With so many financial wizards here I thought I’d ask something that’s been on my mind for a while: What role, if any, might Precious Metals (PMs) have in a portfolio? Commodity trading, paper gold/silver (i.e. IRAs or other investment vehicles), or physical bullion/coins in hand? What do you think?
PMs in a portfolio?
- Thread starter HondoBob
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Red Badger
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I own some lead as a hedge against other people - the bad ones. Inventory includes 12 gage, .357and 9 millimeter, to name a few.
I looked at Roger Gibson's book on Asset Allocation a decade or more ago. IIRC it showed that adding different assets can reduce volatility while keeping solid performance. Near the end of this process was adding the Goldman Sax Commodity Index which by itself was the highest volatility actually reduced volatility for the entire portfolio and I think kept the performance or maybe even improved it. this was only a 2% allocation to a broad commodity index.
I do have a small investment in a commodity fund, but not a PM focused fund.
I do have a small investment in a commodity fund, but not a PM focused fund.
Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Same here. Small amount of DBC just to have a little exposure to commodities. I do have some gold and silver coins, but total value would be less than $10k. Don’t expect it to happen again, but bought the gold coins when gold was under $300/oz. I wish I would have bought more.
njhowie
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There are many who view precious metals/commodities from the standpoint of being nothing more than a high risk gamble. For most who are "investing" in them, that is exactly what they are, a high risk gamble...putting their money in them specifically to see the value increase.
However, the theory behind having precious metals and commodities in a portfolio is as a hedge/protection, not only in the event that markets collapse, but should we have an economic/financial Armageddon. It's less of a matter for expecting the value to go up (which it likely would during a collapse), but rather seeing it maintain its value, being an accepted "currency" and store of value even if everything else became worthless.
There's another recent thread on stashing cash in the home - it's along similar lines. There are many reasons why it makes little sense to keep any significant amount of cash in the home. However, it is a hedge against the potential of something bad which may happen, whether that be your bank account gets looted, or electronic banking and the ATM system gets brought down by some ingenious hackers for some period of time. I'm comfortable with the $100 I walk around with in my wallet, while you can find others on that thread who have a couple thousand at home, to some who have buried wads of cash in various places on their property.
I personally do not have anything in commodities or precious metals. However, I do become more and more concerned about where things are headed with world economies and finances, and that financial/economic Armageddon has the potential of happening in my lifetime.
However, the theory behind having precious metals and commodities in a portfolio is as a hedge/protection, not only in the event that markets collapse, but should we have an economic/financial Armageddon. It's less of a matter for expecting the value to go up (which it likely would during a collapse), but rather seeing it maintain its value, being an accepted "currency" and store of value even if everything else became worthless.
There's another recent thread on stashing cash in the home - it's along similar lines. There are many reasons why it makes little sense to keep any significant amount of cash in the home. However, it is a hedge against the potential of something bad which may happen, whether that be your bank account gets looted, or electronic banking and the ATM system gets brought down by some ingenious hackers for some period of time. I'm comfortable with the $100 I walk around with in my wallet, while you can find others on that thread who have a couple thousand at home, to some who have buried wads of cash in various places on their property.
I personally do not have anything in commodities or precious metals. However, I do become more and more concerned about where things are headed with world economies and finances, and that financial/economic Armageddon has the potential of happening in my lifetime.
Bryan Barnfellow
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My wife and I own some (physical) gold strictly for the purpose of tiding us over in the case of a global economic/social emergency. I have no idea what "tiding us over"means, but it is a small position and makes us feel better. Perhaps that is its real value. We don't count it in our investments.
-BB
-BB
Car-Guy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
As long as the general populaces continues to believe in and support our Fiat money, then PM's aren't really needed, IMO. I do have some gold and silver but it's more for the numismatics value than the PM value.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
None for me.... I'm an investor, not a speculator.
I have physical PMs as backup for when/in case the US debt becomes the next Argentina. It's not speculation that metals will go up but insurance for when FRNs go down.
From that perspective, paper PM's are nothing but speculation + counter-party risk.
From that perspective, paper PM's are nothing but speculation + counter-party risk.
We have held VGPMX since 2006. It is currently worth 37% of our cost basis. It's role in our portfolio will be to provide a capital loss to offset some of our capital gains.
VanWinkle
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We have held VGPMX since 2006. It is currently worth 37% of our cost basis. It's role in our portfolio will be to provide a capital loss to offset some of our capital gains.
Might be time to harvest!!
