The GOLD scream room

Discussion of the Gold portion of the Permanent Portfolio

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mathjak107
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Re: The GOLD scream room

Post by mathjak107 » Wed Dec 15, 2021 4:20 am

No one knows what will make gold do well …so far it stumbled where it should have gotten traction .

I cant see committing more than 5 to 10% gold ….there is no economic outcome it can reasonably be counted on other than a collapse of the dollar and if I had to put a percentage on that I would say 5% chance , hence the 5% position in gold.

I wouldn’t load up on umbrellas to sell in the dessert on the chance it may rain one day either ….

My guess is with the fed tapering and rate hikes expected gold may see 1600 before 1800….I will still hold my 5% in gold but no way would I hold 25%. I would sooner throw the gold money in cash instruments if i wanted less volatility
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Re: The GOLD scream room

Post by mathjak107 » Wed Dec 15, 2021 5:40 am

Exactly

“Today's November producer price index report showed a rise of 0.8% from October and a rise of 9.6%, year-on-year. U.S. stock indexes also sold off on that news, yet gold and silver could muster no safe-haven demand. Today is one of those trading days that has many metals watchers scratching their heads.”

https://www.kitco.com/news/2021-12-14/G ... bulls.html
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I Shrugged
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Re: The GOLD scream room

Post by I Shrugged » Wed Dec 15, 2021 8:23 am

Gold has thousands of years as a store of value. How it does next week is meaningless.
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Re: The GOLD scream room

Post by mathjak107 » Wed Dec 15, 2021 8:35 am

Unfortunately we don’t have thousands of years for it to be profitable.

A negative return on any asset directly effects many of us since each years draw is based on that portfolio value or the raises on the standard 4% swr are effected by that value .
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Re: The GOLD scream room

Post by Cortopassi » Wed Dec 15, 2021 9:26 am

FYI, my silver portion (5%) is right on the edge of hitting its lower band. I will be adding a good amount of silver in Jan.

Am I crazy? Maybe. But the volatility has been very good (which is another aspect of the PP we don't seem to talk much about). I am still in accumulation mode, and SLV has been, I think, the only asset that caused a rebalance last year because it hit my upper band, spiked in Aug 2020.
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Re: The GOLD scream room

Post by barrett » Wed Dec 15, 2021 9:49 am

Cortopassi wrote:
Wed Dec 15, 2021 9:26 am
Am I crazy?
Yes, Cortopassi. You are a silver-hoarding nut job! O0

I am curious if you hold silver in tax-advantaged accounts as well as taxable. If it's all in taxable, will your January re-balance have negative tax repercussions? You will presumably be selling stocks, right?
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Re: The GOLD scream room

Post by Cortopassi » Wed Dec 15, 2021 11:49 am

barrett wrote:
Wed Dec 15, 2021 9:49 am
Cortopassi wrote:
Wed Dec 15, 2021 9:26 am
Am I crazy?
Yes, Cortopassi. You are a silver-hoarding nut job! O0

I am curious if you hold silver in tax-advantaged accounts as well as taxable. If it's all in taxable, will your January re-balance have negative tax repercussions? You will presumably be selling stocks, right?
SLV in a couple IRAs. I have one taxable brokerage account in which I have some taxable dividends, but when I can almost 100% of my buying/selling happens in retirement accounts.
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Re: The GOLD scream room

Post by buddtholomew » Wed Dec 15, 2021 12:39 pm

Let’s see if gold can lead the charge lower today.
Gold down .6%, REITs up .8%
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Re: The GOLD scream room

Post by buddtholomew » Wed Dec 15, 2021 2:53 pm

Well at least it’s Green.
That’s a miracle in and of itself.
Let’s rejoice.
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Re: The GOLD scream room

Post by seajay » Wed Dec 15, 2021 5:18 pm

The PP is two barbells, 1 and 20 year treasuries, that combine to a central 10 year bullet, and a stock and gold barbell, fiat/commodity currencies, polar opposite assets, that combine to a central bullet, not that dissimilar to a currency unhedged global bond bullet.

I like small cap value for stock holdings and from that perspective 2021 to end of November saw a 50/50 SCV/gold barbell yield a 7.4% nominal gain, so as a bullet is countering inflation reasonably. Whilst gold is down 5% in price since the start of 2021 (to end of November), rebalancing would see 13% more ounces of gold being held. 13% more ounces priced to -5% lower price = +7.4%

All just part of how the stock/gold barbell works. Over some periods you might see ounces of gold held remaining much the same and the price having risen; Over other periods you might see the price having declined but multiple more ounces having been accumulated; Or other such combinations. The PP's cogs and wheels all mesh and work fine, try swapping out one cog for another different choice and the engine will mangle. Attempts at supercharging and subsequent mangled engines are topics best discussed on other boards.
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Re: The GOLD scream room

Post by mathjak107 » Wed Dec 15, 2021 7:00 pm

The ten year bond behaves differently then the barbel does .

For one the interest rate is higher on the ten year since it is at 1.46 and the 30 year is 1.86 and cash is zero so that is .93% …so interest is way less .

The longer term bonds trade more on fear ,greed and perception so their moves tend to be more pronounced as well , so comparing to a 10 year bond is not going to be the same
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Re: The GOLD scream room

Post by seajay » Wed Dec 15, 2021 7:26 pm

mathjak107 wrote:
Wed Dec 15, 2021 7:00 pm
The ten year bond behaves differently then the barbel does .

For one the interest rate is higher on the ten year since it is at 1.46 and the 30 year is 1.86 and cash is zero so that is .93% …so interest is way less .

The longer term bonds trade more on fear ,greed and perception so their moves tend to be more pronounced as well , so comparing to a 10 year bond is not going to be the same
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Re: The GOLD scream room

Post by mathjak107 » Thu Dec 16, 2021 2:53 am

Looking at some other time frames we get

From 2000 barbell 5.16 , 10 yr 5.12

From 2008 barbell 4.25% , 10 year 3.98

From 2010 barbell 4.26 , 10 year 3.97

From 2015 Bar bell 3.23 , 10 year 2.91

From 2018 barbell 4.44 , 10 year 4.01

From 2020 barbel 4.71 , 10 year 3.55


So you can see the barbel moves more than the 10 year
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Re: The GOLD scream room

Post by seajay » Thu Dec 16, 2021 7:17 am

Code: Select all

Year_10yrT___10yr____Inflation_STT/LTT___10yrT___STT___LTT
_____yield___Ladder____________barbell___fund
_____(year
_____average)
1962_3.95
1963_4.00
1964_4.19
1965_4.28
1966_4.93
1967_5.07
1968_5.64
1969_6.67
1970_7.35
1971_6.16
1972_6.21____5.22%
1973_6.85____5.45%
1974_7.56____5.74%
1975_7.99____6.07%
1976_7.61____6.44%
1977_7.42____6.71%
1978_8.41____6.95%____9.02%____0.90%___-0.74%____3.35%___-1.55%
1979_9.43____7.22%___13.29%____2.99%____1.83%____8.08%___-2.10%
1980_11.43___7.50%___12.52%____1.91%___-1.29%____8.81%___-4.99%
1981_13.92___7.91%____8.92%____7.46%____5.28%___14.26%____0.65%
1982_13.01___8.68%____3.83%___34.61%___39.57%___22.12%___47.10%
1983_11.10___9.36%____3.79%____3.35%____2.30%____8.00%___-1.29%
1984_12.46___9.79%____3.95%___15.12%___14.87%___14.01%___16.24%
1985_10.62__10.28%____3.80%___25.37%___29.85%___13.83%___36.90%
1986_7.67___10.54%____1.10%___20.61%___21.35%___10.35%___30.87%
1987_8.39___10.55%____4.43%____0.93%___-2.64%____4.78%___-2.92%
1988_8.85___10.64%____4.42%____7.41%____6.90%____5.67%____9.15%
1989_8.49___10.69%____4.65%___14.71%___17.84%___11.48%___17.93%
1990_8.55___10.59%____6.11%____7.85%____7.70%____9.92%____5.78%
1991_7.86___10.31%____3.06%___14.46%___18.91%___11.49%___17.43%
1992_7.01____9.70%____2.90%____7.08%____7.23%____6.75%____7.41%
1993_5.87____9.10%____2.75%___11.55%___12.97%____6.31%___16.78%
1994_7.09____8.58%____2.67%___-3.76%____-7.19%__-0.48%___-7.04%
1995_6.57____8.04%____2.54%___21.10%___25.55%___12.11%___30.09%
1996_6.44____7.64%____3.32%____1.57%____0.00%____4.39%___-1.26%
1997_6.35____7.51%____1.70%___10.21%___11.97%____6.51%___13.90%
1998_5.26____7.31%____1.61%___10.21%___14.64%____7.36%___13.05%
1999_5.65____6.95%____2.68%___-3.40%___-7.83%____1.85%___-8.66%
2000_6.03____6.67%____3.39%___14.28%___17.28%____8.83%___19.72%
2001_5.02____6.41%____1.55%____6.05%____5.40%____7.80%____4.31%
2002_4.61____6.13%____2.38%___12.35%___15.45%____8.02%___16.67%
2003_4.01____5.89%____1.88%____2.53%____0.15%____2.38%____2.68%
2004_4.27____5.70%____3.26%____4.07%____4.50%____1.03%____7.12%
2005_4.29____5.42%____3.42%____4.19%____3.01%____1.77%____6.61%
2006_4.80____5.19%____2.54%____2.75%____2.19%____3.77%____1.74%
2007_4.63____5.03%____4.08%____8.56%___10.42%____7.89%____9.24%
2008_3.66____4.86%____0.09%___14.60%___20.53%____6.68%___22.51%
2009_3.26____4.70%____2.72%___-5.31%__-10.17%____1.44%__-12.06%
2010_3.22____4.46%____1.50%____5.78%____7.92%____2.63%____8.93%
2011_2.78____4.18%____2.96%___15.77%___16.24%____2.26%___29.28%
2012_1.80____3.95%____1.74%____2.08%____2.73%____0.69%____3.46%
2013_2.35____3.67%____1.50%___-6.56%___-8.57%___-0.10%__-13.03%
2014_2.54____3.51%____0.76%___12.99%___10.63%____0.71%___25.27%
2015_2.14____3.33%____0.73%___-0.54%____1.12%____0.45%___-1.54%
2016_1.84____3.12%____2.07%____1.10%____1.00%____1.00%____1.21%
2017_2.33____2.82%____2.11%____4.49%____2.39%____0.40%____8.59%
2018_2.91____2.59%____1.91%___-0.28%____0.99%____1.35%___-1.90%
2019_2.14____2.52%____2.29%____8.86%____8.03%____3.59%___14.13%
2020_0.89____2.40%____1.36%___11.12%___10.01%____3.96%___18.29%
2021_1.45____2.17%

Average______6.71%____3.43%____7.70%____7.91%____5.99%____9.41%
Median_______6.95%____2.72%____7.08%____6.90%____5.67%____7.41%
Stdev________2.64%____2.78%____8.33%___10.40%____4.91%___13.28%
CAGR_________6.68%____3.39%____7.40%____7.44%____5.88%____8.65%
(1978-2020 inclusive)				
Barbell 1978 to 2020 inclusive had a lower yearly Stdev. than the fund.
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Re: The GOLD scream room

Post by barrett » Thu Dec 16, 2021 7:21 am

mathjak107 wrote:
Wed Dec 15, 2021 7:00 pm
The ten year bond behaves differently then the barbel does .
But seejay was writing about a STT/LTT barbell with the LTTs being 20-year bonds. At least that is my understanding.
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Re: The GOLD scream room

Post by mathjak107 » Thu Dec 16, 2021 7:33 am

He used long term treasuries in portfolio visualizer..they are Long Term Government Bonds.

So from 1987 on they use vustx which has a 20 year duration so my data from 2000 is actually closer to 20 year bonds


So pretty much the barbell does have greater volatility then the10 year when using the long bond etfs

Data used
FRED Interest Rate Data (30-year maturity) 1978-1986
Vanguard Long Term Treasury Fund (VUSTX) 1987+
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Re: The GOLD scream room

Post by buddtholomew » Thu Dec 16, 2021 3:31 pm

I’m pleased to report that Gold has woken up for the time being. Nice to see the response on a down day in stocks. Interestingly, ITT’s outperformed LTT’s.
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Re: The GOLD scream room

Post by Ugly_Bird » Thu Dec 16, 2021 3:40 pm

buddtholomew wrote:
Thu Dec 16, 2021 3:31 pm
Nice to see the response on a down day in stocks.
Remember, those are uncorrelated assets. So, it could be coincidence (or not :-) )
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Re: The GOLD scream room

Post by Xan » Thu Dec 16, 2021 4:02 pm

Ugly_Bird wrote:
Thu Dec 16, 2021 3:40 pm
buddtholomew wrote:
Thu Dec 16, 2021 3:31 pm
Nice to see the response on a down day in stocks.
Remember, those are uncorrelated assets. So, it could be coincidence (or not :-) )
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Re: The GOLD scream room

Post by buddtholomew » Thu Dec 16, 2021 4:07 pm

You’re right, correlation does not imply causation.
Just pleased to see a pulse in Gold, maybe coming out from hibernation.
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Re: The GOLD scream room

Post by dualstow » Thu Dec 16, 2021 5:01 pm

mathjak107 wrote:
Wed Dec 15, 2021 8:35 am
Unfortunately we don’t have thousands of years for it to be profitable.
He said store of value, not “profitable.”
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Re: The GOLD scream room

Post by mathjak107 » Thu Dec 16, 2021 5:23 pm

A store of value isn’t a store of value when it loses its value you thought it had
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Re: The GOLD scream room

Post by dualstow » Thu Dec 16, 2021 6:02 pm

mathjak107 wrote:
Thu Dec 16, 2021 5:23 pm
A store of value isn’t a store of value when it loses its value you thought it had
All I’m saying is, it’s not the same thing as “profitable.” If you’re trying to make a quick buck, gold is not for you.
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Re: The GOLD scream room

Post by seajay » Fri Dec 17, 2021 3:23 am

mathjak107 wrote:
Thu Dec 16, 2021 5:23 pm
A store of value isn’t a store of value when it loses its value you thought it had
Commodity currency (gold) is best not solely held, hedge it with some stocks/fiat currency and 50/50 will tend to see combined relatively smooth real gains. Some periods might see gold prices down but more ounces having been accumulated, other periods see prices up and the same/fewer ounces being held. When the stock based hedge is sold/closed to revert to all-gold more often the value would have been preserved, even though you may have fewer ounces of more highly priced gold, or more ounces of lower priced gold. Small cap value stock have historically served as a reasonable hedge choice for gold.
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Re: The GOLD scream room

Post by mathjak107 » Fri Dec 17, 2021 4:24 am

I won’t use gold by itself anymore …that gold budget is split between gold , commodities, bitcoin and a strategic real return fund

The bulk of the rest is in a portfolio very insensitive to interest rates and about 30% equities..

I won’t use anything making heavy bets on rates in my core nor leave it to gold alone to cover my inflation protection as it does a poor job unless it gets totally out of control
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