Does anyone own gold?

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hazlitt
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Does anyone own gold?

Post by hazlitt » Sun Jan 28, 2018 8:10 pm

I get the investment arguments against it. It doesn't produce anything, historically hasn't held up to the S&P, etc.

The hedge reasons to hold it may be very unlikely to happen, but they are catastrophic if they do occur. Federal debt actually becomes unsustainable, resulting in drastic budget cuts, tax increases, and the dollar losing its status as the world's reserve currency.

I'm 37 years old. I've got 5% gold in my taxable account and none in my 401k. My taxable account is worth more than my 401k, but it's not a huge difference.

Is there any data that supports that idea that a small amount of gold can reduce volatility? Anyone that thinks holding a small amount of gold is a good idea?

Thanks in advance.

Uniballer
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Joined: Thu Apr 20, 2017 9:55 am

Re: Does anyone own gold?

Post by Uniballer » Sun Jan 28, 2018 8:23 pm

This is discussed every week or two. Not very productive.

google site:bogleheads.org physical gold

Miriam2
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Re: Does anyone own gold?

Post by Miriam2 » Sun Jan 28, 2018 8:44 pm

I guess those who use the Harry Browne Permanent Portfolio own gold - looks like he suggests 25% of one's portfolio should be in gold :mrgreen:

Then 25% in the US total stock market, 25% in US long term Treasury bonds, and 25 % in US Treasury bills, at least that's what these articles say on our Boglehead Financial Page blog.

https://finpage.blog/2018/01/10/harry-b ... 17-update/
https://finpage.blog/?s=harry+browne+po ... &submit=Go

2015
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Re: Does anyone own gold?

Post by 2015 » Sun Jan 28, 2018 9:15 pm

Unfortunately, yes. Back when I was stupid(er) than I am now, I bought $21K worth of gold coins. I'm happy to report it's now worth around $16K after all these years. Even the small amount of space it takes in my safe deposit box is too much.

livesoft
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Re: Does anyone own gold?

Post by livesoft » Sun Jan 28, 2018 9:35 pm

Around this forum, no one owns gold, but gold owns them.
Wiki This signature message sponsored by sscritic: Learn to fish.

Stonebr
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Re: Does anyone own gold?

Post by Stonebr » Sun Jan 28, 2018 9:42 pm

I've owned gold for many years -- mostly purchased in the early 2000s at an average price of about $400 an ounce, but also some old Liberties and Indians purchased in the 1980s. I am (or was) a coin collector and bought coins by date. In those days gold got even less respect than it gets today. I put together a complete date-set of the gold eagles in various denominations because the price was so good and the hunt for dates was fun.

At this point I'd just as soon sell, but the taxes are prohibitive. So I'll probably just pass them on to the next generation.

I don't look at it as part of my portfolio. I read the Harry Browne books in the late 80s and thought the Permanent Portfolio idea had some appeal, but today consider him a crackpot.
"have more than thou showest, | speak less than thou knowest" -- The Fool in King Lear

bada bing
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Re: Does anyone own gold?

Post by bada bing » Sun Jan 28, 2018 9:43 pm

I have about 7 oz in bullion grade old euro-coins. Mostly French Angels and Roosters.
My cost basis is under $300 oz, I've had it for a long time. I also have $250 face value in
pre-65 US silver coins. I also own about 12K rounds of good NATO milspec ammo, mostly
5.56 with some 7.62 and 9x19mm. I also have a couple bitcoins that my cost basis is less
than $200. I also have about 6 person-months of long term storage food. None of that
is included in any accounting of my investments and would only amount to ~2% if I tried to
put a total value on it.

I wouldn't advise anyone to buy any of that for an investment. I wouldn't tie any money up in
any of it until/unless you have your basic investment portfolio and emergency fund in good shape.
After that, there are some very unlikely corner case scenarios where some of it could come in
handy. I sleep better at night after watching the latest episode of The Walking Dead, although
admittedly it is an expensive pile of stuff for a little better sleep.

Gold as an investment ? lol :oops:

enderland
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Re: Does anyone own gold?

Post by enderland » Sun Jan 28, 2018 9:48 pm

I have a gold wedding ring :beer

asif408
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Re: Does anyone own gold?

Post by asif408 » Sun Jan 28, 2018 9:50 pm

hazlitt wrote:
Sun Jan 28, 2018 8:10 pm
Is there any data that supports that idea that a small amount of gold can reduce volatility? Anyone that thinks holding a small amount of gold is a good idea?
There is data (google Bill Bernstein rebalancing gold). You only get the benefit of reduced volatility by rebalancing. Are you buying more gold when it's price goes down and stocks are up, or selling gold to buy stocks when stocks are down and gold is up? If not, then holding gold is just an emotional crutch with no actual tangible benefit. And you have to consider taxes and storage costs, which may offset any benefit.

I personally think holding a small amount is not unreasonable, but I would use precious metals equities as a proxy, and rebalance periodically.

hazlitt
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Re: Does anyone own gold?

Post by hazlitt » Sun Jan 28, 2018 10:01 pm

asif408 wrote:
Sun Jan 28, 2018 9:50 pm
hazlitt wrote:
Sun Jan 28, 2018 8:10 pm
Is there any data that supports that idea that a small amount of gold can reduce volatility? Anyone that thinks holding a small amount of gold is a good idea?
There is data (google Bill Bernstein rebalancing gold). You only get the benefit of reduced volatility by rebalancing. Are you buying more gold when it's price goes down and stocks are up, or selling gold to buy stocks when stocks are down and gold is up? If not, then holding gold is just an emotional crutch with no actual tangible benefit. And you have to consider taxes and storage costs, which may offset any benefit.

I personally think holding a small amount is not unreasonable, but I would use precious metals equities as a proxy, and rebalance periodically.
I got into investing late. At 31, my 401k was next to nothing and I didn't have a taxable account. Then our small business took off and I was able to start maxing out our 401k and plowing money into taxable. That's to say that I've had large balances in my accounts a short period of time and am still putting a decent amount of money into them. So rebalancing is all done by adding new money to the appropriate funds.

At 85/10/5, I think if I sold it all today, I would put it into bonds and go 85/15. My 401k is 93/7. I am not risk averse, but I think a total percentage of stocks of 90% (taxable and 401k combined) is probably high enough.

technovelist
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Re: Does anyone own gold?

Post by technovelist » Thu Feb 01, 2018 7:50 am

Miriam2 wrote:
Sun Jan 28, 2018 8:44 pm
I guess those who use the Harry Browne Permanent Portfolio own gold - looks like he suggests 25% of one's portfolio should be in gold :mrgreen:

Then 25% in the US total stock market, 25% in US long term Treasury bonds, and 25 % in US Treasury bills, at least that's what these articles say on our Boglehead Financial Page blog.

https://finpage.blog/2018/01/10/harry-b ... 17-update/
https://finpage.blog/?s=harry+browne+po ... &submit=Go
Yes, that is correct.
In theory, theory and practice are identical. In practice, they often differ.

Angelus359
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Re: Does anyone own gold?

Post by Angelus359 » Thu Feb 01, 2018 8:02 am

My headphones cables have gold plating on their connectors.
IT-DevOps System Administrator

UpperNwGuy
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Re: Does anyone own gold?

Post by UpperNwGuy » Thu Feb 01, 2018 8:34 am

I have never invested in gold, nor do I plan to do so. Nor do I have a secret closet full of canned goods.

Jack FFR1846
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Re: Does anyone own gold?

Post by Jack FFR1846 » Thu Feb 01, 2018 8:34 am

I'm buying coal right now. It's been hammered so much that it just has to go up, right? I have a special deal where I buy 800 tons and only have to keep 400 tons in my yard. Wait till all those new coal fired plants get built....I'm going to be rich. I just have to figure out how to move 400 tons with my snowmobile trailer.
Bogle: Smart Beta is stupid

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topper1296
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Re: Does anyone own gold?

Post by topper1296 » Thu Feb 01, 2018 8:53 am

I think that gold in a lousy investment, however I do think that a small allocation has some value as "portfolio insurance"/ballast to a diversified portfolio.

MI_bogle
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Re: Does anyone own gold?

Post by MI_bogle » Thu Feb 01, 2018 9:27 am

I think I have an old double eagle coin somewhere that I inherited from a relative, so I guess technically I own some gold

I think it's a poor investment though, in terms of actually owning it as part of a portfolio

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fishandgolf
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Re: Does anyone own gold?

Post by fishandgolf » Thu Feb 01, 2018 9:30 am

livesoft wrote:
Sun Jan 28, 2018 9:35 pm
Around this forum, no one owns gold, but gold owns them.
+1

I have a hunk in my tooth :) .....it's probably not the real stuff but they keep telling me it is.. :shock:

Patzer
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Re: Does anyone own gold?

Post by Patzer » Thu Feb 01, 2018 9:58 am

Gold is protection against a catastrophic systemic failure.
If the system fails, are you going to be happy with 5% of your assets. In other words, it has limited value as a hedge, because you cannot retire on 5% of your investable assets.
For the extremely wealthy, setting asides money in different forms on different continents is very common, to protect against any possible situation, but for the average investor, it is a waste of portfolio space.

The events that justify owning gold can usually be foreseen well in advance, and switching to gold even after the bad news hits has still been a good hedge.

Example 1: If you lived in Europe in the run up to WW2, you had several years to see what was coming on the horizon. Although, you would have been far better off to move to a different continent, than to try to hedge with gold.
Source: History books and political cartoons from the 1930s.

Example 2: In 2008, when the markets crashed, golds price actually dipped with the markets, and then proceeding to progressively go up for the next 2 years, until it started to drop once it was clear we were not going to have another great depression. Consequently, there was plenty of time to buy gold, even into 2009 and still make a handsome profit off it, and therefore no reason to hold it going into 2008.

For events that can't be foreseen,like a zombie apocalypse/Yellowstone eruption, gold in an ETF would probably not be worth much, because you won't be able to physically access it. In those situations, physical gold would have some value, but capable friends, dried food, and access to clean water would be far more valuable.

Valuethinker
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Re: Does anyone own gold?

Post by Valuethinker » Thu Feb 01, 2018 10:06 am

hazlitt wrote:
Sun Jan 28, 2018 8:10 pm
I get the investment arguments against it. It doesn't produce anything, historically hasn't held up to the S&P, etc.

The hedge reasons to hold it may be very unlikely to happen, but they are catastrophic if they do occur. Federal debt actually becomes unsustainable, resulting in drastic budget cuts, tax increases, and the dollar losing its status as the world's reserve currency.

I'm 37 years old. I've got 5% gold in my taxable account and none in my 401k. My taxable account is worth more than my 401k, but it's not a huge difference.

Is there any data that supports that idea that a small amount of gold can reduce volatility? Anyone that thinks holding a small amount of gold is a good idea?

Thanks in advance.
William Bernstein on Efficient Frontier had a piece a few years back "the most patient asset" which is worth a read.

Campbell Harvey at Duke University has published on gold as an asset class.

Lafder
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Re: Does anyone own gold?

Post by Lafder » Thu Feb 01, 2018 10:38 am

Do you have actual gold, or a piece of paper or online statement that says you own gold someone else is holding for you ?

lafder

hazlitt
Posts: 41
Joined: Sun Jan 29, 2017 10:00 pm

Re: Does anyone own gold?

Post by hazlitt » Thu Feb 01, 2018 9:40 pm

Lafder wrote:
Thu Feb 01, 2018 10:38 am
Do you have actual gold, or a piece of paper or online statement that says you own gold someone else is holding for you ?

lafder
Both. I'm only considering getting rid of the paper gold.

3funder
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Re: Does anyone own gold?

Post by 3funder » Thu Feb 01, 2018 9:57 pm

I own a gold necklace and a gold bracelet. Both are pretty cool. In my view, there are stocks, and there are bonds.

JBTX
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Re: Does anyone own gold?

Post by JBTX » Thu Feb 01, 2018 10:14 pm

Bought some GLD and SLV some years back as diversifiers. Approx 2% of my portfolio. Those same same investments are now 1% of my portfolio.

Everything else I own is up substantially except for those. I guess they worked. They definitely diversified my portfolio returns.

itstoomuch
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Re: Does anyone own gold?

Post by itstoomuch » Thu Feb 01, 2018 11:01 pm

Yes, IAU.
To irritate older bro.
As a monitor.
Currently has better returns than cash, but is because of the buy point.
It is a very small amount of our Discretionary..
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

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StormShadow
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Re: Does anyone own gold?

Post by StormShadow » Thu Feb 01, 2018 11:05 pm

I have a few silver and gold coins. It doesn't make up 5% (maybe close to 1%) and I don't recommend it as an investment.

But I'd MUCH rather have gold than bitcoin. :mrgreen:

Broken Man 1999
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Re: Does anyone own gold?

Post by Broken Man 1999 » Fri Feb 02, 2018 5:02 pm

Yep, I have six one ounce proof gold coins from the US mint(s). I need two more so I can give all four of my grandchildren the same number of coins. I'm in no hurry to buy, though.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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