Gyroscopic Investing

Congratulations! I re-balanced into GLD before the recent decline, as timing the market is not my forte either. The only guidance I can offer (unsolicited) is to look at the overall portfolio performance and not fixate on gold's gyrations. This approach has been of little solace lately as all assets have declined in unison, but there is comfort in following your re-balancing bands and you can't beat yourself up mentally for following an established plan.

well...you're going to get more shares when order executes in the AM than you would have 2day

I rebalanced on Friday and Monday.

Bought more GTU.

Just rebalanced into gold today, selling stocks and buying more bonds, GTU at a 6.72% discount, and more physical bullion. I feel pretty good about this.

Pointedstick wrote: Just rebalanced into gold today, selling stocks and buying more bonds, GTU at a 6.72% discount, and more physical bullion. I feel pretty good about this.

If anyone hasn't already done it, put this link in your bookmarks to track the GTU discount/premium to NAV:

https://docs.google.com/spreadsheet/lv? ... y=CNzzi40L

I remember when GTU was trading at a nearly 8% premium. The spread between the discount we've purchased these shares at and a premium like that can be pretty nutty. GTU is certainly a wild ride but seems like it can really reward you if you mostly buy it when it's down.

Pointedstick wrote: Just rebalanced into gold today, selling stocks and buying more bonds, GTU at a 6.72% discount, and more physical bullion. I feel pretty good about this.

Did you trigger a re-balancing band or was this trade emotionally driven? Feeling good about your investment decisions are not always a positive sign for higher returns. Not trying to be negative, just interested in what prompted this "re-balance".

buddtholomew wrote: Did you trigger a re-balancing band or was this trade emotionally driven? Feeling good about your investment decisions are not always a positive sign for higher returns. Not trying to be negative, just interested in what prompted this "re-balance".

Gold hit a lower rebalance band.

I'm not sure if this qualifies as emotion or strategy but I have about 31% VTI and 21% GLD in a Fidelity taxable account...  I think additionally that the forum's consensus may be that GTU is a more favorable asset in a taxable account than GLD for a variety of reasons.  My thought is that while it is not yet a 35/15 band hit and that long term I should get out of GLD and into GTU (particularly now given the apparent historical discount for GTU)...

What would be the best strategy?  Wait for the 35/15 band to hit?  Sell all GLD now, wait 31 days and rebalance using GTU for the gold portion?  Just sell enough VTI and buy just enough GTU to get back close to 25% each?  Is there an issue buying GTU in a Fidelity account?

Sorry for all the questions but I am a novice in handling my investmest and really appreciate this forum's wisdom...

Thanks in advance...

Consensus is that GLD and GTU are dissimilar enough to avoid being a wash sale, so you could do the swap today. Your idea to tax-loss-harvest GLD and swap for GTU at a huge discount makes sense but honestly that form scared me off from holding it in taxable. I've got my GTU in a tax sheltered account.

To take a page from Budd though, we don't know if gold is going to fall lower. Tomorrow it could go down another 4% and GTU's discount could grow even larger. I don't think there's anything wrong with 30/20 rebalance bands, but if you want to stick with 35/25, it's probably best to wait a for them to be hit.

Budd's page was thrown into the garbage this afternoon. I logged into VG while waiting inline to pick up my son from school and placed a 50K limit order at 118.50 that executed around 12:10 this afternoon. Who knows how this asset or the portfolio will perform moving forward, but I for one know that investing when you feel sick to tour stomache is far better than buying when you are greedy. I am now back to 4x25 (2-3% less in cash) and really need to lose my passwords. I bet none of you thought that little old Budd would be around this long when the going gets tough...

buddtholomew wrote: Budd's page was thrown into the garbage this afternoon. I logged into VG while waiting inline to pick up my son from school and placed a 50K limit order at 118.50 that executed around 12:10 this afternoon. Who knows how this asset or the portfolio will perform moving forward, but I for one know that investing when you feel sick to tour stomache is far better than buying when you are greedy. I am now back to 4x25 and really need to lose my passwords. I bet none of you thought that little old Budd would be around this long when the going gets tough...

I don't know how anything will perform going forward either; if I did, would I be posting here or from my private island?

But I do know that you are right that the greatest danger is when everything seems great, and logically also that the greatest opportunity is when everything seems terrible. I've learned those lessons the hard way, but I'm still in it for the long haul.

MediumTex wrote: I rebalanced on Friday and Monday.

Bought more GTU.

I rebalanced today, a bit early for me as I did not hit my 15/35 band but once I am in the 20/30 band range I feel that I need to keep a closer watch and if I want to rebalance why not and have piece of mind, I do not want to spend all day watching portfolio .  As I said in another post, I always liked gold and with GTU premium -7% I thought why not

Btw, I re-balanced with additional cash and not from equities. Just for the record.

Pointedstick wrote: Consensus is that GLD and GTU are dissimilar enough to avoid being a wash sale, so you could do the swap today.

I'm questioning this statement  because: (1) GLD is treated as a collectable by the IRS and (2) its the first I've heard of this "consensus"

murphy_p_t wrote:

Pointedstick wrote: Consensus is that GLD and GTU are dissimilar enough to avoid being a wash sale, so you could do the swap today.

I'm questioning this statement  because: (1) GLD is treated as a collectable by the IRS and (2) its the first I've heard of this "consensus"

I haven't seen this consensus either, but I guess you could argue that with premium swings around +/- 10% to gld, the investing public certainly doesn't see the two assets as substantially equivalent.

dragoncar wrote:

murphy_p_t wrote:

Pointedstick wrote: Consensus is that GLD and GTU are dissimilar enough to avoid being a wash sale, so you could do the swap today.

I'm questioning this statement  because: (1) GLD is treated as a collectable by the IRS and (2) its the first I've heard of this "consensus"

I haven't seen this consensus either, but I guess you could argue that with premium swings around +/- 10% to gld, the investing public certainly doesn't see the two assets as substantially equivalent.

The reason why I say this is because unlike GLD or IAU, GTU is not an ETF, it's a Closed-End Fund, and my sense is that wash sale rules only apply within the same asset class. For example, if I were to sell TLT and buy treasuries, it wouldn't be a wash sale, whereas if I were to sell TLT and buy TLO, it probably would be.

This is of course where a wandering tax attorney might be helpful. 

Jim Rickards points out that this year's drop in gold price is the largest percentage drop since 1968's. Gold then went up over 2000% in just the next 12 years! Wow!


As far as rebalancing goes, I am just going to wait for the price of gold to show signs of levelling a little before doing it, trying to avoid catching the proverbial falling knife..

Reub wrote: As far as rebalancing goes, I am just going to wait for the price of gold to show signs of levelling a little before doing it, trying to avoid catching the proverbial falling knife..

So your gold allocation has fallen below the 15% rebalancing band?

What if it suddenly reverses direction and goes back above 15% before it has shown any signs of leveling off? Would you rebalance at that point or just leave things alone?

Interesting to see the divergence between TIPS and Gold. Looks like some of us that re-balanced prior to hitting a 15% trigger might have been early.

buddtholomew wrote: Interesting to see the divergence between TIPS and Gold. Looks like some of us that re-balanced prior to hitting a 15% trigger might have been early.

Isn't rebalancing before you reach a predetermined band "early" by definition? 

Pointedstick wrote:

dragoncar wrote:

murphy_p_t wrote: I'm questioning this statement  because: (1) GLD is treated as a collectable by the IRS and (2) its the first I've heard of this "consensus"

I haven't seen this consensus either, but I guess you could argue that with premium swings around +/- 10% to gld, the investing public certainly doesn't see the two assets as substantially equivalent.

The reason why I say this is because unlike GLD or IAU, GTU is not an ETF, it's a Closed-End Fund, and my sense is that wash sale rules only apply within the same asset class. For example, if I were to sell TLT and buy treasuries, it wouldn't be a wash sale, whereas if I were to sell TLT and buy TLO, it probably would be.

This is of course where a wandering tax attorney might be helpful. 

http://www.tradersgame.com/articles/taxing-gold.html

Who the hell is selling?
Mutual funds,etfs?

annieB wrote: Who the hell is selling?
Mutual funds,etfs?

Probably all of the above. I read an article recently indicating that there have been massive withdrawals of bullion from GLD by those who can do that, to capture the premium on physical bullion in the East, but who knows what is really happening?

All I can say is I'm glad I learned my lesson about margin in 1980 with a lot smaller portfolio!