Gyroscopic Investing

Nothing in the Fed meeting has signaled a gold selloff. We sold off from the 1300 mark on the idea that the Fed would turn hawkish but instead it was a lot of hemming and hawing. It looks like gold could recapture the recent losses and with tensions rising again in Russia, it could be back up again by next week. 

Once upon a time I told Annie (s)he had more gold threads than Rumpelstiltskin, but I think you're at the top now, portart.

I think one way to look at this is that gold has been trading in a pretty narrow range for the last 14 months after a significant correction in 2012, so it is probably not a bad time to continue purchasing gold if you have the cash available.  With stocks overvalued by many measures, and bond yields at an all time low, it seems like Gold might be well positioned to move up when stocks/bonds revert to their historical mean.

I'm of the opinion that the uncertainty/swings we're seeing in all three markets (stocks, bonds and gold) is indicative of an upcoming major correction in stocks, bonds or both.  The worst case scenario for PP holders would be a significant deflation of all assets as the bubble pops (including gold) but that would probably be short lived while traders cover positions.  After that we would likely see a rush to "safe" assets like gold.

Of course, I'm probably entirely wrong here - which is why I'm just sticking with the PP mix!

Instincts are usually for birds when to fly south. Human instincts in markets are not as reliable but if you have been a market watcher over many years, you begin to develop a "feel." Today we are watching the equity market, making new highs regularly. All the calls for a crash have only been laughed at by Mr. SPY as it continuously trudges upward.

It has been said that gold has it's own language. So what do you hear gold saying? It says, I have been sold off for equities. I have been here before, unloved during the dot com days and scorned. But now, eh..people have stopped selling me. I am starting inch back. I see Mr. SPY, while still going up..it's in dribs and drabs without the prior force when it was far lower. The two are starting to see saw together.

Instinct here is telling me we are approaching a sea change. A topping in Mr. SPY and the the beginning of a climb in gold. We in PP casually watch it unfold with no fear either way. Our VP is another story. A nice large position in GDX and GDXJ. Unloved gold stocks during the last gold climb, they stayed down knowing it wasn't going to last. Is this time different? I think this time, gold stocks may lead gold. Think outsized percentage gains.

Ok, only invest money you can afford to lose. We can play the hedging game here and still not have to time the PP. I like the feel of this...

portart wrote: It has been said that gold has it's own language. So what do you hear gold saying?

All I can hear are the crickets.
I hope you're right, though, because gold holdings are my one negative. Would love to just break even.

dualstow wrote:

portart wrote: It has been said that gold has it's own language. So what do you hear gold saying?

All I can hear are the crickets.
I hope you're right, though, because gold holdings are my one negative. Would love to just break even.

Me too. Lifetime GLD loss -17%, GDX -9%.

Gold made a great comeback but of course that depends on when you got in. It rose so far above from where it started, even a 50% retracement is a sizable gain for the early buyers. It's now consolidating at these levels, waiting for Mr. Market to get exhausted.  Patience is required. Now one knows when it will make a staying move to 1400 and above. Gold has a way of making people wait until they throw in the towel, then move before you can get back in.

portart wrote: Gold made a great comeback but of course that depends on when you got in. It rose so far above from where it started, even a 50% retracement is a sizable gain for the early buyers. It's now consolidating at these levels, waiting for Mr. Market to get exhausted.  Patience is required. Now one knows when it will make a staying move to 1400 and above. Gold has a way of making people wait until they throw in the towel, then move before you can get back in.

Reinvested the proceeds from TLT sale into GLD earlier this morning.

Bud, I have rebalancing envy. Just sitting here with this damn PP that doesn't need any tinkering at the moment.

barrett wrote: Bud, I have rebalancing envy. Just sitting here with this damn PP that doesn't need any tinkering at the moment.

The whole transaction amounted to 1.19% of PP-invested assets. It was a thrilling experience to say the least 

Buddtho,

Just checked and I could do likewise with 1.25% of my total PP. Do you really dislike LTTs at this level, love gold at its current price, or just feel like tweaking a bit? Damn, now it's Labor Day Weekend and I can't make any moves until Tuesday!

barrett wrote: Buddtho,

Just checked and I could do likewise with 1.25% of my total PP. Do you really dislike LTTs at this level, love gold at its current price, or just feel like tweaking a bit? Damn, now it's Labor Day Weekend and I can't make any moves until Tuesday!

Tinkering along the edges is as likely to out-perform as under-perform. I am mostly looking for opportunities to tax-loss harvest using specific identification, but only if it moves the PP allocation closer to 4x25% (current allocation: stocks - 28, gold - 23, LTT - 23, Cash - 26). I also look to maintain a fixed income duration of 5.6 in taxable accounts (5.6 is the duration of the vanguard total bond market index). So, the last two TLT sales brought gold and treasuries back to a 50/50 balance.

From a forecasting perspective, failure is not an option. The US will emerge out of this recession. I hold the PP to ensure the stability of my investments no matter how long that takes.