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Gold.. what % in retirement portfolio?
Old 05-17-2009, 02:09 PM   #1
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Gold.. what % in retirement portfolio?

We currently have a 60/40 slice & dice portfolio and are concern about inflation in the coming months & years. We are in our mid 50's and will be fully retired in 2010.

What are your feeling about 5% investment in a Gold ETF of Vanguards Precious metals fund? The talking heads on tv are saying that gold is the way to go if interest rates go high, states go bankrupt etc.

Do you put 5% into gold or how would you protect your investments during high inflation and market uncertainly?

ADUM
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Old 05-17-2009, 02:18 PM   #2
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I would talke a modest slice of my portfolio (5 to 10%) and invest it in commodity-related stuff. In this modest slice I would include lots of commodities (precious metals, industrial metals, energy, agricultural products, timber, etc.), not just gold. You can do this with commodity futures funds, physical commodities, and/or owning shares of companies that produce these products.
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Old 05-17-2009, 02:22 PM   #3
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My thoughts exactly! I've been reading up on Gold and have decided to buy some gold certificates for my corporate portfolio, amounting to 5-10% of the total portfolio. This is pretax money and will be the last portfolio I draw on, so I am envisaging a long term investment. I'd be doing this as a hedge against hyperinflation and against collapse of the US dollar. The Chinese are building their gold reserves and most gold forecasts suggest that the price will rise over time.

Why gold certificates? Well, here in Canada, fund fees are too high. Certificates are easy to store and are exchangeable for bullion at any time. Bullion is subject to a sales tax while certificates are not. I am not concerned about bank failure since my bank (Scotiabank) has recently been rated one of the 10 most stable banks in the world. Brewer mentions physical commodities. I wouldn't buy gold coins or jewellery as an investment, because there is a significant markup.
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Old 05-17-2009, 02:22 PM   #4
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Alternatives such as REIT, commodities, precious metals provide additional diversification. I would limit the exposure to 15%.
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Old 05-17-2009, 02:35 PM   #5
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I vote for 5% gold in a conservative portfolio, preferring GLD. Watch out for VGPMX: it had a long good run then the bottom fell out. It's volatile: doesn't necessarily correlate to physical gold.
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Old 05-17-2009, 03:18 PM   #6
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Suggest you look at Larry Swedroe's Alternative Investment book for a good discussion about gold, commodities, TIPS, etc. This source will probably beat most personal advice you will find here (including mine).

BTW, if you want some gold I have a 1980 Canadian Maple Leaf I could sell you but you'll have to pay the inflation adjusted gold price from 1980. Let's see, bought it at something like $600. So that would be $1552.72 please .
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Old 05-17-2009, 03:36 PM   #7
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I have about 3% VGENX (Energy) and about 3% VGSIX (REIT) - although they were almost 5% each at one time. Never had an interest in gold due to long term returns, but I see how precious metals could be a viable part of the investment portfolio of some...
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Old 05-17-2009, 03:51 PM   #8
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Thanks everyone for your replies, it's been helpful.

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Old 05-17-2009, 05:22 PM   #9
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Well, Read Larry's and Several others over the yrs and Neumorus Articles.. Fact is, I found that Anything less than 10% has very little Impact on My Port.. and causes too many funds to track all the time. And I also Found that Having just a Couple of Moderate and Couple of Conservative Balanced Funds do the job alot better over the past Decade.. and Just move more into One vs the other vs Bull vs Bear markets.. and You can buy whatever they are buying, directly seeing what the real pro's are doing that you already trust with your core Savings.. (most owned Treas in 08' and So did I in a Sep. Bond Port..)

No Reason to ReInvent the Wheel.. And the only way I've stayed ahead of Inflation is? Just make more than it is ...and that's equities and Into top performing Bond Funds Like *EMDB's for example..always have outperformed In Inflationary times by a Long Mile.. * Emerging Market Debt Bonds..like FNMIX or PREMX.

and I think It's way to soon to be worrying about Inflation.. we're still in a boaderline Depression and a long ways from getting out of it..

From Bill Larkin @ Cabot Mgmnt. , one of the top bond Guru's in the business..Next to Bill Gross..and 1 of 4 of my Guys I use as a Ref. source for every yr..... haven't led me wrong in over 12 yrs now..( He advised a tot. of 70% in 2-Treas., 7.5% Corps-I used VBLTX, 7.5% GNMA-MBB, I used VFIIX, going into 08' )

2009 Recommended Bond Port & Comparative Funds in { } in Dec. 08'..
25% iShares Barclays Aggregate Bond ETF (AGG) (Tracks a broad index of high-quality U.S. bonds) {VBMFX }
25% iShares iboxx $ Investment Grade Corporate (LQD) (Tracks an index of the most liquid, long-term corporate bonds) {VWESX}
10% Fidelity Floating Rate High Income (FFRHX) (Invests in floating rate bank loans that automatically adjusts to rising short-term interest rates. It offers additional inflation hedge) & Only for Your ST COH for your bills and only for this yr of 09', not 4 LT.( 08' it was Shrt US Gov't Like VSGBX ) and excellant for your Short Term and Emergency $ vs CD's/Treas. this Yr... Just Sell when At 10% ytd to lock iin your Rtns for the yr or Sell Cost basis $ and let your Profits ride the rest of the yr..
10% iShares MBS Fixed Income (MBB) (Tracks a broad index mortgage-backed securities) { VFIIX }
7.5% SPDR DB International Govt Inflation-Protected Bond (WIP) (Invests in an index of non-U.S., inflation-linked bonds) {VIPSX} Wait Unitl 3rd or 4th qtr to buy..
7.5% PowerShares Emerging Markets Sovereign Debt (PCY) (Tracks an index of emerging markets government debt) (PREMX/FNMIX}
7.5% iShares Barclays TIPS Bond (TIP) (Tracks an index of inflation-protected, U.S. Treasury securities) { VIPSX } wait until 3rd or 4th qtr..
7.5% iShares Iboxx $ High Yield Corporate Bond (HYG) (Tracks an index of high yield bonds) {VWEHX }


Hope this helps you as it has me..
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Old 05-17-2009, 06:30 PM   #10
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Personally (i.e. not meant as advice for anyone), I think that natural gas producers will be very attractive at some point. I think that the huge excess inventories need to be resolved first, but shut ins are proceeding and eventually the equilibrium will overshoot to higher prices.
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Old 05-17-2009, 07:01 PM   #11
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A guy I used to work with, electrical engineer, single and nothing better to do got into gold investing. Don't know if it was certificates, bullion, comodities or a combination of all or more than that. Made well over $1M on his investments. Quit his job to devote full fime to gold investing. Ten years later I ran into this guy at a design firm in Detroit. I was shocked to see him and in our conversation, asked him how the gold investing was going. He told me he had lost it all and had to go back to work. He told me that he thought he knew it all and ended up not knowing s---!
Guess you better do your homework if you're going to be playing with big money.
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Old 05-17-2009, 07:05 PM   #12
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Quote:
Originally Posted by JOHNNIE36 View Post
A guy I used to work with, electrical engineer, single and nothing better to do got into gold investing. Don't know if it was certificates, bullion, comodities or a combination of all or more than that. Made well over $1M on his investments. Quit his job to devote full fime to gold investing. Ten years later I ran into this guy at a design firm in Detroit. I was shocked to see him and in our conversation, asked him how the gold investing was going. He told me he had lost it all and had to go back to work. He told me that he thought he knew it all and ended up not knowing s---!
Guess you better do your homework if you're going to be playing with big money.
I guess that goes to the old saying"dont put all your eggs in one basket."
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Old 05-17-2009, 07:17 PM   #13
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I own a number of assets that will protect me more or less efficiently against inflation, including TIPS/I-bonds, short term nominal bonds, commodities (diversified basket of commodities -PCRIX- as well as small amounts of physical Au and Ag) and REITs. And off course plenty of stocks that are *supposed* to keep up with inflation over the long term. I am also thinking about taking a position in the VG energy ETF.

But my best weapon against inflation is: 1) a budget which is fairly insensitive to inflation, and 2) a job with good benefits and wages that have historically increased much faster than inflation.
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Old 05-17-2009, 07:38 PM   #14
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We own no gold except whatever gold stocks happen to be in our MFs. I don't know if that's a mistake or not.
- Physical gold produces no return, just holding costs. Most people who hold the actual metal do it in case of a banking collapse, etc. in the belief that people will still recognize the value of gold in this case. It seems to me that other items/commodities would be more useful in the case of a Mad Max scenario.
- Gold Stocks--Might be a good inflation hedge if we have high inflation. But, as Brewer points out, so might a lot of other commodities. I don't see any reason to fixate on gold producers. If we have inflation and we have an economic slowdown, it's possible these commodity stocks won't keep up with inflation, so it's good to have other investments as well.
- TIPS/I-Bonds: Unless the government pulls some hanky-panky with the inflation computation, these should pay a real return of 2% plus. That's a lot better than a zero % return on gold coins.
- Equities: Stocks have historically done a good job of keeping up with inflation unless the inflation gets very high (causing distortions in capital flows).
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Old 05-17-2009, 07:56 PM   #15
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The only gold I have as an asset is my very small collection of personal jewelry.
Commodities are less than 5% of my overall portfolio, and are limited to VGENX.
If I ever win the Lottery, I might dabble a little more in commodities just for the adrenalin rush and using someone else's money. Mine own? Never.
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Old 05-17-2009, 07:58 PM   #16
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Keep in mind the VG Precious Metals is not a gold fund. It invest less than 50% of its assets in gold and gold production.
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Old 05-17-2009, 08:05 PM   #17
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I have never understand gold as an investment, so I do not invest in it.
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Old 05-17-2009, 08:34 PM   #18
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I've had 5% in GLD since it was created ~5 years ago.
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