Search found 480 matches

by Wonk
Fri Dec 14, 2012 1:21 pm
Forum: Investing - Theory, News & General
Topic: Gold continues to fall
Replies: 178
Views: 20081

Re: Gold continues to fall

mptfan wrote:
Wonk wrote:In a year it will be at a higher price than it is today--count on it.
I just made a note on my calendar to check on your prediction. :wink:

Just for the record, today, December 15, 2011, gold is at $1,570 per ounce.
I made a note on my calendar too. Assuming no crash in the last 2 hours of trading, it looks like the price of gold is indeed higher 1 year later. A modest 8%, but I'll take it, along with an ice-cold belgian beer if we ever happen to meet :wink:
by Wonk
Fri Apr 06, 2012 9:51 am
Forum: Investing - Theory, News & General
Topic: POLL: How do you consider gold?
Replies: 61
Views: 4949

Re: POLL: How do you consider gold?

thekro wrote: My question is if gold is not money why do central banks hold it?
That question gets raised on many gold threads on this board, but time and again the anti-gold crowd can never come up with a good answer. If you believe The Bernank, it's because of "tradition."
by Wonk
Thu Dec 15, 2011 10:52 pm
Forum: Investing - Theory, News & General
Topic: Gold continues to fall
Replies: 178
Views: 20081

Re: Gold continues to fall

In a year it will be at a higher price than it is today--count on it. I just made a note on my calendar to check on your prediction. :wink: Just for the record, today, December 15, 2011, gold is at $1,570 per ounce. Thank you. I do hope you follow up. So what do you know that the million or so other gold traders don't know? If the market thinks the price will be higher a year from now, that expectation would already be embeded into the price today. The other million gold traders have their own reasons for liquidating--perhaps margin calls, mood, divorce, whatever. The market priced equities at 44x earnings in 1999. Was the market right or was mass perception too optimistic? I can't explain the daily or weekly machinations of the market. Wh...
by Wonk
Thu Dec 15, 2011 3:52 pm
Forum: Investing - Theory, News & General
Topic: Gold continues to fall
Replies: 178
Views: 20081

Re: Gold continues to fall

The irony is that in a few years, most of the folks on this board who scoff at holding gold as an investment will be saying "well, maybe 5% allocation is ok." Gold is down 20% from a few months ago. Big deal. Secular bull markets don't derail this easily. In a year it will be at a higher price than it is today--count on it.
by Wonk
Fri Oct 14, 2011 7:01 am
Forum: Investing - Theory, News & General
Topic: Gold's Expected Return
Replies: 97
Views: 11268

Re: Gold's Expected Return

Can someone clue me in to what's going on here? Here's the short answer: money supply is either backed by gold or a central bank deftly manages monetary policy to provide sustained positive real interest rates. That's confidence. In the case of 1970, Nixon closed the gold window and for the next 10 years the U.S. sustained persistent negative real interest rates--providing the catalyst for gold's ascension into the monetary conversation. That's loss of confidence. When Volker pushed rates much higher than inflation from 79-81, there was no incentive to hold gold over t-bills. For the next 20 years positive real interest rates fostered complacency within the market--allowing gold's market value to diverge from historical correlations with t...
by Wonk
Fri Aug 12, 2011 8:32 pm
Forum: Investing - Theory, News & General
Topic: Permanent Portfolio revisited
Replies: 193
Views: 23829

MCSquared wrote:The hangup seems to be the 25% gold allocation. Would it be fair to say that if the PP contained 25% TIPS for inflationary environment(s) (versus the gold the PP holds) you would agree that the entire portfolio is very Boglehead-like?
I was thinking the same thing. The permanent portfolio seems to be very much a Boglehead-compliant portfolio with the exception of gold. Low cost, stay the course, rebalance, don't time the market, etc.

It seems there's a subset of investors that just don't like the idea of gold in a portfolio. The fact that the gold market hasn't dropped substantially in over a decade has them flustered and agitated--classic case of shiny rock syndrome.

I particularly like the thread about the ponzi scheme.
by Wonk
Mon Aug 08, 2011 2:50 pm
Forum: Investing - Theory, News & General
Topic: anybody calling Peak in Gold?
Replies: 74
Views: 9403

Not even close to a top yet. Here was my position last year. Nothing's changed:

http://www.bogleheads.org/forum/viewtop ... old+bubble
by Wonk
Wed Jul 27, 2011 4:27 pm
Forum: Investing - Theory, News & General
Topic: ...
Replies: 70
Views: 9151

Re: Who wishes they bought some gold now?

Who wishes they bought some gold now? I do. The permanent portfolio devotees were right. People like myself that mocked the idea of buying gold were wrong. I didn't invest in gold until I bought into the permanent portfolio concept in 2008, so I was late to the game. I switched 80% of my assets into gold, silver and mining stocks in early 2009 after quite a bit more research. The remaining 20% stays in the permanent portfolio. I've been satisfied and see no reason to exit at this point. In fact, gold mining companies are my favorite target at the moment. People who mock gold don't understand it, and that's fine--they shouldn't be buying something they don't understand. In a well-diversified investment strategy like the permanent portfolio,...
by Wonk
Fri May 13, 2011 12:50 pm
Forum: Investing - Theory, News & General
Topic: Re: Which stage is the housing bubble at?
Replies: 23
Views: 2775

Nationally, capitulation (if you can call it that). About 15-20% downside left on an inflation-adjusted basis until we hit the mean. Of course, it all depends on where your market is. Miami looks like it's hit the mean already.
by Wonk
Fri May 13, 2011 11:37 am
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio Discussion (Cont'd)
Replies: 876
Views: 211209

Dr1Gonzo wrote: They all went down in 2007/08.
Yes, but only for a couple of months. By the end of the year, LTT's pulled the portfolio back into the positive. There's a difference between getting knocked down and getting knocked out.

In 40 years, the longest the PP has gone with a loss is 18 months--which was the 1981 Fed-induced tight money recession. Cash performed well, but not well enough to recoup losses in stocks, bonds & gold. On the year the portfolio returned -4%.

What I was asking LBill to explain was under what type of scenario will all assets come down both substantially and simultaneously for a prolonged period of time.
by Wonk
Fri May 13, 2011 8:13 am
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio Discussion (Cont'd)
Replies: 876
Views: 211209

Lbill wrote: I think there is a valid and weighty argument to be made that it will all come tumbling down at the same time: hard assets, stocks, bonds, your granny's garters, and the rest. There will be no place to hide.
Anything can happen, of course. But can you expound on that a bit? What type of event has the capacity to take down all asset classes simultaneously (short of a comet strike or some similar event)?
by Wonk
Wed May 04, 2011 11:12 am
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio Discussion (Cont'd)
Replies: 876
Views: 211209

Bongleur wrote:
Which brings up the question of how they know what your purchase price was? Are coin dealers required to report to the IRS that they sold you a coin & for what price?
Dealers don't report sales unless you pay in cash. They don't have to because wire transfers & checks leave a paper trail that can easily be identified later for examination if necessary.

If you report the gains from a coin sale, you should probably include a copy of the invoice from both sides of the transaction as proof of your basis. If you don't and you are audited, the IRS will likely ask for it anyway. If you don't have it, you risk having the full amount of the coin become taxable as a capital gain.
by Wonk
Wed Apr 27, 2011 8:42 am
Forum: Investing - Theory, News & General
Topic: Silver
Replies: 78
Views: 11964

If silver and gold represent a true measure of value, why isn't the price of silver always about 1/16 of the price of gold? How do people know whether it is silver or gold whose true value is fluctuating? I see more gold/silver threads, but still didn't see a good answer to this. Is there one? Probably because that was a ratio based on bullion coin weight from 150 years ago and doesn't have much meaning today. Well, what ratio has meaning today then? Presumably that should be the same ratio as 1 month ago, 1 year ago, 1 decade ago, etc. Either that, or we need to know which of the two is the "true" measure of value. Gold is in the central bank vaults, not silver. Gold is the primary monetary metal. Silver has been in and out of u...
by Wonk
Tue Apr 26, 2011 10:26 pm
Forum: Investing - Theory, News & General
Topic: Being Open Minded about Gold
Replies: 111
Views: 12001

There are other charts going back 1,000 years and 500-600 is the eye-ball price. That would be relevant if the money supply in which gold was priced grew only slightly more than the supply of gold during the same span of time. Unfortunately, that's not the case. http://www.mineweb.com/mineweb/media_stream/mineweb/1/82760/images/Blanchard%20chart%20jpeg.jpg Thats the reason gold bubbled - real, honest to goodness double-digit inflation! Where's that inflation now? Nowhere. For the past 10 years we've been told by the gold bugs that hyper-inflation is coming. Where is it? It's all speculation. Gold has gone higher on a hoax. So....what you're saying is starting in 2000, gold bugs all over the world decided to band together and create an infl...
by Wonk
Tue Apr 26, 2011 3:41 pm
Forum: Investing - Theory, News & General
Topic: Being Open Minded about Gold
Replies: 111
Views: 12001

Re: Being Open Minded about Gold

Rick Ferri wrote:
Inflation adjusted, on the high end, gold should be trading between $500 and $600 per ounce. That's the price.
I see the chart, but what is your start date? 1900? 1934? 1971?

What is your method of adjusting for inflation? I haven't seen anyone, anywhere, make any kind of coherent case for the inflation adjusted gold price at $600. Cash costs alone to mine an ounce are north of $600.

What date and price are you using for your start and what method of inflation adjustment?
by Wonk
Tue Apr 26, 2011 3:26 pm
Forum: Investing - Theory, News & General
Topic: Being Open Minded about Gold
Replies: 111
Views: 12001

Re: Being Open Minded about Gold

Rick Ferri wrote:
Over 3000 years of gold prices, there have been many spikes in supply and demand. However, gold prices have ALWAYS fallen back to the same inflation-adjusted price, which is about $600 per once in today's dollars.
Ok, I'd be very interested to see how you came up with the $600 figure. Please share.
by Wonk
Tue Apr 26, 2011 11:01 am
Forum: Investing - Theory, News & General
Topic: Being Open Minded about Gold
Replies: 111
Views: 12001

Re: Being Open Minded about Gold

tadamsmar wrote:Ferri took on gold a while back...
And gold beat him like a red headed stepchild. His call was for $700 gold by 2010 and $500 gold by 2011.

There is plenty of evidence gold is an excellent portfolio diversifier. As long as people don't get dogmatic about the topic, it's an open & shut case.
by Wonk
Tue Apr 12, 2011 1:38 pm
Forum: Investing - Theory, News & General
Topic: Gold and silver, why they aren't a bright idea
Replies: 66
Views: 9041

Can anyone explain why precious metal mining stocks (and indices of precious metal mining stocks) are such a poor proxy for gold/silver exposure? Obviously companies and their stock prices are affected by a lot of different factors, but given broad diversifiaction, isn't the vast demand/price increase for gold and silver supposed to put their profit margins through the roof? Like all companies, PM companies exist to turn a profit. Some factors related to the ability or inability to do so: 1. Input costs (labor, energy, equipment, technology) 2. Mine risk: collapse, flooding, fire, etc 3. Labor risk: strikes 4. Political risk: imposition of "excess profits" taxes & non-specific political strife between warring parties. 5. Mana...
by Wonk
Tue Apr 05, 2011 9:11 pm
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio Discussion (Cont'd)
Replies: 876
Views: 211209

chinose wrote:Thanks, And If I´ll go with the 10yrs Uruguay Treasury (only choice buy individually) How long I need to hold them before the sell and replace part?

Regards
3 years
by Wonk
Tue Apr 05, 2011 9:47 am
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio Discussion (Cont'd)
Replies: 876
Views: 211209

chinose wrote:Hi, I´m from Uruguay (zero etf for this country and no long treasury here) I wonder If it make any sense to do a PP like this:

25% GML or ILF
25% Gold
50% Emerging Market Debt (most ETFs with intermediate maturity bonds)

Regards
Try:

25% ILF or Total World Index (VTWSX) if you can
25% Gold
50% 10-year Uruguay Treasury equivalent if you can get it

I agree emerging market debt is NOT the choice you want.
by Wonk
Wed Mar 09, 2011 7:40 pm
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio Discussion (Cont'd)
Replies: 876
Views: 211209

1) with the surge in gold and precious metal related equities, is that 25% into Total Stock Market or SP500 now overweight to gold? 25% TSM. 2) what is the effect of dollar cost averaging the permanent portfolio? are all these returns based off of starting on January 1 of each year and rebalancing? What if I missed out this year, should I then wait until next year... The PP is a low volatility portfolio. Pretty much any time is a good time to go "all in" if you are ready for the change. Otherwise, DCA is fine. Just don't overly complicate it. It's meant to be easy peasy. 3) what is best way to combine this with Roth IRA? Should you put one "leg" of the 4 into Roth the whole time? For tax advantaged accounts like Roth, I...
by Wonk
Thu Feb 24, 2011 10:58 am
Forum: Investing - Theory, News & General
Topic: paying off mortgage early is a form of market timing
Replies: 19
Views: 2841

This issue is easily solved by the individual who runs the following scenario:

If:

mortgage/inflation spread + peace of mind is < or = expected real rate of return on long term asset allocation, don't pay off mortgage.

If:

mortgage/inflation spread + peace of mind is > or = expected real rate of return on long term asset allocation, pay off mortgage.

What a person has to do is quantify a value for peace of mind and then plug in the rest of the numbers. Admittedly this is tough to do because peace of mind is relatively intangible and filled with emotion.
by Wonk
Wed Jan 26, 2011 8:29 am
Forum: Investing - Theory, News & General
Topic: Harry Browne Permanent Portfolio Discussion (Cont'd)
Replies: 876
Views: 211209

>the PP has produced about 4% real So how does that stack up against other "preservation" oriented strategies?? Sounds like an ideal withdrawal phase AA if you can have a 4% SWR (actually more if leaving no money on the table). I believe Clive presented a SWR analysis of the PP since 1970 on the other board. If he's not posting here anymore, I'll ask over there to see if he can point to a reference. Basically, he showed that 4% WWR survived in the U.S. due to the low volatility of the portfolio. The 4% WR would have failed in Japan over the same time frame as inflation was minimal. I think 2.5%-3% was the magic number for SWR in Japan using the PP. The PP has produced 5%+ real since 1970 when employing 1-3 yr bonds instead of T-B...
by Wonk
Sat Jan 22, 2011 10:23 am
Forum: Investing - Theory, News & General
Topic: .....
Replies: 14
Views: 2341

GDX tracks HUI. Since the low in 2000, HUI is up over 1350%. Gold is up about 525% over the same time frame. As others have mentioned, hedges, input costs, earnings all come into play. Look at the 10 year and it all makes sense.
by Wonk
Wed Jan 19, 2011 5:25 pm
Forum: Investing - Theory, News & General
Topic: Will boomers retirement fuel their own bear market?
Replies: 47
Views: 7184

Who are they kidding? The Baby Boomers didn't save and invest enough to retire.

http://www.washingtonpost.com/wp-dyn/co ... 03322.html

Most will continue to work...because they'll have to.
by Wonk
Wed Jan 19, 2011 8:58 am
Forum: Investing - Theory, News & General
Topic: Saving Priorities - Pay Off Mortgage B4 Buying Stocks+Bonds
Replies: 20
Views: 3290

I agree with ramsfan and lifesoft. Those priorities make sense to me. Also, extremes at either end of the saving/spending spectrum can be unsatisfying. We all know how harmful too much spending can be. Conversely, if you save every last penny to pay off a mortgage and find you can't enjoy your younger, healthier years, where does that leave you? We only get one shot at this life. Be prudent, but watch how far you take it or you might miss out on some great experiences.
by Wonk
Sun Jan 16, 2011 10:18 am
Forum: Investing - Theory, News & General
Topic: Grok's tip 5:To keep real wealth skip Gold, buy TIPs
Replies: 117
Views: 41869

Is there another asset class which at this time is selling at about 3x the cost of production? Oil from Saudi Arabia costs something like $2-3/barrel to produce, but sells for market price just like any other barrel for nearly $100. Don't forget the demand side of the equation. Exactly. Also, the following link should be a great resource for Bongleur and others looking for updated costs of gold production across the industry: http://www.cnbc.com/id/41058173/Gold_Cost_of_Production Total costs of production currently sit around $1000/oz across the entire industry. I've seen other people on this board mention $300-$400 cost of production which I suspect is the cash cost they are referring to. Unfortunately, cash costs are not the only cost o...
by Wonk
Sat Jan 15, 2011 12:50 pm
Forum: Investing - Theory, News & General
Topic: Grok's tip 5:To keep real wealth skip Gold, buy TIPs
Replies: 117
Views: 41869

Two thoughts: I wonder if can someone post historical returns and standard deviations for the following two portfolios: Portfolio A: 50/50 stocks/bonds Portfolio B: 50/45/5 stocks/bonds/gold Make sure when you get your comparison, the data starts at 1970. No valid data set prior to 1970 will be valid as gold's price was not determined freely. The U.S. lost 12000 tons of gold to overseas redemptions from the 50s until the Nixon shock due to the $35 price not matching its true value overseas. As for me, I'll take 5000 years history over 13 to determine the probability of past performance continuing into the future. Nothing is guaranteed, but I like the odds. I also prefer that most investors don't buy gold. More for me at a lower price. Woma...
by Wonk
Fri Jan 14, 2011 11:30 am
Forum: Investing - Theory, News & General
Topic: The Death of Buy and Hold has Been Greatly Exaggerated
Replies: 20
Views: 4288

Also worth noting that a buy and hold portfolio using the Harry Browne 4 x 25 allocation resulted in over 12% annual returns over the same period at substantially less volatility.
by Wonk
Thu Jan 13, 2011 11:18 am
Forum: Investing - Theory, News & General
Topic: another mortgage question
Replies: 6
Views: 1090

Depends on what you value more...

Highest emotional return: mortgage payoff

Highest investment return: most likely a well diversified, low cost asset allocation

Neither is right or wrong, just choose which one means more to you over the next 10-20 years.
by Wonk
Wed Jan 12, 2011 9:44 am
Forum: Investing - Theory, News & General
Topic: Home price drops exceed Great Depression
Replies: 15
Views: 2432

If most analysts are expecting a low in 2011, it's highly likely they will be making revisions. Inflation-adjusted case-shiller currently sits around 126 and we've seen bottoms at about 110. Inflation will need to rise to support asset prices or asset prices will need to drop to find a bottom.

Judging by the number of foreclosures in the pipeline for the next few years, I have a hard time figuring out where they bought the rose-colored glasses. I've seen few bubbles fail to complete the bell curve in both time and magnitude. It's always possible the government alters price discovery again with incentives, but that seems to have run its course.
by Wonk
Sun Jan 02, 2011 11:52 am
Forum: Investing - Theory, News & General
Topic: When is a Bubble Not a Bubble?
Replies: 32
Views: 3952

Thanks Chet, you just saved me some time posting a detailed reply. nisiprius, Chet's explanation most likely answers your questions to me along the same lines.
by Wonk
Sat Jan 01, 2011 10:13 am
Forum: Investing - Theory, News & General
Topic: When is a Bubble Not a Bubble?
Replies: 32
Views: 3952

Re: When is a Bubble Not a Bubble?

I don't see what's disingenuous about it. During the time the price of gold was regulated, the price of the dollar was simply tied to the price of gold--dollars essentially were gold. To me it's disingenuous because the gold market wasn't free for price discovery until after 1971. Beginning in the late 50s and ending with the closing of the redemption window, the U.S. lost over 14000 tons of gold to overseas redemptions. Why? Because gold's value was greater than the officially mandated $35/oz. With regards to the Civil War and WWI, wars are always inflationary. Their costs are usually paid through the purchasing power of a country's currency. Gold has always allowed an investor to protect that purchasing power from becoming diluted.
by Wonk
Thu Dec 30, 2010 2:08 pm
Forum: Investing - Theory, News & General
Topic: When is a Bubble Not a Bubble?
Replies: 32
Views: 3952

Re: When is a Bubble Not a Bubble?

bob90245 wrote:Which begs the question. What is the chart really supposed to look like had the dollar not been convertible to a fixed amount of gold prior the 1970's? :?
It's a disingenuous chart at best used to prove a flawed opinion. The fact that the chart is not inflation adjusted simply magnifies the problem.
by Wonk
Wed Dec 29, 2010 11:17 pm
Forum: Investing - Theory, News & General
Topic: Kiplinger's Article on Online Brokerages
Replies: 13
Views: 2938

I'm surprised Scottrade was rated that low. They did receive 5 stars on customer service, which is my most important category. I think they are fantastic.
by Wonk
Wed Dec 29, 2010 3:27 pm
Forum: Investing - Theory, News & General
Topic: China to overtake US GDP by 2019?
Replies: 14
Views: 2569

China to overtake US GDP by 2019?

I was a kid in the 80s, so I don't personally remember....but weren't people saying the same thing about Japan back then?

http://www.economist.com/blogs/dailycha ... mn-content

Seems like a very aggressive compounded rate of growth over an extended period of time. Lots of things could go wrong.
by Wonk
Wed Dec 29, 2010 11:28 am
Forum: Investing - Theory, News & General
Topic: When is a Bubble Not a Bubble?
Replies: 32
Views: 3952

In 1934, the USD was devalued versus gold when the US set the new price at $35/oz, up from $20. This was a "new normal." Was gold a bubble at $35/oz? Compared to $20, you could say that. It also allowed the Fed to create more dollars to buy gold from the international market in the years that followed, creating more liquidity and subsequently more economic growth.

If gold becomes a part of a new international monetary agreement--like a "Bretton Woods III"--you could see another new normal with a gold price in the several thousands of dollars per ounce as an official price. There's no guarantee that will ever occur, but given historical precedent it's reasonable to assume the option is on the table.
by Wonk
Tue Dec 28, 2010 7:52 pm
Forum: Investing - Theory, News & General
Topic: You know gold is in a bubble when...
Replies: 54
Views: 8194

MossySF wrote:Anything you don't own that goes up ... bubble.

Anything you own that goes up ... sound investment.
Pure...awesomeness! Spot on.
by Wonk
Tue Dec 28, 2010 10:47 am
Forum: Investing - Theory, News & General
Topic: You know gold is in a bubble when...
Replies: 54
Views: 8194

RaleighStClaire wrote:I hope gold plummets but I'm not quite sure what the ramifications of such an event are. What presumably happens to other asset classes if gold fell to 700 by this time next year?
The last time gold crashed (1981), it was during a tight money (Fed induced) recession. Cash was the place to be, 19% returns. Gold crashes when confidence begins to rise in monetary and fiscal management.

Judging from the collective "gold is a bubble" theme on this thread, I see most bogleheads must be increasingly confident in monetary and fiscal policy.
by Wonk
Fri Dec 24, 2010 9:28 am
Forum: Investing - Theory, News & General
Topic: Planning on purchasing a home - best way to invest?
Replies: 10
Views: 2004

Auream wrote:
dm200 wrote:Depending on the situation and the details of what you are doing, if you have a mortgage on the present home, you could pay the mortgage down more quickly, thereby having more equity in the present home, for use on the next home.

Your return will be your interest rate (less any tax savings, if any).
This. Even if you recently refinanced into a very cheap loan, say 4.25% (my current rate), you're still almost certainly going to come out ahead by paying down that mortgage than by investing in any type of low-risk investment (CDs, money markets, bond funds, etc.) If your loan is any higher than that, then all the better.
Agreed. Do this.
by Wonk
Mon Dec 13, 2010 8:13 pm
Forum: Personal Investments
Topic: 83 year old should pay off mortgage or invest ?
Replies: 16
Views: 2791

Since no one else mentioned it, would she entertain the idea of selling the unit and renting? Seems to me if she has significant equity, it's languishing in the coop. IMO, the opportunity cost of paying off a mortgage is high right now. Home equity has returned -36% nationally the last 4 years with further declines in the pipeline. At best, that equity will only keep pace with inflation going forward. If it were my MIL, I'd suggest selling and investing the proceeds for an income stream.
by Wonk
Mon Dec 13, 2010 7:21 pm
Forum: Investing - Theory, News & General
Topic: Gold overpriced relative to inflation: Rick Ferri
Replies: 77
Views: 8599

Re: Non-rare gold coins

With respect to the ownership of physical bullion - is there a requirement of having assays run on each piece when it is finally sold? And if so, at what cost? RM Good question Mr. Random. I ask the same questions about standard/non-rare gold coins, such as American Eagles. How do coin dealers make sure they aren't buying counterfeit coins from a random guy who walks in from off the street (no offense Mr. Random)? Is there a fee to the seller for whatever test is used? Best, Neil Bullion bars should carry a certificate of authenticity from the mint. Most investors buy coins instead. The easiest method of verifying authenticity is with a Fisch tester: http://www.fisch.co.za/principle.htm Acid tests can be performed as well. The lowest-tech ...
by Wonk
Sat Nov 27, 2010 8:34 pm
Forum: Investing - Theory, News & General
Topic: Interesting Chart about SPDR Gold Shares from wsj
Replies: 12
Views: 1791

If gold has maintained its value, buying a suit in roman times, and a suit now for a given amount, as the story goes, it must be tied to something fundamental........ Right? I mean, if the story about maintaining value over the years is even loosely true, humans must in some way tie it to something, otherwise, its value would fluctuate much more wildly than it has one would think. Something that has no fundamental tie, maintaining a somewhat steady state value (if that is indeed the case)........ Does not quite make sense to me. If it was just random mob psychology, based on nothing.... why the purported near constant real value? People used to think it was the sun that moved throughout the sky. Then it was determined the sun stays fixed a...
by Wonk
Mon Nov 22, 2010 2:31 pm
Forum: Investing - Theory, News & General
Topic: Interview with Rick Ferri on Gold and Permanent Portfolio
Replies: 37
Views: 6241

How does one perform valuation analysis on gold? Is there an agreed upon standard like there is somewhat for equities? For example, one can look up one of the following equity valuations based on the following metrics: 12 month trailing earnings, 12 month forward earnings estimates or 10-year trailing earnings, aka P/E10. Generally, yes. A "fair value" for gold at the tail end of secular bear markets in equities is generally about 75% of the monetary base (MB). A further devaluation to 100+% of MB is an easy catalyst for economic expansion. http://goldnews.bullionvault.com/files/US_gold_reserves_2.png Given U.S. MB at a shade under $2T, fair value of gold today would be about $5700/oz. Others have different valuations such as gol...
by Wonk
Fri Nov 19, 2010 9:56 am
Forum: Investing - Theory, News & General
Topic: "Rick Ferri's Take on Gold"
Replies: 209
Views: 30347

I think Paul Boyer may have implied an excellent point: How many investors (even sophisticated ones) are willing to sit tight during 45% drawdowns while their portfolios underperform versus a dramatically lower volatility portfolio for 10+ years? That is what we see when comparing a "Core Four" portfolio vs. a "Permanent" portfolio. The promise is that a CF portfolio will outperform a PP by perhaps 50 bp over 30 years. The question is how many investors will have the intestinal fortitude to ride out the inevitable storms? I would submit that the vast majority of investors won't be able to stomach the volatility over the long term. And what about those investors who had a target retirement date somewhere between 2000-pres...
by Wonk
Tue Nov 09, 2010 12:09 pm
Forum: Investing - Theory, News & General
Topic: My take on gold
Replies: 30
Views: 3883

Couple of points: 1. patrick & subrosa -The chart posted includes the value of gold mining shares, not just bullion. -The 150,000 tons is a reference to all of the gold ever mined. Some of this value is in jewelry, which will be recycled back into investment supply. -subrosa is correct to include real estate as a global asset. 2. linuxizer I agree, not much of the 150,000 actually changes hands on monthly futures contracts. The U.S. has 8100 tons so relative to other governments it is a player but relative to total supply it is not. Also worth noting that the U.S. acts as a custodian for several thousand tons owned by overseas governments and investors. 3. neverknow There's been talk recently about silver shorts getting squeezed. Not su...
by Wonk
Mon Nov 08, 2010 4:21 pm
Forum: Investing - Theory, News & General
Topic: My take on gold
Replies: 30
Views: 3883

Re: My take on gold

It is the etf that is running the price up not the demand for the metal by the public IMHO. Here is the fund summary for GLD: "The investment seeks to replicate the performance, net of expenses, of the price of gold bullion." It would appear gold etf's track gold bullion, not the other way around. Also, GLD holds about 1,000 metric tons of gold & gold derivatives. An estimate by the World Gold Council puts the total supply of gold at 150,000 metric tons. Below is another way to look at gold assets relative to other assets during previous peaks: http://www.investmentu.com/images/gold-and-shares-vs-global-assets_5.jpg I would agree gold is running hot and heavy at the moment. We'll probably see some sort of pullback in the next...
by Wonk
Fri Nov 05, 2010 12:02 pm
Forum: Investing - Theory, News & General
Topic: "Rick Ferri's Take on Gold"
Replies: 209
Views: 30347

Re: "Rick Ferri's Take on Gold"

Taylor Larimore wrote:Hi Bogleheads:

It is useful to learn Rick Ferri's thoughts about investing in gold.

Rick Ferri’s Take on Gold
Thanks for the link Taylor. I can agree with Rick on one thing: if you think the world will collapse, owning shares of GLD will not save you. Other than that, I've been enjoying my pile of bricks. While 1 brick didn't turn into 2 bricks, it has been buying me more stocks.
by Wonk
Wed Nov 03, 2010 2:41 pm
Forum: Investing - Theory, News & General
Topic: QE2 announced
Replies: 19
Views: 2878

Bond market was expecting $100B/mo. At a minimum, Bill Gross was expecting $100B/mo. Remoras follow sharks.
by Wonk
Fri Oct 22, 2010 4:27 pm
Forum: Investing - Theory, News & General
Topic: Permanent Portfolio Poll
Replies: 222
Views: 28874

Gumby wrote:HB squashed this myth many times. The only reason Gold rose during that deflation was due to government intervention with Executive Order 6102 and the Gold Reserve Act. Without any government intervention, Gold would normally decline in deflationary environments as cash becomes more valuable.
The U.S. was on a gold standard with public convertibility until Roosevelt's E.O. Effectively cash = gold and gold = cash. From 1927-1933 CPI was -30%, so gold's value rose in real terms. The gold reserve act devalued the dollar relative to gold in order to produce the desired inflation to accelerate growth.