Gyroscopic Investing

"So, even though gold doesn’t generate interest or dividends, it can produce capital appreciation (price goes up) and those profits can be harvested and used in a balanced and diversified portfolio to produce real returns."

Could someone explain this quote to me like am a second grader please?
Thank youy

This is the argument for a rebalancing premium...in other words, selling an appreciated asset to rebalance results in a positive return for that asset.

fishdrzig wrote: "So, even though gold doesn’t generate interest or dividends, it can produce capital appreciation (price goes up) and those profits can be harvested and used in a balanced and diversified portfolio to produce real returns."

Could someone explain this quote to me like am a second grader please?
Thank youy

Every once in a while, a lot of people want to buy gold (or a couple people want to buy a lot of it). When lot of people wanting something, the people who have it can charge more for it. Like when you have a soda, and everyone else at the lunch table wants it, you can get a couple bags of chips + a cookie. But if your class had just been force-fed 2 gallons of water due to your parents' political disloyalty, you might only get a pretzel for it. You also go to second grade in North Korea.

2nd Grade explanation: You buy a toy for $5. A little while later, the toy is worth $10 so you decide to sell it. You have made $5 in profit which you can now use to buy other toys.

Now realize toys = gold and profit = capital appreciation

Hope that helps

AHHHHHHH  yes,  now I get it.  Thanks