GOLD

[ripper1]

Is there any gold bugs out there? How much, if any, should one hold in their portfolio? Should one hold physical gold or gold funds? Gold produces no profits or dividends but can be considered a hedge. I've been recommended the GLD fund and to hold only 5% come rain or shine. Right now though I still think the price is too high. Any thoughts?

 

[braumeister]

Is there any gold bugs out there? How much, if any, should one hold in their portfolio? Should one hold physical gold or gold funds? Gold produces no profits or dividends but can be considered a hedge. I've been recommended the GLD fund and to hold only 5% come rain or shine. Right now though I still think the price is too high. Any thoughts?

If it's a "hold rain or shine" investment, then why should the price matter?

FWIW, I use this approach, and have had a small bit of my portfolio (3-5%) in GLD for years.

 

[ripper1]

If it's a "hold rain or shine" investment, then why should the price matter?

FWIW, I use this approach, and have had a small bit of my portfolio (3-5%) in GLD for years.

You are right, it shouldn't.

 

[MichaelB]

It is a hedge. That means it is not a rain or shine but more like an umbrella. Buy when the sun shines but sell when it rains. Never selling it means it is not a hedge but just another buy and hold investment.

 

[REWahoo]

I only buy gold as a filler - for my teeth.

 

[ripper1]

I only buy gold as a filler - for my teeth.

You still have teeth?

 

[REWahoo]

You still have teeth?

Yeth.

 

[ratto]

You still have teeth?

 

[ripper1]

All kidding aside, you all, I guess what I am trying to get at is alternative investing other than stocks/bonds/cash. Is it something one needs in this day and age? What else other than gold could one use to further diversify a portfolio?

 

[Chuckanut]

If i thought the economy was going to be so bad that gold would be needed, then what I would really want stored away would be food. I could trade food for all the gold I want. Which would be about zero.

 

[wingfooted]

On and off positions in GLD, AGQ and UGL exchange trading vehicles.

Physical silver , pre 1965 US coins.
Physical gold, pre 1933 US coins.

Physical precious metal holdings less than 1% of total assets - not a major position but just in case backup.

 

[jerome len]

I've been buying gold for many years, starting around $500.00 per ounce. Each year I buy a couple of 1 oz coins, put them in a safety deposit box and forget about them. Now, if things really get bad I have a back up to everything else. If they don't, my kids will inherit them someday.

As the U.S. dollar loses value, gold will keep going up. But it doesn't really matter since I don't plan to use them except in case of an emergency. And, I give my kids a one ounce silver coin each Christmas....gold costs too much. I have old coins from my parents.......never sold one, some are 75 years old. I have no idea what they are worth but, years ago, my kids loved to play with them and each time I look at them it is with fond memories.

If I was on a tight budget I'm not sure I would do this. But, they've been a great investment, lots of fun and a security blanket. To each their own, I guess. Hope this helps you decide on gold for yourself.

 

[eytonxav]

I see gold as a hedge against fear, not inflation like some may claim. Whether you hold your gold in GLD or physical (coins), 3-5% seems like a reasonable allocation to me. Other alts to consider if you want to add more in the alternative investment area would be MERGER, ARBITRAGE, HSGFX, CEF, PRPFX, various long/shorts, or maybe a commodity fund like PCRIX. While some folks have a pretty sizeable allocation to alts, personally, I would keep it under 10% overall if your opting for several of these types of investments. Right now, I'm not holding any GLD other than whats in PRPFX and PCRIX.

 

[sengsational]

If i thought the economy was going to be so bad that gold would be needed, then what I would really want stored away would be food. I could trade food for all the gold I want. Which would be about zero.

But food doesn't store very long. What you want is Jack Daniels. It's value dense, will have a market no matter what, and might even appreciate, as aged whisky is more desired.

 

[MichaelB]

See William Bernstein here for gold and PM hedging value in a portfolio. His view

1. While the long term return of precious metal bullion is close to the risk free rate the long term return for precious metal equity appears to be similar to that of common stock.
2. Because the correlation of PME returns and other common stock returns is very low substantial decreases in portfolio risk are available from the judicious use of this asset. For those willing and able to rebalance, significant increments in return are available as well.
3. In order to fully reap the portfolio benefits of PME the investor must be able to ignore its substantial nonsystematic risk. She must also be able to endure long periods in which PME will be an albatross around the portfolio's neck. Most important of all, she must be able to weather from time to time the jeers of others.

 

[Chuckanut]

But food doesn't store very long. What you want is Jack Daniels. It's value dense, will have a market no matter what, and might even appreciate, as aged whisky is more desired.

OK. You've convinced me.

Maybe the Irish will end up ruling the world!!!!!!

 

[urn2bfree]

I am trying to figure this out as well. I get that in general Gold (and other commodities) move out of step with Stocks and Bonds and therefore should reduce volatility. with rebalancing at appropriate intervals that should translate into better returns than a similar but more volatile portfolio.
BUT WAIT- Many argue that in the long run-which is the fair way to think about investing because otherwise you think you can time things - and you can't, no one can- in the long run Gold tracks inflation - it does not grow....
SO, I think( but am open to being educated about this) that if you are growing/accumulating, Gold dos not make as much sense as in a Preservation mindset during withdrawal phase..
Anyone think this makes sense?

 

[clifp]

I am trying to figure this out as well. I get that in general Gold (and other commodities) move out of step with Stocks and Bonds and therefore should reduce volatility. with rebalancing at appropriate intervals that should translate into better returns than a similar but more volatile portfolio.
BUT WAIT- Many argue that in the long run-which is the fair way to think about investing because otherwise you think you can time things - and you can't, no one can- in the long run Gold tracks inflation - it does not grow....
SO, I think( but am open to being educated about this) that if you are growing/accumulating, Gold dos not make as much sense as in a Preservation mindset during withdrawal phase..
Anyone think this makes sense?

I think you nailed it Gold is a way of preserving wealth not accumulating it at least in the west. There was a recent segment (on 60 Minute I believe) about the importance of gold in Indian culture. Purchasing gold jewelry by Indians is viewed as in investment not an expenditure. "Honey, how do you like my my latest investment that I am wearing around my neck." The rising middle class in India along with methods of allowing poor (but not dirt poor) to accumulate gold I think bodes well for gold prices to at least keep track with inflation.

 

[foxfirev5]

But food doesn't store very long. What you want is Jack Daniels. It's value dense, will have a market no matter what, and might even appreciate, as aged whisky is more desired.

I have tried this approach but have ended up drinking the assets. My SWR of Meyers rum will always exceed my savings rate.

 

[Gone4Good]

I think you nailed it Gold is a way of preserving wealth not accumulating it at least in the west.

I question even this use. An asset that goes from $100 to $700 one decade; $700 to $300 over two decades; and $300 to $1,700 the last decade isn't a reliable store of value. It isn't a reliable inflation hedge either. I'm not sure what it is . . . speculative plaything?

 

[clifp]

I question even this use. An asset that goes from $100 to $700 one decade; $700 to $300 over two decades; and $300 to $1,700 the last decade isn't a reliable store of value. It isn't a reliable inflation hedge either. I'm not sure what it is . . . speculative plaything?

I don't own any gold,so put me down in the skeptic category also. However, the permanent portfolio and other such gold heavy portfolios have done very well over the last decade or when more traditional portfolio have failed. In good times gold acts as significant drag in the portfolio. It is worth remember that you and I are fortunate to be US citizen and enjoyed a pretty stable economic environment with growing prosperity during our and our parents lives. Which is pretty much why we don't "get" gold.

For much of the rest of the world the situation hasn't be so rosy, and gold has acted as way of preserving wealth. In situations as diverse as he Wiemar Republic, and Nazi Germany to numerous coups and currency devaluation in Latin America and Africa, a large store of gold has been the difference between financial ruin or worse.

 

[obgyn65]

I do not own gold and do not plan to buy / sell / hold gold or gold funds.

Is there any gold bugs out there? How much, if any, should one hold in their portfolio? Should one hold physical gold or gold funds?

 

[traineeinvestor]

While we have a few ounces of gold sitting in a safe deposit box and hold some notional silver as a portfolio diversifier, we generally prefer other asset classes for investment purposes.

 

[Dawg52]

I only buy gold as a filler - for my teeth.

I've had gold teeth. Maybe I should have brushed them.

 

[gerntz]

I question even this use. An asset that goes from $100 to $700 one decade; $700 to $300 over two decades; and $300 to $1,700 the last decade isn't a reliable store of value. It isn't a reliable inflation hedge either. I'm not sure what it is . . . speculative plaything?

But a stock index of 30 leading companies called the DJIA that goes from 14060 to 6630 to 13000 in less than 5 years is a reliable source of value?