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Wonk
Joined: 11 Jul 2008
Posts: 204
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 Posted: Tue Nov 03, 2009 8:54 am Post subject: Gold and gold stocks during deflation/inflation |
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You don't usually see an analysis of anything related to gold without inclusion of one of the next two statements:
a. Gold is going to $10,000!
or
b. Gold is going to $1!
While the author looks to be bullish on gold in general over the next few years, I thought the gold/gold stock/commodities comparisons between 30's, 40's, 60's and 70's were really interesting.
The idea that gold stocks perform best during deflation while suffering during inflation is rare.
http://www.financialsense.com/..../0317.html |
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Rick Ferri
Joined: 26 Feb 2007
Posts: 2877
Location: Home on the range in Medina, Texas
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| Posted: Tue Nov 03, 2009 9:13 am Post subject: |
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There are records on the price of gold going back 3,000 years. In the long-term, gold returns equal the inflation rate, less trading costs, insurance, and storage costs.
If you buy gold to make money, you are late. Gold bugs argue that the dollar is falling and that is a reason to buy gold. But that does not explain why the price of gold has tripled in almost every currency in the world. No 'dollar is falling' gold bug can explain this phenomena.
There are those who say gold is in a bubble. That is the group that I fall into. It is so easy to buy gold today. All you do is call your broker and buy one of the many gold bullion exchange-traded products. That is what millions of new gold buyers have done. When the price starts to fall, there will be a mad rush for the door. I would not want to be in the way of fire sale, whenever it occurs.
There is more precedence to own gold mining companies than owning gold in the long-term. However, the gold mining funds out there are not very good. Either the costs are high or they are under-diversified. Some enterprising fund company should launched a very low fee global gold mining fund. But that will not happen now. There is too much interest from the public, so the price of any new fund will be high.
Rick Ferri |
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Wonk
Joined: 11 Jul 2008
Posts: 204
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| Posted: Tue Nov 03, 2009 11:27 am Post subject: |
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| Quote: | | If you buy gold to make money, you are late. Gold bugs argue that the dollar is falling and that is a reason to buy gold. But that does not explain why the price of gold has tripled in almost every currency in the world. No 'dollar is falling' gold bug can explain this phenomena. |
It's actually quite easy to explain (although I'm not a gold bug). Almost every currency in the world is competing to devalue its currency faster than the others to revive exports. Holders of these currencies see this and are moving to protect purchasing power with the only currency that can't be devalued: gold. It's not that gold is going up per se, it's that world currencies are going down.
The USD gains strength from it's reserve currency status and the fact that it could be the "least ugly" of all the girls at the currency dance.
| Quote: | | There are those who say gold is in a bubble. That is the group that I fall into. It is so easy to buy gold today. All you do is call your broker and buy one of the many gold bullion exchange-traded products. That is what millions of new gold buyers have done. When the price starts to fall, there will be a mad rush for the door. I would not want to be in the way of fire sale, whenever it occurs. |
There are those who say equities are in a bubble. That is the group that I fall into. It is so easy to buy equities today. All you do is call your broker and buy one of the many equity exchange-traded products. That is what millions of new equity buyers have done. When the price starts to fall, there will be a mad rush for the door. I would not want to be in the way of fire sale, whenever it occurs.
With all due respect, Rick, I don't think either of us can be absolutely sure which way gold and equities are going.
| Quote: | | There is more precedence to own gold mining companies than owning gold in the long-term. However, the gold mining funds out there are not very good. Either the costs are high or they are under-diversified. Some enterprising fund company should launched a very low fee global gold mining fund. But that will not happen now. There is too much interest from the public, so the price of any new fund will be high. |
GDX is an option for those who are interested. Low ER. Barrick is a top holding but the management is awful. Maybe that's what you were referring to above.
The intent of the post wasn't really to argue over gold. I thought it was an interesting read as it challenges the mainstream belief that gold, gold stocks & commodities all perform the same way in periods of inflation and deflation. They clearly don't and investors should look closely at this. |
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brick-house
Joined: 07 May 2009
Posts: 49
Location: Philadelphia, PA
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| Posted: Tue Nov 03, 2009 11:37 am Post subject: |
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What is the long term? Stock bugs always throw up the long term, but never define it. Sometimes it is from 1926 or 1802 or 1945 or 1914 or 1971… It often appears that dates are cherry picked to match the point they are trying to make.
Gold’s inflation adjusted high from 1980 is over 2000 per ounce. If gold returns do match inflation over the long run, then gold has some catching up to do.
The Indian Government is not worried about the current price of gold. They purchased 200 metric tons today from the International Monetary Fund at a value of 6.7 billion. I guess they are foolish gold bug performance chasers.
http://www.bloomberg.com/apps/....7oJp_8Dtys
I am not a gold bug. I am amazed at the price of gold, but I was also amazed at the price of stocks a couple of years ago. I am a I have no idea what the investment future holds bug. Thus, I use the voodoo portfolio of Harry Browne which requires a holding in gold, stocks, bonds, and cash within disciplined re-balancing bands.
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Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac? George Carlin |
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Latecomer
Joined: 14 Jan 2008
Posts: 34
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| Posted: Tue Nov 03, 2009 12:34 pm Post subject: |
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There are those who say gold is in a bubble. That is the group that I fall into. It is so easy to buy gold today. All you do is call your broker and buy one of the many gold bullion exchange-traded products. That is what millions of new gold buyers have done. When the price starts to fall, there will be a mad rush for the door. I would not want to be in the way of fire sale, whenever it occurs.
Rick,
I appreciate your scholarly and well-researched approach to investing. When I invest for retirement, I like to follow well-written guidelines. In our town, you can almost smell the greed for gold. I think it goes hand in hand with fear. The mood has almost reached hysterical levels. |
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craigr
Joined: 13 Mar 2007
Posts: 1973
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| Posted: Tue Nov 03, 2009 12:36 pm Post subject: Re: Gold and gold stocks during deflation/inflation |
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| Wonk wrote: | | While the author looks to be bullish on gold in general over the next few years, I thought the gold/gold stock/commodities comparisons between 30's, 40's, 60's and 70's were really interesting. |
I'd be very careful reading too much into the 30s and 40s. We were on a fixed gold exchange rate that was artificially raised in 1933 to cause inflation (it failed). Then during the 1940s we were involved in WWII and the government was a huge purchaser of commodities which caused shortages. Yet, there were also war time price controls in place so profiting from commodity investing would have been difficult if I recall.
Re: India's central bank gold purchase
Interesting news.
I remember reading last year from some analysts about the IMF selling gold and how that was going to crater the gold market when it happened. I guess they didn't consider the idea that a central bank would come in and buy it up in an effort to diversify their reserve holdings. Countries, just like people, will act in their own self-interest and apparently India thinks it's in their self-interest to own more gold. Another prediction bites the dust.
Re: Is gold in a bubble?
I just tell people who own it to stick to their rebalancing bands and not get caught up in the euphoria. The same advice I'd give about any other asset class you'd own.
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“The best-kept secret in the investment world is this: Almost nothing turns out as expected.” - Harry Browne |
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SP-diceman
Joined: 05 Oct 2008
Posts: 849
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| Posted: Tue Nov 03, 2009 2:47 pm Post subject: |
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From Jeremy Siegel's Book:
The Future for Investors:
The purchasing power of $1 (inflation factored in)
from 1802 to 2003.
Dollar itself: 7 cents
Equities: $597,485
Bonds: $1,072
Bills: $301
Gold: $1.39
Pick your poison wisely.
Thanks
SP-diceman |
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brick-house
Joined: 07 May 2009
Posts: 49
Location: Philadelphia, PA
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| Posted: Tue Nov 03, 2009 3:06 pm Post subject: |
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SP-Diceman wrote:
| Quote: | From Jeremy Siegel's Book:
The Future for Investors:
The purchasing power of $1 (inflation factored in)
from 1802 to 2003.
Dollar itself: 7 cents
Equities: $597,485
Bonds: $1,072
Bills: $301
Gold: $1.39
Pick your poison wisely.
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1802? Thanks for the tip! Now I can tune up the flux capicator, set the controls of the Delorean for London, 1802 and buy some shares of the East India Trading Company.
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Lbill
Joined: 13 Mar 2008
Posts: 2078
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| Posted: Tue Nov 03, 2009 3:33 pm Post subject: |
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There has to be a reason that governments buy and hold the barbarous yellow relic, and used to back their paper play money with it too. Maybe individual investors should contemplate those reasons and own a little of the stuff too. It can't hurt and maybe it will help.
_________________
"Whenever you find yourself on the side of the majority, it is time to pause and reflect." ~ Mark Twain
"A foole and his money is soone parted." - J. Bridges, 1587 |
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Valuethinker
Joined: 11 May 2007
Posts: 10937
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| Posted: Tue Nov 03, 2009 4:53 pm Post subject: |
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| brick-house wrote: |
1802? Thanks for the tip! Now I can tune up the flux capicator, set the controls of the Delorean for London, 1802 and buy some shares of the East India Trading Company. |
Hi
From memory, it was nationalized after the Indian Mutiny (1854?) so you might not have done so well as all that.
http://en.wikipedia.org/wiki/East_India_Company
dissolved 1871 from the above.
1704 would have given you time to get caught in the South Sea Bubble, from memory.
http://en.wikipedia.org/wiki/South_Sea_Company (1720)
It used to be all of Holland (bourgeois) lived on shares in the VOC (Dutch East India Company) but, again, I vaguely remember that that worked out badly eventually.
http://en.wikipedia.org/wiki/D....ia_Company
18% pa yield for 200 years according to the above. Bankrupt in 1800 though.
Hudson's Bay Company has done relatively better:
http://en.wikipedia.org/wiki/H....ay_Company |
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Adrian Nenu
Joined: 12 Apr 2007
Posts: 3760
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| Posted: Tue Nov 03, 2009 5:14 pm Post subject: |
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About a month ago, a friend of mine and ex-co-worker told me that he is investing 50% of his portfolio in gold because the dollar will be worthless in a couple of years. He advised me to do the same and called other retiree friends urging them to buy gold as well. When I asked him where he got this priceless information about the inevitable total collapse of the dollar he replied that he heard it on an AM radio investing show.
This convinced me that gold is in a bubble because the same friend was trying to get me to flip condos a few years ago. He knows nothing about investing and is always late to arrive at the speculative bubble party - the perfect contrarian indicator.
Interesting that Buffett bought a railroad stock, not gold.
Adrian
anenu@tampabay.rr.com
Last edited by Adrian Nenu on Tue Nov 03, 2009 5:39 pm; edited 1 time in total |
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craigr
Joined: 13 Mar 2007
Posts: 1973
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| Posted: Tue Nov 03, 2009 5:29 pm Post subject: |
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| SP-diceman wrote: | From Jeremy Siegel's Book:
The Future for Investors: |
Siegel misses the point. Gold is not an investment like stocks and bonds. It has no interest or dividends. It does, however, have an uncanny ability to not be destroyed by bad government policies and disasters in the market that can kill stocks and bonds. It is a diversifier against the risks that affect other assets you own.
In a diversified portfolio gold can serve a purpose just as stocks and bonds do. Looking at assets in isolation is not the answer.
Someone did an analysis of how gold responded in a portfolio under a severe currency and market crisis in Iceland in 2008. Here were some of the results:
Long Term Government bonds = 0%
Short-term government bonds = +12%
Stocks = -88%
Gold = +259%
The reason the bonds in this case weren't wrecked is because the IMF stepped in to back them up. Otherwise it would have been lights out for those as well. A 50%+ loss for the bonds would not have been unreasonable. A stock/bond only investor in this case would have been annihilated.
But this is an extreme to make a point. On the less extreme, a US investor holding gold along with stocks and bonds probably earned near equal returns with about half the volatility the past few decades of a stock/bond portfolio. It also managed to turn in positive after-inflation returns over the rolling 10 year periods where a stock/bond portfolio might not have over this same time.
I have a FAQ that attempts to address the common questions about gold in a portfolio:
http://crawlingroad.com/blog/2....ation-faq/
If you want to own gold in a portfolio then you should do it with the positive and negative aspects in mind. Gold is not a worthless asset to own. The history of it as a useful tool in a diversified portfolio is overwhelming if you look beyond the relatively tranquil US markets (and even when you look at the US markets). Gold can help smooth volatility and provide insurance for your life savings when the markets are treating stocks and bonds very badly. But it needs to be used correctly and rebalanced as you do with any asset you own.
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“The best-kept secret in the investment world is this: Almost nothing turns out as expected.” - Harry Browne |
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SP-diceman
Joined: 05 Oct 2008
Posts: 849
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| Posted: Tue Nov 03, 2009 8:36 pm Post subject: |
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| Quote: | | Siegel misses the point. Gold is not an investment like stocks and bonds. It has no interest or dividends. It does, however, have an uncanny ability to not be destroyed by bad government policies and disasters in the market that can kill stocks and bonds. It is a diversifier against the risks that affect other assets you own. |
And GoldBugs have an uncanny ability to believe their smarter than
everyone else.
(of course Siegel missed the point. He's not as sharp as some)
I'm not sure he was making one.
More just stating the facts.
I think the take away is:
1) Stocks, Bonds also beat inflation (better than most things)
2) Gold has a horrific long-term record.
3) If you hold gold for its Armageddon value.
You should be nimble with your timing.
When the smoke clears it will revert to its Armageddon prevent defense.
4) If Armageddon doesn't unfold in your lifetime you will probably
be very disappointed in your gold holdings.
Thanks
SP-diceman |
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craigr
Joined: 13 Mar 2007
Posts: 1973
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| Posted: Tue Nov 03, 2009 10:10 pm Post subject: |
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| SP-diceman wrote: | I'm not sure he was making one.
More just stating the facts. |
Over the past 10 years a portfolio that held gold with stocks and bonds beat one that held stocks and bonds alone. The same thing happened in the 1970s. These things all happened without motorcycle gangs roaming the remains of American cities.
And yes, Siegel does miss the point. Not everyone wants, nor needs, to wager their life savings on concentrated stock market bets. Gold ownership does offer diversification benefits that are different than stocks and bonds in a portfolio and can work with those assets to provide acceptable returns.
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“The best-kept secret in the investment world is this: Almost nothing turns out as expected.” - Harry Browne |
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dumbmoney
Joined: 16 Mar 2008
Posts: 1312
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| Posted: Wed Nov 04, 2009 12:45 am Post subject: |
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| brick-house wrote: | The Indian Government is not worried about the current price of gold. They purchased 200 metric tons today from the International Monetary Fund at a value of 6.7 billion. I guess they are foolish gold bug performance chasers.
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Governments were dumping gold when it was <$300/oz. They follow the herd like everyone else.
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I am pleased to report that the invisible forces of destruction have been unmasked, marking a turning point chapter when the fraudulent and speculative winds are cast into the inferno of extinction. |
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mephistophles
Joined: 27 Mar 2007
Posts: 1375
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| Posted: Wed Nov 04, 2009 1:47 am Post subject: |
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| Owning a small amount of gold for diversification makes sense to me. |
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brick-house
Joined: 07 May 2009
Posts: 49
Location: Philadelphia, PA
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| Posted: Wed Nov 04, 2009 6:21 am Post subject: |
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Siegel is a great example of puffed up smarts. He has a tweed jacket, a Ph.D, and creates pretty graphs dating back to 1802. As a result, he is treated like a wisdom tree by the stock bugs, instead of the simple compiler of statistics that he is.
Here is a non gold bug criticism of Jeremy Siegel by Jason Zwieg.
http://online.wsj.com/article/....24871.html
And another one by Bond bug – Bill Gross
“one must be careful of beginning and ending data points in any theoretical “proof.” Such is the fallacy of Jeremy Siegel’s Stocks for the Long Run approach which begins at very low PEs and ends most long-term time periods with much higher ones, justifying a 6.5% “Siegel constant” real rate of return for U.S. equities over the past 75 years or so.”
Back-testing is helpful, but of limited value because it cannot predict the future. It only reports on the past. While I do use the rear view mirror to see what is behind me, I spend the majority of my driving time looking straight ahead.
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Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac? George Carlin |
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Lbill
Joined: 13 Mar 2008
Posts: 2078
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| Posted: Wed Nov 04, 2009 9:02 am Post subject: |
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brick-house: That's a good article by Zweig about Siegel's methodology. I've pretty much discounted Siegel's conclusions anyway and this adds more weight to that decision. I'm in the Zvi Bodie and Paul Samuelson camp on "stocks for the long run." Specifically, stocks are NOT safer the longer you hold them - that's a myth perpetuated by predatory financial advisors, IMO and Siegel gave credibility to this view that it doesn't merit.
_________________
"Whenever you find yourself on the side of the majority, it is time to pause and reflect." ~ Mark Twain
"A foole and his money is soone parted." - J. Bridges, 1587 |
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Valuethinker
Joined: 11 May 2007
Posts: 10937
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| Posted: Wed Nov 04, 2009 10:47 am Post subject: |
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| dumbmoney wrote: | | brick-house wrote: | The Indian Government is not worried about the current price of gold. They purchased 200 metric tons today from the International Monetary Fund at a value of 6.7 billion. I guess they are foolish gold bug performance chasers.
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Governments were dumping gold when it was <$300/oz. They follow the herd like everyone else. |
The largest retail buyers of gold in the world are Indians.
Word on the street is they are selling, big time.
It's not a crowd I wish to fight.
Remember Indians have exchange controls, confiscatory taxation (irregular) etc. so they have a particular fondness for portable and personal forms of wealth. |
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Valuethinker
Joined: 11 May 2007
Posts: 10937
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| Posted: Wed Nov 04, 2009 10:55 am Post subject: |
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| Latecomer wrote: |
Rick,
I appreciate your scholarly and well-researched approach to investing. When I invest for retirement, I like to follow well-written guidelines. In our town, you can almost smell the greed for gold. I think it goes hand in hand with fear. The mood has almost reached hysterical levels. |
We'd have to get into politics more than I would wish, but if you hear the rumours circulating out of Talk Radio-space, you have to believe there is an alternate reality out there.
In that alternate reality, piling into gold would be a consistent strategy alongside certain other commodities.
The world I live in, which I might call 'Roubini-World' is that we are in a considerable macro-economic mess, but the workout will be just like the UK in the early 90s, Canada in the early 90s, SE Asia after the Crash of 1997 ie very long, slow and painful.
More banking problems to come. More threats of deflation. High unemployment. Sluggish growth. Cyclical mini-bubbles: I am reminded of the Australian mining bubble in the early 70s-- whilst Wall Street was going nowhere very fast, fortunes were made and lost in Oz.
But, praise the Gods of financial markets, it's likely that the apocalypse we glimpsed after Lehman and the liquidation of the Money Market Reserve Fund has been avoided.
Hopefully I'll never live through another 3 months like that in my investing lifetime. |
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Rick Ferri
Joined: 26 Feb 2007
Posts: 2877
Location: Home on the range in Medina, Texas
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| Posted: Wed Nov 04, 2009 10:56 am Post subject: |
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| mephistophles wrote: | | Owning a small amount of gold for diversification makes sense to me. |
I own a gold wedding ring, although only one. I don't think my wife would approve of diversification. 
Rick Ferri |
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brick-house
Joined: 07 May 2009
Posts: 49
Location: Philadelphia, PA
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| Posted: Wed Nov 04, 2009 11:30 am Post subject: |
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ValueThinker wrote:
| Quote: | | Remember Indians have exchange controls, confiscatory taxation (irregular) etc. so they have a particular fondness for portable and personal forms of wealth. |
Since India is forecast to grow and become wealthier in the future, wouldn’t the trend be for increased Indian gold demand since there is a need/demand for portable and personal forms of wealth.?
I live in “Harry Browne world." I do not worry about gold’s price direction or rate of ascent/descent. I just hold my balance of gold, bonds, cash, and stocks and rebalance back to my targets when they are above/below their bands.
Gold is very polarizing and brings strong opinions on both sides. I get a kick out of the vehement disgust that stock bugs heap on folks that use gold for diversification. I also get a kick out of the TV/AM Talk Radio commercials for gold that appeal to the road warrior future vision crowd. Nothing like G Gordon Liddy as my investment advisor.
_________________
Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac? George Carlin |
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mathu1968
Joined: 08 Sep 2009
Posts: 96
Location: Wisconsin
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| Posted: Wed Nov 04, 2009 12:50 pm Post subject: Hold gold as a % of your overall portfolio, no less than 5% |
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| mephistophles wrote: | | Owning a small amount of gold for diversification makes sense to me. |
I would only add this. I found this clip from today that I think is relevant to understanding the role of gold in ones over all portfolio. I wish he would have added that one should pick a percentage, buy, hold and rebalance. Other than that I thought his words were helpful. Again, I think anywhere from 5-25% Pick a percentage. I don't see how a person can have a truly diversified portfolio without this financial asset.
Here is the clip: http://www.youtube.com/watch?v=-42_FipDCwU
all the best. |
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mathu1968
Joined: 08 Sep 2009
Posts: 96
Location: Wisconsin
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| Posted: Wed Nov 04, 2009 12:55 pm Post subject: |
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| Rick Ferri wrote: | | mephistophles wrote: | | Owning a small amount of gold for diversification makes sense to me. |
I own a gold wedding ring, although only one. I don't think my wife would approve of diversification.
Rick Ferri |
Humor us Rick. As a professional financial advisor you know that less than 5% in a portfolio is insignificant and irrelevant. So come a little out on a limb with us, put 5% of your portfolio in gold. 
You may think that would be living on the wild side. But in fact, it would be a safe thing to do. |
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Lbill
Joined: 13 Mar 2008
Posts: 2078
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| Posted: Wed Nov 04, 2009 2:01 pm Post subject: |
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Hey, I've had a return of almost 300% on my gold investments since 2002. How much have you stock-bugs made? 
_________________
"Whenever you find yourself on the side of the majority, it is time to pause and reflect." ~ Mark Twain
"A foole and his money is soone parted." - J. Bridges, 1587 |
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Tramper Al
Joined: 18 Oct 2007
Posts: 2374
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| Posted: Wed Nov 04, 2009 2:10 pm Post subject: |
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| Lbill wrote: | | Hey, I've had a return of almost 300% on my gold investments since 2002. |
That does sound good, though I wonder if a real gold bug would define his return in terms of a lowly fiat paper money currency like the U.S. dollar? |
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Lbill
Joined: 13 Mar 2008
Posts: 2078
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| Posted: Wed Nov 04, 2009 2:43 pm Post subject: |
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| Quote: | | That does sound good, though I wonder if a real gold bug would define his return in terms of a lowly fiat paper money currency like the U.S. dollar? |
You've got a good point Al. I've wondered about that myself. What would make more sense is to view gold as the cash portion of your portfolio and denominate all your other assets in terms of gold. Makes much more sense than using any currency as your standard of reference since gold more-or-less retains it's real purchasing power (which is waaaay more than currency does). However, this makes for dismal reading of your annual investment returns report. The U.S. stock market really looks awful in relation to gold these days. Looks better when you view it in terms of a currency that is being debased.
_________________
"Whenever you find yourself on the side of the majority, it is time to pause and reflect." ~ Mark Twain
"A foole and his money is soone parted." - J. Bridges, 1587 |
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Tramper Al
Joined: 18 Oct 2007
Posts: 2374
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| Posted: Wed Nov 04, 2009 3:25 pm Post subject: |
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| Lbill wrote: | | The U.S. stock market really looks awful in relation to gold these days. |
Yes, people really cringe when they see that S&P 500 valued in ounces of gold over time. I do live in U.S. dollars, but even then there is another "how much do they buy" step involved. I'm one of those who thinks a little gold may help the overall portfolio, though I like to think I'm not at all buggy about it. |
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Valuethinker
Joined: 11 May 2007
Posts: 10937
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| Posted: Wed Nov 04, 2009 3:35 pm Post subject: |
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| brick-house wrote: |
Gold is very polarizing and brings strong opinions on both sides. I get a kick out of the vehement disgust that stock bugs heap on folks that use gold for diversification. I also get a kick out of the TV/AM Talk Radio commercials for gold that appeal to the road warrior future vision crowd. Nothing like G Gordon Liddy as my investment advisor. |
Actually Road Warrior was closer to the 'end of petroleum' crowd (which is not an allowed topic here). It's never quite explained what is causing civilization to break down (in the first movie, the one Hollywood dubbed with an American accent because they didn't think the audience would buy Mel Gibson's then-Aussie accent).
So gold--> useless.
Methane digesters and pigs --> very useful (ask Tina Turner ) |
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stratton
Joined: 04 Mar 2007
Posts: 6233
Location: Puget Sound
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| Posted: Wed Nov 04, 2009 7:08 pm Post subject: |
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| Rick Ferri wrote: | | mephistophles wrote: | | Owning a small amount of gold for diversification makes sense to me. |
I own a gold wedding ring, although only one. I don't think my wife would approve of diversification.
Rick Ferri |
There's lots of ways to diversify with yellow metal she might like ...
Paul |
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mephistophles
Joined: 27 Mar 2007
Posts: 1375
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| Posted: Wed Nov 04, 2009 7:09 pm Post subject: |
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| Rick Ferri wrote: | | mephistophles wrote: | | Owning a small amount of gold for diversification makes sense to me. |
I own a gold wedding ring, although only one. I don't think my wife would approve of diversification.
Rick Ferri |
I don't think she would object to your wearing a gold earring, as long as you stay out of the clubs.  |
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Rick Ferri
Joined: 26 Feb 2007
Posts: 2877
Location: Home on the range in Medina, Texas
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| Posted: Wed Nov 04, 2009 11:04 pm Post subject: |
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| mathu1968 wrote: | | Rick Ferri wrote: | | mephistophles wrote: | | Owning a small amount of gold for diversification makes sense to me. |
I own a gold wedding ring, although only one. I don't think my wife would approve of diversification.
Rick Ferri |
Humor us Rick. As a professional financial advisor you know that less than 5% in a portfolio is insignificant and irrelevant. So come a little out on a limb with us, put 5% of your portfolio in gold.
You may think that would be living on the wild side. But in fact, it would be a safe thing to do. |
I have about 50% of my wealth investing in that gold ring! How much more gold do I need?
Rick Ferri |
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mathu1968
Joined: 08 Sep 2009
Posts: 96
Location: Wisconsin
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| Posted: Wed Nov 04, 2009 11:18 pm Post subject: |
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| Rick Ferri wrote: | | mathu1968 wrote: | | Rick Ferri wrote: | | mephistophles wrote: | | Owning a small amount of gold for diversification makes sense to me. |
I own a gold wedding ring, although only one. I don't think my wife would approve of diversification.
Rick Ferri |
Humor us Rick. As a professional financial advisor you know that less than 5% in a portfolio is insignificant and irrelevant. So come a little out on a limb with us, put 5% of your portfolio in gold.
You may think that would be living on the wild side. But in fact, it would be a safe thing to do. |
I have about 50% of my wealth investing in that gold ring! How much more gold do I need?
Rick Ferri |
I like your style.  |
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stratton
Joined: 04 Mar 2007
Posts: 6233
Location: Puget Sound
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| Posted: Thu Nov 05, 2009 1:58 am Post subject: |
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| Rick Ferri wrote: | I have about 50% of my wealth investing in that gold ring! How much more gold do I need?
Rick Ferri |
That reminds me of a quote from science fiction author Lois McMaster Bujold: All wealth is biological.
Paul |
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Lbill
Joined: 13 Mar 2008
Posts: 2078
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| Posted: Thu Nov 05, 2009 8:43 am Post subject: |
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I just realized there is a perfect litmus test to determine when gold reaches it's final blow-off mania stage and it is time to exit: sell everything when Rick finally caves and picks up a few shares of GLD. 
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"Whenever you find yourself on the side of the majority, it is time to pause and reflect." ~ Mark Twain
"A foole and his money is soone parted." - J. Bridges, 1587 |
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