scream room

Discussion of the Gold portion of the Permanent Portfolio

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Dieter
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Re: The GOLD scream room

Post by Dieter » Fri Jun 22, 2018 12:39 am

Or working to improve income....

Financially I'd be better of without Gold (I think LTT+ "cash" has been a wash for me vs TBM), but worry less. Even if do still spend too much time, um , "reviewing"....

Did put in to buy my first TBill at the next auction. :)
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buddtholomew
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Re: The GOLD scream room

Post by buddtholomew » Fri Jun 22, 2018 5:38 pm

WhiteElephant wrote:
Thu Jun 21, 2018 2:54 pm
When you start a PP you know that gold can easily go down for 10-20 years. As long as one or more other assets make up for it. PP has performed exactly as expected.

It's not a portfolio to make money, it's for protecting your money.
There was a lot of talk about 'solid 3-5% real returns', but I don't think Browne ever said something like that himself. It was always about protecting what you can't afford to lose. So far the PP has done exactly that, during the 'lost decade' and this bull run.

What are your expectations Budd?
That’s a good question.

I’ve always assumed comparable returns to a 60/40 allocation with lower volatility and reduced drawdowns.
From that perspective the PP has fulfilled the objective.

What I can’t seem to comprehend is the agnostic nature of 4x25 with a 25% allocation to Gold.
I hold all 25% in taxable for an overall 7.5% portfolio allocation.
I “think” if some of the Gold was in tax-deferred I may feel more inclined to just let it be.
I hold REIT in retirement accounts and couldn’t care less what it is doing on a daily basis.
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dualstow
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Re: The GOLD scream room

Post by dualstow » Fri Jun 22, 2018 7:00 pm

In the archives, Harry said the 25% share was really a guideline. You don’t have to hold that much. And of course, we get around it by holding a vp.
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ochotona
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Re: The GOLD scream room

Post by ochotona » Fri Jun 22, 2018 7:18 pm

The best way to own gold is some way where its a little bit hard to get out of the position; physical gold. ETFs are too easy to sell. You want it a bit locked up. Then you won't worry about it. The problem people have is we have too many choices.

Even that ultra gold bull and generalized doomsayer Jim Rickards says most people should have 10% gold, and if you're really a fan then up to 20%. He never mentions 25%. I'm happy at 10%. If it takes off like Jim thinks it might, and they sky really does fall, then I won't sell until I hit a 35% rebalancing band, and take it back to 25%. That probably happens at $5,000 per ounce.
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Mark Leavy
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Re: The GOLD scream room

Post by Mark Leavy » Fri Jun 22, 2018 8:05 pm

I run what I loosely call a 2x Permanent Portfolio.

45% 30 year bonds.
35% Physical Gold
15% Inverse Volatility (Currently SVXY - now reduced to 50% inverse of VIX)
05% T-Bill Money Market Fund (Mostly to collect bond dividends and to provide some grease for transactions)

Plus (and this is a big plus) 3 Year's living expenses in cash spread across multiple checking accounts.

So... based on this, you could say that I think the proper PP gold allocation is about 17.5%

Mark
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ochotona
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Re: The GOLD scream room

Post by ochotona » Sat Jun 23, 2018 6:13 am

ARGHHHH If I had converted my gold IRA to a Roth this week instead of months ago, my tax bill would've been $1,100 less!
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pugchief
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Re: The GOLD scream room

Post by pugchief » Sat Jun 23, 2018 7:36 am

Mark Leavy wrote:
Fri Jun 22, 2018 8:05 pm
I run what I loosely call a 2x Permanent Portfolio.

45% 30 year bonds.
35% Physical Gold
15% Inverse Volatility (Currently SVXY - now reduced to 50% inverse of VIX)
05% T-Bill Money Market Fund (Mostly to collect bond dividends and to provide some grease for transactions)

Plus (and this is a big plus) 3 Year's living expenses in cash spread across multiple checking accounts.

So... based on this, you could say that I think the proper PP gold allocation is about 17.5%

Mark
Mark, could you clarify? Is SVXY a reasonable proxy for 2x stocks?
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ochotona
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Re: The GOLD scream room

Post by ochotona » Sat Jun 23, 2018 11:30 am

Inverse and leveraged ETFs are dangerous sob's to buy and hold. I had my face ripped off once.
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eufo
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Re: The GOLD scream room

Post by eufo » Sat Jun 23, 2018 4:16 pm

ochotona wrote:
Fri Jun 22, 2018 7:18 pm
The best way to own gold is some way where its a little bit hard to get out of the position; physical gold. ETFs are too easy to sell. You want it a bit locked up. Then you won't worry about it.
I think I agree here. Since starting to convert to physical, I feel much less attached to the daily prices. My gold is my gold. If the price falls, I'll just end up owning even more.

I don't think I could've reached this point early on. I wanted to easily move in and out of my position. Now I want stability. I can take this store of value with me wherever I go and it cannot be easily erased like the numbers I hold in my accounts. It has its own frailties, but they are unique and not correlated with the frailties of my other holdings.
Don't agree with me too strongly or I'm going to change my mind
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buddtholomew
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Re: The GOLD scream room

Post by buddtholomew » Sat Jun 23, 2018 7:23 pm

eufo wrote:
Sat Jun 23, 2018 4:16 pm
ochotona wrote:
Fri Jun 22, 2018 7:18 pm
The best way to own gold is some way where its a little bit hard to get out of the position; physical gold. ETFs are too easy to sell. You want it a bit locked up. Then you won't worry about it.
I think I agree here. Since starting to convert to physical, I feel much less attached to the daily prices. My gold is my gold. If the price falls, I'll just end up owning even more.

I don't think I could've reached this point early on. I wanted to easily move in and out of my position. Now I want stability. I can take this store of value with me wherever I go and it cannot be easily erased like the numbers I hold in my accounts. It has its own frailties, but they are unique and not correlated with the frailties of my other holdings.
Good points; avoids marking to market daily.
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Mark Leavy
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Re: The GOLD scream room

Post by Mark Leavy » Sat Jun 23, 2018 7:25 pm

pugchief wrote:
Sat Jun 23, 2018 7:36 am
Mark Leavy wrote:
Fri Jun 22, 2018 8:05 pm
I run what I loosely call a 2x Permanent Portfolio.
...
Mark, could you clarify? Is SVXY a reasonable proxy for 2x stocks?
Depends on what you mean by "reasonable". As ochotona implies, SVXY is a dangerous thing and can quickly go to zero. (Much like XIV did recently) But, as to your question, yes. SVXY is inverse volatility, and moves "approximately" at some multiple of SPY. Not every day and not exactly, but over time, I have found the above mix to have fairly consistent performance to a 2X PP.

You just really have to understand that SVXY is NOT a leveraged version of SPY (it is volatility) and in the case of a market crash, it really moves hard against you.
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ochotona
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Re: The GOLD scream room

Post by ochotona » Sat Jun 23, 2018 8:55 pm

buddtholomew wrote:
Sat Jun 23, 2018 7:23 pm
Good points; avoids marking to market daily.
If houses were marked-to-market every day, some people would not be able to stand that information flow, and they'd remain renters.
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