Gold as a diversifier - PP gets a mention

Discussion of the Gold portion of the Permanent Portfolio

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Hal
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Gold as a diversifier - PP gets a mention

Post by Hal » Wed Feb 19, 2020 12:14 am

Found this an interesting read - enjoy.

Hal

<snip>
Both the optimal (20%) and upper range of efficient portfolios (35%) may seem to include a fairly high percentage of gold compared to the 5% rule-of-thumb allocation to which a large number of financial advisors seem to subscribe. But there is a precedent. The “permanent portfolio” by Harry Browne recommends an equal weighting (25%) across stocks, bonds, cash, and gold as being optimal across different economic regimes. We believe the evidence presented in this white paper strongly suggests that the currently prevailing “conventional wisdom” greatly understates the potential role of gold in portfolios for a typical investor over the long term.
<snip>

Part 1
http://proactiveadvisormagazine.com/gol ... scenarios/

Part 2
http://proactiveadvisormagazine.com/wha ... n-to-gold/
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sophie
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Re: Gold as a diversifier - PP gets a mention

Post by sophie » Wed Feb 19, 2020 8:47 am

Oh sure...gold goes up over $1600 and instantly people come out of the woodwork to praise the PP. They'll hate it again when gold goes back down, not to worry :-).
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Re: Gold as a diversifier - PP gets a mention

Post by Kbg » Wed Feb 19, 2020 9:20 am

Thanks for the posts, excellent find.

I'm glad I came across the PP. I don't use it in the "doctrinally pure" way but I sure like the mix. What I've found is a nice sweet spot for me is a 1:1 ratio between Stocks to LTTs and gold. For example, if my allocation was 50% stocks then 25% each to LTTs and gold. This works pretty well. Folks can then dial the cash component to whatever and with the remainder use the above ratio if they want more growth.

Here's a performance breakdown: https://www.portfoliovisualizer.com/bac ... tion4_3=25
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Hal
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Re: Gold as a diversifier - PP gets a mention

Post by Hal » Wed Feb 19, 2020 1:20 pm

Kbg wrote:
Wed Feb 19, 2020 9:20 am
For example, if my allocation was 50% stocks then 25% each to LTTs and gold. This works pretty well. Folks can then dial the cash component to whatever and with the remainder use the above ratio if they want more growth.
Looks like you both agree :)

<snip>
Over the 45 years studied, the optimal allocation in a balanced portfolio has actually been 20% to gold and 80% to a balanced portfolio, representing an end result of roughly 50% stocks, 30% bonds, and 20% gold.
<snip>
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Kbg
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Re: Gold as a diversifier - PP gets a mention

Post by Kbg » Wed Feb 19, 2020 4:14 pm

My actual mix is 60% Stks/90% bonds/30% Gold

Here's a fun one that demonstrates gold doesn't stink it up as bad as advertised . https://www.portfoliovisualizer.com/bac ... tion4_3=30
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Re: Gold as a diversifier - PP gets a mention

Post by dualstow » Wed Feb 19, 2020 5:56 pm

Kbg wrote:
Wed Feb 19, 2020 4:14 pm
My actual mix is 60% Stks/90% bonds/30% Gold
That’s a lot of %!
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Re: Gold as a diversifier - PP gets a mention

Post by Smith1776 » Wed Feb 19, 2020 6:34 pm

dualstow wrote:
Wed Feb 19, 2020 5:56 pm
Kbg wrote:
Wed Feb 19, 2020 4:14 pm
My actual mix is 60% Stks/90% bonds/30% Gold
That’s a lot of %!
Maybe it's a leveraged portfolio? :o
e + 1 = 0
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Re: Gold as a diversifier - PP gets a mention

Post by dualstow » Wed Feb 19, 2020 6:37 pm

Smith1776 wrote:
Wed Feb 19, 2020 6:34 pm
dualstow wrote:
Wed Feb 19, 2020 5:56 pm
Kbg wrote:
Wed Feb 19, 2020 4:14 pm
My actual mix is 60% Stks/90% bonds/30% Gold
That’s a lot of %!
Maybe it's a leveraged portfolio? :o
I was thinking that, too, but leveraging to 90% bonds? What..How..that would be original, anyway.
I guess its 60% stocks to 40% non-stocks,
and the non-stock portion itself is- oop, that doesn’t work either.
What I've found is a nice sweet spot for me is a 1:1 ratio between Stocks to LTTs and gold.
Record 6.6 Million Americans Sought Jobless Benefits Last Week
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Re: Gold as a diversifier - PP gets a mention

Post by Kbg » Wed Feb 19, 2020 11:30 pm

It is leveraged...60% is a bond ETF the other 30% is TMF (10% by face value)
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Hal
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Re: Gold as a diversifier - PP gets a mention

Post by Hal » Thu Feb 20, 2020 9:38 am

As an aside, check out this Incrementum report on Gold. Its probably the largest report I have ever seen at 339 pages!


https://ingoldwetrust.report/wp-content ... nglish.pdf
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