Gold?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
User avatar
Topic Author
Phinance
Posts: 46
Joined: Fri Apr 12, 2019 3:33 pm

Gold?

Post by Phinance » Wed Jul 17, 2019 12:21 pm

I, like many of BHers, am anti-gold, I don’t understand how it is an investment, seems like pure speculation. Saw this recent post by Ray Dalio, any merit to his gold argument?

https://www.cnbc.com/2019/07/17/ray-dal ... rkets.html

“I know gold sounds like a kooky investment. But gold is just an alternative currency to fiat paper currencies. If your portfolio is likely to perform poorly in the adverse environment I’ve been describing—less effective monetary policy, the need to run larger fiscal deficits and monetize them, and challenging politics—the behavior of gold as alternative cash has some diversifying merit.”
"Our life is frittered away by detail. Simplify, simplify." -Thoreau

DarkHelmetII
Posts: 367
Joined: Mon Jul 24, 2017 12:25 pm

Re: Gold?

Post by DarkHelmetII » Wed Jul 17, 2019 12:26 pm

My opinion is that gold is not an investment but rather an insurance policy of sorts. Its cost is the drag on portfolio performance. Its value can be seen in times of unanticipated inflation runups and / or catastrophic events.

I don't own gold and am not necessarily advocating to do so. But rather am suggesting that such discussions might be more fruitful in the context of speaking about gold as insurance rather than an investment.

User avatar
samsoes
Posts: 1275
Joined: Tue Mar 05, 2013 9:12 am
Location: Northeast Rat Race

Re: Gold?

Post by samsoes » Wed Jul 17, 2019 12:27 pm

His company runs a hedge fund. Hedge funds tend to manipulate markets to their advantage. I would suggest doing the opposite of what a hedge fund operator suggests.
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

User avatar
willthrill81
Posts: 11930
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Gold?

Post by willthrill81 » Wed Jul 17, 2019 12:36 pm

First of all, I'm not a fan at all of Dalio and wouldn't recommend that anyone pay any attention to anything he says.

That being said, the data do not necessarily support an 'anti-gold' position. Yes, it's just a metal, but portfolios that had up to a 20% allocation to gold over the last nearly 50 years had significantly higher safe withdrawal rates than those without it. For instance, since 1972, the 30 year safe withdrawal rate for a 60/40 portfolio was 4.5%. But if you substituted half the bonds with gold (i.e. a 60/20/20 AA), the SWR was 5.4%. This is largely because gold would have really helped during the 1970s stagflation when stocks and especially bonds were really suffering. However, gold would have helped year 2000 retirees significantly as well, who had the worst sequence of returns in about 25 years.
DarkHelmetII wrote:
Wed Jul 17, 2019 12:26 pm
My opinion is that gold is not an investment but rather an insurance policy of sorts. Its cost is the drag on portfolio performance. Its value can be seen in times of unanticipated inflation runups and / or catastrophic events.
Correct. Over the last almost 50 years, an allocation to gold would have lowered average returns, but it would have helped to boost returns when the rest of the portfolio wasn't doing well. From 1972-1981, a portfolio with 60% TSM and 40% intermediate-term Treasuries had a real return of -1.49%. But a 60/20/20 portfolio (see above) had a real return of 3.56%. And from 2000-2009, the former's real return was .84%, but the latter's was 2.11%. So gold may bring down your average return, but it may help to reduce your 'tail risk'.
Last edited by willthrill81 on Wed Jul 17, 2019 12:40 pm, edited 1 time in total.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Jack FFR1846
Posts: 9742
Joined: Tue Dec 31, 2013 7:05 am

Re: Gold?

Post by Jack FFR1846 » Wed Jul 17, 2019 12:38 pm

Ray is either stupid or making things up. I'd think the latter. Gold is not currency. When I go into Taco Bell and order a #8, 3 tacos, crunchy, were I to hand the cashier a 1 ounce gold coin, he's going to likely think it's fake, hand it back and say "we don't accept this". Heck....my kids both barely use actual money. They use only credit cards. My 22 year old gets money from his grandfather during visits and gives it to me like they're Weimar Republic bearer bonds that he has no use for.

If you're thinking of gold, be different and buy coal. Listen to the Steve Martin gig on this. Or maybe aluminum. I know aluminum's really down. It's got to go up eventually, right?
Bogle: Smart Beta is stupid

DesertDiva
Posts: 465
Joined: Thu Mar 01, 2018 12:49 pm
Location: In the desert

Re: Gold?

Post by DesertDiva » Wed Jul 17, 2019 12:40 pm

Gold is for jewelry :happy

rascott
Posts: 495
Joined: Wed Apr 15, 2015 10:53 am

Re: Gold?

Post by rascott » Wed Jul 17, 2019 12:44 pm

I own rental real estate as an inflation hedge. At least I'm getting cash flow off of it, unlike a rock from the ground.

petulant
Posts: 618
Joined: Thu Sep 22, 2016 1:09 pm

Re: Gold?

Post by petulant » Wed Jul 17, 2019 12:47 pm

Positive "investment" returns rely on a set of social, political, and legal conditions that make possible advantageous market exchanges for goods, services, and capital. If these conditions begin to deteriorate, a rational investor would price less favorably all assets built on these conditions. Often, if this system includes a paper currency, the currency will also deteriorate. Gold is an asset whose value depends much less on these conditions, so its value may decline less during deteriorating investment conditions. From the perspective of a depreciating paper currency, gold will thus have a positive return, much as other currencies do in relation to the depreciating paper currency. In that sense, gold can take on aspects of a foreign currency if one is looking for this particular kind of decline/deterioration hypothesis. That is all he is saying.

User avatar
DanMahowny
Posts: 922
Joined: Sun Aug 06, 2017 8:25 pm

Re: Gold?

Post by DanMahowny » Wed Jul 17, 2019 12:50 pm

Gold is not an investment. Gold is insurance.
Funding secured

User avatar
willthrill81
Posts: 11930
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Gold?

Post by willthrill81 » Wed Jul 17, 2019 12:51 pm

DanMahowny wrote:
Wed Jul 17, 2019 12:50 pm
Gold is not an investment. Gold is insurance.
And maybe cheap insurance at that.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
Topic Author
Phinance
Posts: 46
Joined: Fri Apr 12, 2019 3:33 pm

Re: Gold?

Post by Phinance » Wed Jul 17, 2019 1:16 pm

Very informative, thank you, insurance vehicle, metal in the ground.
"Our life is frittered away by detail. Simplify, simplify." -Thoreau

WhiteMaxima
Posts: 1930
Joined: Thu May 19, 2016 5:04 pm

Re: Gold?

Post by WhiteMaxima » Wed Jul 17, 2019 1:21 pm

Gold mine company. It is a business. gold coin is already a product. You buy apple computer company stock not ipad for investment.

MotoTrojan
Posts: 5520
Joined: Wed Feb 01, 2017 8:39 pm

Re: Gold?

Post by MotoTrojan » Wed Jul 17, 2019 1:23 pm

willthrill81 wrote:
Wed Jul 17, 2019 12:36 pm
First of all, I'm not a fan at all of Dalio and wouldn't recommend that anyone pay any attention to anything he says.

That being said, the data do not necessarily support an 'anti-gold' position. Yes, it's just a metal, but portfolios that had up to a 20% allocation to gold over the last nearly 50 years had significantly higher safe withdrawal rates than those without it. For instance, since 1972, the 30 year safe withdrawal rate for a 60/40 portfolio was 4.5%. But if you substituted half the bonds with gold (i.e. a 60/20/20 AA), the SWR was 5.4%. This is largely because gold would have really helped during the 1970s stagflation when stocks and especially bonds were really suffering. However, gold would have helped year 2000 retirees significantly as well, who had the worst sequence of returns in about 25 years.

Is a 30 year max safe withdrawal rate defined as the rate that would get as close to $0 as possible at some point during the span (no margin)?

User avatar
willthrill81
Posts: 11930
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Gold?

Post by willthrill81 » Wed Jul 17, 2019 1:27 pm

MotoTrojan wrote:
Wed Jul 17, 2019 1:23 pm
willthrill81 wrote:
Wed Jul 17, 2019 12:36 pm
First of all, I'm not a fan at all of Dalio and wouldn't recommend that anyone pay any attention to anything he says.

That being said, the data do not necessarily support an 'anti-gold' position. Yes, it's just a metal, but portfolios that had up to a 20% allocation to gold over the last nearly 50 years had significantly higher safe withdrawal rates than those without it. For instance, since 1972, the 30 year safe withdrawal rate for a 60/40 portfolio was 4.5%. But if you substituted half the bonds with gold (i.e. a 60/20/20 AA), the SWR was 5.4%. This is largely because gold would have really helped during the 1970s stagflation when stocks and especially bonds were really suffering. However, gold would have helped year 2000 retirees significantly as well, who had the worst sequence of returns in about 25 years.
Is a 30 year max safe withdrawal rate defined as the rate that would get as close to $0 as possible at some point during the span (no margin)?
Yes, the SWR explicitly allows for portfolio depletion within the specified period, 30 years in the case I referenced. So in at least one 30 year period since 1972, withdrawing 4.5% from the portfolio in year 1 and then adjusting that dollar amount for inflation in subsequent years would have depleted the portfolio in exactly 30 years.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

mbasherp
Posts: 220
Joined: Mon Jun 26, 2017 8:48 am

Re: Gold?

Post by mbasherp » Wed Jul 17, 2019 1:31 pm

As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.

petulant
Posts: 618
Joined: Thu Sep 22, 2016 1:09 pm

Re: Gold?

Post by petulant » Wed Jul 17, 2019 1:32 pm

IIRC the perpetual withdrawal rate improvement for small gold allocations is also advantageous--depletion in SWR analysis isn't a gotcha. (The simba spreadsheet shows both.)

User avatar
permport
Posts: 172
Joined: Sat Mar 31, 2018 11:20 am

Re: Gold?

Post by permport » Wed Jul 17, 2019 2:52 pm

Listen to the man. Put 10% of your portfolio in gold.
Buy right and hold tight.

User avatar
willthrill81
Posts: 11930
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Gold?

Post by willthrill81 » Wed Jul 17, 2019 2:55 pm

mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
Bogle himself explicitly recommended a 5% allocation to gold, so it can't be argued that doing so isn't Bogle-approved, even if it isn't Boglehead-approved.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

gougou
Posts: 177
Joined: Thu Sep 28, 2017 7:42 pm
Location: San Francisco Bay Area

Re: Gold?

Post by gougou » Wed Jul 17, 2019 3:41 pm

Why do people only talk about gold when it ran up from $1.2K to $1.4K recently?

How would a 5% allocation help a portfolio in any ways? Gold has historically returned less than bond with higher volatility so it is unlikely to help a stock/bond portfolio. https://www.gold.org/goldhub/portfolio-tools/simulator has a good simulator that you can use.

User avatar
willthrill81
Posts: 11930
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Gold?

Post by willthrill81 » Wed Jul 17, 2019 3:45 pm

gougou wrote:
Wed Jul 17, 2019 3:41 pm
Why do people only talk about gold when it ran up from $1.2K to $1.4K recently?

How would a 5% allocation help a portfolio in any ways? Gold has historically returned less than bond with higher volatility so it is unlikely to help a stock/bond portfolio. https://www.gold.org/goldhub/portfolio-tools/simulator has a good simulator that you can use.
If returns were all we were concerned about, we'd advocate for everyone to be 100% stock or, better yet, leverage up to be over 100% stock.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Alan S.
Posts: 8527
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Gold?

Post by Alan S. » Wed Jul 17, 2019 3:51 pm

Anyone know someone who purchased enough physical gold to get the free safe? :arrow:

Do they hire a 24 hr armed guard service?

Van Down By Da River
Posts: 52
Joined: Wed May 22, 2019 2:27 pm

Re: Gold?

Post by Van Down By Da River » Wed Jul 17, 2019 4:05 pm

DanMahowny wrote:
Wed Jul 17, 2019 12:50 pm
Gold is not an investment. Gold is insurance.
This pretty much sums it up. I have 5% of my Simple IRA going towards a gold mining fund(5% in a real estate REIT too). Not because I think it will juice my returns, but because I sleep better at night knowing that I have something in my portfolio that will (hopefully) zig when the market zags, preventing me from making any drastic moves at the wrong time.

Plus, gold is one of those things that there will always be a demand for. There is no real rational explanation why we are drawn to this shiny little metal, its like a dog and a tennis ball, its just in our genes.

Jack FFR1846
Posts: 9742
Joined: Tue Dec 31, 2013 7:05 am

Re: Gold?

Post by Jack FFR1846 » Wed Jul 17, 2019 4:18 pm

willthrill81 wrote:
Wed Jul 17, 2019 2:55 pm
mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
Bogle himself explicitly recommended a 5% allocation to gold, so it can't be argued that doing so isn't Bogle-approved, even if it isn't Boglehead-approved.
Everyone pulls out that number with no context. Go to 56 minutes: https://www.youtube.com/watch?v=3uJbHREmUs4

The 5% gold is with respect to The Blair Academy scholarship fund that Jack managed. 45% Wellington, 45% Balanced Index Fund, 5% gold, 5% emerging markets index.

This is meant to be completely hands off and held like this forever. Jack analyzes the make up of these funds as well, especially the lack of any international and the makeup of the bond portion....liking not too much government.

So Jack didn't recommend "Everybondy use 5% gold and I don't care what else you do". He disclosed what he allocated (10 years prior, by the way) for a scholarship fund where the investment would never be changed. Are you at zero international? Wellington? Bal Index? Emerging markets index? Are you a scholarship? Will you never touch this for a hundred years?

Here, Jack talked about international with Christine Benz https://www.youtube.com/watch?v=P54trh0Rre8
Last edited by Jack FFR1846 on Wed Jul 17, 2019 4:21 pm, edited 1 time in total.
Bogle: Smart Beta is stupid

MotoTrojan
Posts: 5520
Joined: Wed Feb 01, 2017 8:39 pm

Re: Gold?

Post by MotoTrojan » Wed Jul 17, 2019 4:21 pm

mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
How is the flight to quality bonds any different than a flight to gold in a state of distress?

User avatar
willthrill81
Posts: 11930
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Gold?

Post by willthrill81 » Wed Jul 17, 2019 4:21 pm

Jack FFR1846 wrote:
Wed Jul 17, 2019 4:18 pm
willthrill81 wrote:
Wed Jul 17, 2019 2:55 pm
mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
Bogle himself explicitly recommended a 5% allocation to gold, so it can't be argued that doing so isn't Bogle-approved, even if it isn't Boglehead-approved.
Everyone pulls out that number with no context. Go to 56 minutes: https://www.youtube.com/watch?v=3uJbHREmUs4

The 5% gold is with respect to The Blair Academy scholarship fund that Jack managed. 45% Wellington, 45% Balanced Index Fund, 5% gold, 5% emerging markets index.

This is meant to be completely hands off and held like this forever. Jack analyzes the make up of these funds as well, especially the lack of any international and the makeup of the bond portion....liking not too much government.

So Jack didn't recommend "Everybondy use 5% gold and I don't care what else you do". He disclosed what he allocated (10 years prior, by the way) for a scholarship fund where the investment would never be changed. Are you at zero international? Wellington? Bal Index? Emerging markets index? Are you a scholarship? Will you never touch this for a hundred years?
It's true that there was context to his statement, but the bigger point is that he did recommend a small allocation to gold for a portfolio with a long time horizon. There's no logical reason to believe that Bogle only believed gold to be useful in this specific AA with those specific funds.

And scholarship funds are withdrawn from at fairly regular intervals to pay for the ongoing scholarship. In a very real way, there's little difference between a scholarship or endowment fund from an investor's portfolio who has a significantly longer than typical time horizon to make withdrawals, where the perpetual withdrawal rate is used instead of the safe withdrawal rate.
Last edited by willthrill81 on Wed Jul 17, 2019 4:24 pm, edited 1 time in total.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

MotoTrojan
Posts: 5520
Joined: Wed Feb 01, 2017 8:39 pm

Re: Gold?

Post by MotoTrojan » Wed Jul 17, 2019 4:23 pm

gougou wrote:
Wed Jul 17, 2019 3:41 pm
Why do people only talk about gold when it ran up from $1.2K to $1.4K recently?

How would a 5% allocation help a portfolio in any ways? Gold has historically returned less than bond with higher volatility so it is unlikely to help a stock/bond portfolio. https://www.gold.org/goldhub/portfolio-tools/simulator has a good simulator that you can use.
Not true. In the past it’s added a significant boost to SWR. I still don’t hold any.

EDIT: 5% may not, but 5% of almost anything won’t do much (maybe BTC).

petulant
Posts: 618
Joined: Thu Sep 22, 2016 1:09 pm

Re: Gold?

Post by petulant » Wed Jul 17, 2019 4:38 pm

MotoTrojan wrote:
Wed Jul 17, 2019 4:21 pm
mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
How is the flight to quality bonds any different than a flight to gold in a state of distress?
Flight to quality bonds only happens if the bonds are quality. In the event U.S. government debt loses credibility, it is likely both U.S. bonds and equities will suffer. In that event, there may be a flight to gold only.

FI4LIFE
Posts: 151
Joined: Sun Apr 28, 2019 9:27 am

Re: Gold?

Post by FI4LIFE » Wed Jul 17, 2019 4:53 pm

MotoTrojan wrote:
Wed Jul 17, 2019 4:21 pm
mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
How is the flight to quality bonds any different than a flight to gold in a state of distress?
Dalio explains his position on this, which answers your question. I subscribe to his newsletter.

https://www.linkedin.com/pulse/paradigm ... ublished=t


Edit: It's a long read but worth your time

User avatar
permport
Posts: 172
Joined: Sat Mar 31, 2018 11:20 am

Re: Gold?

Post by permport » Wed Jul 17, 2019 7:19 pm

FI4LIFE wrote:
Wed Jul 17, 2019 4:53 pm
MotoTrojan wrote:
Wed Jul 17, 2019 4:21 pm
mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
How is the flight to quality bonds any different than a flight to gold in a state of distress?
Dalio explains his position on this, which answers your question. I subscribe to his newsletter.

https://www.linkedin.com/pulse/paradigm ... ublished=t


Edit: It's a long read but worth your time
It’s a well written and reasoned paper, but it won’t convince the vast majority of people on this forum to buy gold unfortunately.
Buy right and hold tight.

heyyou
Posts: 3509
Joined: Tue Feb 20, 2007 4:58 pm

Re: Gold?

Post by heyyou » Thu Jul 18, 2019 1:59 pm

If one has enough of other assets (spending only from bonds?) relative to expenses, gold is not necessary. Many here can reduce expenses as needed (spending a somewhat fixed percentage of recent annual portfolio value) so striving to maintain a specific asset level in a fluctuating market, is not necessary. Succinctly, some types of insurance are not necessary, just perceptions of need.

GRP
Posts: 99
Joined: Wed Nov 22, 2017 5:35 pm

Re: Gold?

Post by GRP » Thu Jul 18, 2019 2:22 pm

permport wrote:
Wed Jul 17, 2019 7:19 pm
FI4LIFE wrote:
Wed Jul 17, 2019 4:53 pm
MotoTrojan wrote:
Wed Jul 17, 2019 4:21 pm
mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
How is the flight to quality bonds any different than a flight to gold in a state of distress?
Dalio explains his position on this, which answers your question. I subscribe to his newsletter.

https://www.linkedin.com/pulse/paradigm ... ublished=t


Edit: It's a long read but worth your time
It’s a well written and reasoned paper, but it won’t convince the vast majority of people on this forum to buy gold unfortunately.
Indeed. I love this forum and all, but I must concede the Bogleheads is a bit of an echo chamber sometimes.

The last paragraph is pretty explicit:
I think these are unlikely to be good real returning investments and that those that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant, such as gold. Additionally, for reasons I will explain in the near future, most investors are underweighted in such assets, meaning that if they just wanted to have a better balanced portfolio to reduce risk, they would have more of this sort of asset. For this reason, I believe that it would be both risk-reducing and return-enhancing to consider adding gold to one’s portfolio. I will soon send out an explanation of why I believe that gold is an effective portfolio diversifier.
Cue the chorus of reasons that allows one to "explain away" the need for gold or alternatives. Just a bunch of hand waving: "Ray Dalio is just fear monger."; "He's just trying to sell you something."; "I'll trust this other guru over this guru."

User avatar
bertilak
Posts: 6679
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Gold?

Post by bertilak » Thu Jul 18, 2019 2:46 pm

Phinance wrote:
Wed Jul 17, 2019 12:21 pm
I, like many of BHers, am anti-gold, I don’t understand how it is an investment, seems like pure speculation.
To many people, speculation and investment are one and the same. That misunderstanding is quite useful to the sales staff!

Gold as a store of value is another issue. My belief is that in our economy there are better things for that, e.g. US Government Bonds, but I admit it is arguable.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker, the Cowboy Poet

pepys
Posts: 16
Joined: Mon Nov 12, 2018 10:34 am

Re: Gold?

Post by pepys » Thu Jul 18, 2019 4:26 pm

willthrill81 wrote:
Wed Jul 17, 2019 12:36 pm
Yes, it's just a metal, but portfolios that had up to a 20% allocation to gold over the last nearly 50 years had significantly higher safe withdrawal rates than those without it. For instance, since 1972, the 30 year safe withdrawal rate for a 60/40 portfolio was 4.5%. But if you substituted half the bonds with gold (i.e. a 60/20/20 AA), the SWR was 5.4%. This is largely because gold would have really helped during the 1970s stagflation when stocks and especially bonds were really suffering.
Until November 1973, the dollar was still mostly pegged to gold (central banks were still exchanging it at the fixed price), and it wasn't until the Jamaica Accords in 1976 when price fixing was officially ended. This is after decades of the price being artificially low. And in the US, it was illegal to speculate in gold until January 1, 1975, artificially reducing demand, and making this strategy illegal to implement for US citizens. Price fixing cannot end again and gold speculation cannot be made legal again. It might do well in the next stagflation, or it might collapse even worse than stocks/bonds. Overall, I see no reason to expect any better than returns since January 1, 1975, which were pretty bad; real returns were about 0.80% for gold versus 7.87% for the S&P 500. Go back a couple hundred years instead, and the returns are even worse for gold.

I'm fine with people promoting gold speculation, but it seems almost every time these misleading dates are used (somewhere between the late 1960s and 1972), sometimes mentioning the Nixon shock, but almost never that the Bretton Woods system was still in place, almost never that central banks were still exchanging gold at the fixed price, and almost never that it was still illegal to speculate in gold in the US. Which makes sense, because most of the returns happened in this few year period (the real annual rate of return since 1972 is 3.33%, or over 4 times as high as the fairer start date and the real annual rate of return between 1972 and 1975 was about 50%).

User avatar
willthrill81
Posts: 11930
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Gold?

Post by willthrill81 » Thu Jul 18, 2019 5:09 pm

pepys wrote:
Thu Jul 18, 2019 4:26 pm
willthrill81 wrote:
Wed Jul 17, 2019 12:36 pm
Yes, it's just a metal, but portfolios that had up to a 20% allocation to gold over the last nearly 50 years had significantly higher safe withdrawal rates than those without it. For instance, since 1972, the 30 year safe withdrawal rate for a 60/40 portfolio was 4.5%. But if you substituted half the bonds with gold (i.e. a 60/20/20 AA), the SWR was 5.4%. This is largely because gold would have really helped during the 1970s stagflation when stocks and especially bonds were really suffering.
Until November 1973, the dollar was still mostly pegged to gold (central banks were still exchanging it at the fixed price), and it wasn't until the Jamaica Accords in 1976 when price fixing was officially ended. This is after decades of the price being artificially low. And in the US, it was illegal to speculate in gold until January 1, 1975, artificially reducing demand, and making this strategy illegal to implement for US citizens. Price fixing cannot end again and gold speculation cannot be made legal again. It might do well in the next stagflation, or it might collapse even worse than stocks/bonds. Overall, I see no reason to expect any better than returns since January 1, 1975, which were pretty bad; real returns were about 0.80% for gold versus 7.87% for the S&P 500. Go back a couple hundred years instead, and the returns are even worse for gold.

I'm fine with people promoting gold speculation, but it seems almost every time these misleading dates are used (somewhere between the late 1960s and 1972), sometimes mentioning the Nixon shock, but almost never that the Bretton Woods system was still in place, almost never that central banks were still exchanging gold at the fixed price, and almost never that it was still illegal to speculate in gold in the US. Which makes sense, because most of the returns happened in this few year period (the real annual rate of return since 1972 is 3.33%, or over 4 times as high as the fairer start date and the real annual rate of return between 1972 and 1975 was about 50%).
Gold's ability to boost SWRs was not limited to the 1970s at all. It would have significantly improved the performance of year 2000 retirees' portfolios, for instance. But I have no idea how it or any other asset will perform in the future.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

WhiteMaxima
Posts: 1930
Joined: Thu May 19, 2016 5:04 pm

Re: Gold?

Post by WhiteMaxima » Thu Jul 18, 2019 5:18 pm

You don't invest in Gold. Gold is already a finished product. Like iPad. You need to invest in Gold Mine Company, just as invest in Apple Computer Company.

mikeyzito22
Posts: 208
Joined: Sat Dec 02, 2017 5:42 pm

Re: Gold?

Post by mikeyzito22 » Thu Jul 18, 2019 5:25 pm

willthrill81 wrote:
Wed Jul 17, 2019 12:36 pm
First of all, I'm not a fan at all of Dalio and wouldn't recommend that anyone pay any attention to anything he says.

That being said, the data do not necessarily support an 'anti-gold' position. Yes, it's just a metal, but portfolios that had up to a 20% allocation to gold over the last nearly 50 years had significantly higher safe withdrawal rates than those without it. For instance, since 1972, the 30 year safe withdrawal rate for a 60/40 portfolio was 4.5%. But if you substituted half the bonds with gold (i.e. a 60/20/20 AA), the SWR was 5.4%. This is largely because gold would have really helped during the 1970s stagflation when stocks and especially bonds were really suffering. However, gold would have helped year 2000 retirees significantly as well, who had the worst sequence of returns in about 25 years.
DarkHelmetII wrote:
Wed Jul 17, 2019 12:26 pm
My opinion is that gold is not an investment but rather an insurance policy of sorts. Its cost is the drag on portfolio performance. Its value can be seen in times of unanticipated inflation runups and / or catastrophic events.
Correct. Over the last almost 50 years, an allocation to gold would have lowered average returns, but it would have helped to boost returns when the rest of the portfolio wasn't doing well. From 1972-1981, a portfolio with 60% TSM and 40% intermediate-term Treasuries had a real return of -1.49%. But a 60/20/20 portfolio (see above) had a real return of 3.56%. And from 2000-2009, the former's real return was .84%, but the latter's was 2.11%. So gold may bring down your average return, but it may help to reduce your 'tail risk'.

User avatar
JoMoney
Posts: 7250
Joined: Tue Jul 23, 2013 5:31 am

Re: Gold?

Post by JoMoney » Thu Jul 18, 2019 8:36 pm

...
“I know gold sounds like a kooky investment. But gold is just an alternative currency to fiat paper currencies. If your portfolio is likely to perform poorly in the adverse environment I’ve been describing—less effective monetary policy, the need to run larger fiscal deficits and monetize them, and challenging politics—the behavior of gold as alternative cash has some diversifying merit.”
Gold is not an "alternative currency". Technically you can buy gold coins that could be used as currency, but nobody.. NOBODY... uses 1oz Gold American Eagle coins to transact at their $50 face value... so even those fail at being a currency if you ignore their dollar face value (and everyone does).
Gold is a commodity you can buy with currency - it's almost always shown with it's price in the prevailing currency. I doubt you have ever seen something for sale/trade that was listed as a certain amount in gold as the purchase/trade price. It would be a very "kooky" circumstance if you did.
I have no idea if gold will have some "diversification merit" in the future, it's an extremely volatile commodity... maybe you'll be able to exchange it for more currency than you used to buy it, maybe you wont. There is almost certain to be expenses involved with storing gold, and transaction bid-ask spreads that have you starting at a loss.
If your concern was inflation and purchasing power, there are things like TIPS that address that directly and without the unknowable volatility that comes with gold.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

pepys
Posts: 16
Joined: Mon Nov 12, 2018 10:34 am

Re: Gold?

Post by pepys » Fri Jul 19, 2019 12:55 am

willthrill81 wrote:
Thu Jul 18, 2019 5:09 pm
pepys wrote:
Thu Jul 18, 2019 4:26 pm
willthrill81 wrote:
Wed Jul 17, 2019 12:36 pm
Yes, it's just a metal, but portfolios that had up to a 20% allocation to gold over the last nearly 50 years had significantly higher safe withdrawal rates than those without it. For instance, since 1972, the 30 year safe withdrawal rate for a 60/40 portfolio was 4.5%. But if you substituted half the bonds with gold (i.e. a 60/20/20 AA), the SWR was 5.4%. This is largely because gold would have really helped during the 1970s stagflation when stocks and especially bonds were really suffering.
Until November 1973, the dollar was still mostly pegged to gold (central banks were still exchanging it at the fixed price), and it wasn't until the Jamaica Accords in 1976 when price fixing was officially ended. This is after decades of the price being artificially low. And in the US, it was illegal to speculate in gold until January 1, 1975, artificially reducing demand, and making this strategy illegal to implement for US citizens. Price fixing cannot end again and gold speculation cannot be made legal again. It might do well in the next stagflation, or it might collapse even worse than stocks/bonds. Overall, I see no reason to expect any better than returns since January 1, 1975, which were pretty bad; real returns were about 0.80% for gold versus 7.87% for the S&P 500. Go back a couple hundred years instead, and the returns are even worse for gold.

I'm fine with people promoting gold speculation, but it seems almost every time these misleading dates are used (somewhere between the late 1960s and 1972), sometimes mentioning the Nixon shock, but almost never that the Bretton Woods system was still in place, almost never that central banks were still exchanging gold at the fixed price, and almost never that it was still illegal to speculate in gold in the US. Which makes sense, because most of the returns happened in this few year period (the real annual rate of return since 1972 is 3.33%, or over 4 times as high as the fairer start date and the real annual rate of return between 1972 and 1975 was about 50%).
Gold's ability to boost SWRs was not limited to the 1970s at all. It would have significantly improved the performance of year 2000 retirees' portfolios, for instance. But I have no idea how it or any other asset will perform in the future.
I think you misunderstood my point. I never said it was limited to the 1970s. My point was almost the opposite; I argued that the "boost" in the 1970s is mostly a fiction, based on an artificially low starting price (from the price-fixing that was still heavily affecting prices until late 1973) and impossible to take advantage of (from the ban on speculating until January 1975). There can still be a small boost for a not-too-long retirement, depending on the exact year, but starting in 1972 greatly overstates it. That's pretty much all I was saying. I specifically said that I'm fine with people promoting gold, as long as they use different dates (the 2000 date, for example, is fine).

I did add that long-term returns are very poor, when starting at a fair date (starting either in 1975 or any year before 1933). But if it's strongly enough inversely correlated to stocks/bonds when they're doing poorly, it could be worth that very poor performance in good times.

DesertDiva
Posts: 465
Joined: Thu Mar 01, 2018 12:49 pm
Location: In the desert

Re: Gold?

Post by DesertDiva » Fri Jul 19, 2019 9:23 am

willthrill81 wrote:
Wed Jul 17, 2019 2:55 pm
mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
Bogle himself explicitly recommended a 5% allocation to gold, so it can't be argued that doing so isn't Bogle-approved, even if it isn't Boglehead-approved.
Not being snarky here, just genuinely curious... where did Bogle explicitly recommend a 5% allocation to gold? Was it in a book or an interview? I haven’t seen it in print and thought maybe I overlooked something. Thanks.

User avatar
willthrill81
Posts: 11930
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Gold?

Post by willthrill81 » Fri Jul 19, 2019 9:53 am

DesertDiva wrote:
Fri Jul 19, 2019 9:23 am
willthrill81 wrote:
Wed Jul 17, 2019 2:55 pm
mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
Bogle himself explicitly recommended a 5% allocation to gold, so it can't be argued that doing so isn't Bogle-approved, even if it isn't Boglehead-approved.
Not being snarky here, just genuinely curious... where did Bogle explicitly recommend a 5% allocation to gold? Was it in a book or an interview? I haven’t seen it in print and thought maybe I overlooked something. Thanks.
There was a thread about it earlier this year. He said it in an interview.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

bhsince87
Posts: 2433
Joined: Thu Oct 03, 2013 1:08 pm

Re: Gold?

Post by bhsince87 » Fri Jul 19, 2019 10:38 am

pepys wrote:
Thu Jul 18, 2019 4:26 pm

Until November 1973, the dollar was still mostly pegged to gold (central banks were still exchanging it at the fixed price), and it wasn't until the Jamaica Accords in 1976 when price fixing was officially ended. This is after decades of the price being artificially low. And in the US, it was illegal to speculate in gold until January 1, 1975, artificially reducing demand, and making this strategy illegal to implement for US citizens. Price fixing cannot end again and gold speculation cannot be made legal again. It might do well in the next stagflation, or it might collapse even worse than stocks/bonds. Overall, I see no reason to expect any better than returns since January 1, 1975, which were pretty bad; real returns were about 0.80% for gold versus 7.87% for the S&P 500. Go back a couple hundred years instead, and the returns are even worse for gold.

I'm fine with people promoting gold speculation, but it seems almost every time these misleading dates are used (somewhere between the late 1960s and 1972), sometimes mentioning the Nixon shock, but almost never that the Bretton Woods system was still in place, almost never that central banks were still exchanging gold at the fixed price, and almost never that it was still illegal to speculate in gold in the US. Which makes sense, because most of the returns happened in this few year period (the real annual rate of return since 1972 is 3.33%, or over 4 times as high as the fairer start date and the real annual rate of return between 1972 and 1975 was about 50%).
This is a huge point. We only have maybe 35-40 years of data on how gold performs now that it's no longer tied to currency.

Yes, in the past few hundred years, gold was a good hedge against currency devaluation. But that environment no longer exists.

To me, it's sort of like folks who still advocate a DRIP based stock investment plan, and living off dividends in retirement.

That was a great approach for many decades, back when selling stock was expensive and time consuming. But we don't live in that environment anymore either.
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace." Samuel Adams

User avatar
unclescrooge
Posts: 3603
Joined: Thu Jun 07, 2012 7:00 pm

Re: Gold?

Post by unclescrooge » Fri Jul 19, 2019 2:25 pm

pepys wrote:
Fri Jul 19, 2019 12:55 am
....
I did add that long-term returns are very poor, when starting at a fair date (starting either in 1975 or any year before 1933). But if it's strongly enough inversely correlated to stocks/bonds when they're doing poorly, it could be worth that very poor performance in good times.
Bingo.
Gold is a great diversifier in a portfolio. That was willthrill's main point.

All Seasons
Posts: 119
Joined: Sun Dec 10, 2017 4:14 pm

Re: Gold?

Post by All Seasons » Fri Jul 19, 2019 2:52 pm

Like really, if even Bogle (one of the most anti-gold people out there) conceded 5% to gold, the average person shouldn't have a problem with a 10% diversifier. Let's stop being so stuck up about this.
The market portfolio is always a legitimate portfolio.

User avatar
willthrill81
Posts: 11930
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Gold?

Post by willthrill81 » Fri Jul 19, 2019 3:03 pm

All Seasons wrote:
Fri Jul 19, 2019 2:52 pm
Like really, if even Bogle (one of the most anti-gold people out there) conceded 5% to gold, the average person shouldn't have a problem with a 10% diversifier. Let's stop being so stuck up about this.
"Don't mention almost 50 years of data to me! Gold is just a metal dug out of the ground with 0% expected real return, so it can't possibly have any value in my portfolio! Real world data to the contrary be darned!" :wink:
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
steve roy
Posts: 1674
Joined: Thu May 13, 2010 5:16 pm

Re: Gold?

Post by steve roy » Fri Jul 19, 2019 3:14 pm


blahblahsunshine
Posts: 55
Joined: Sun Jan 14, 2018 8:11 pm

Re: Gold?

Post by blahblahsunshine » Sat Jul 20, 2019 8:52 am

Holding some gold seems reasonable to me if for no other reason than to add diversification. I do think there are some insights in Ray's paradigms letter relative to debt... I think 5-20% in GLD seems like a reasonable allocation to me. But then I guess I am someone who is less than dogmatic about allocations than some or most.

Boglegrappler
Posts: 1174
Joined: Wed Aug 01, 2012 9:24 am

Re: Gold?

Post by Boglegrappler » Sat Jul 20, 2019 9:26 am

It really is worthwhile to read from mid page 17 to page 19 in the Berkshire Hathaway shareholders letter from 2011.

Begin where you see this title

The Basic Choices for Investors and the One We Strongly Prefer

https://www.berkshirehathaway.com/letters/2011ltr.pdf

Buffett discusses gold, fixed income securities (which he describes with different terminology) and equities. It takes about five minutes to read carefully, and is, in my opinion, one of the most insightful pieces of investment wisdom you'll find anywhere.

DesertDiva
Posts: 465
Joined: Thu Mar 01, 2018 12:49 pm
Location: In the desert

Re: Gold?

Post by DesertDiva » Sat Jul 20, 2019 1:45 pm

willthrill81 wrote:
Fri Jul 19, 2019 9:53 am
DesertDiva wrote:
Fri Jul 19, 2019 9:23 am
willthrill81 wrote:
Wed Jul 17, 2019 2:55 pm
mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
Bogle himself explicitly recommended a 5% allocation to gold, so it can't be argued that doing so isn't Bogle-approved, even if it isn't Boglehead-approved.
Not being snarky here, just genuinely curious... where did Bogle explicitly recommend a 5% allocation to gold? Was it in a book or an interview? I haven’t seen it in print and thought maybe I overlooked something. Thanks.
There was a thread about it earlier this year. He said it in an interview.
I did see the thread and have watched the video on YouTube several times. I listened again for context around the 5% Gold statement.

He stated regarding gold - “how that could be considered an investment... I don’t know” (paraphrased) - around the 54:17 mark

Around 54:34 - he said that the huge number of investors should be limited to marketable securities.

Around 55:30 - Jack Bogle’s personal asset allocation was about 50/50 entirely in index funds. No mention of gold in his own portfolio.

Around 56:15 - he starts talking about his work with the Blair Academy scholarship fund and recommended a mix for them “on the assumption that nobody will touch it”. He had them divide 90% between Wellington and a balanced index fund; the other 10% between emerging markets (indexed) and gold. He said “I wouldn’t call it the perfect portfolio” and added this strategy is distinctive, meaning you cannot touch it.

My conclusion is that Bogle wasn’t advocating gold for individual investors (and didn’t admit to holding it himself). His recommendation for a small % of gold was for a small, niche investor- an institution.

I might still buy some jewelry I’ve been keeping my eye on 😊

User avatar
permport
Posts: 172
Joined: Sat Mar 31, 2018 11:20 am

Re: Gold?

Post by permport » Sat Jul 20, 2019 1:50 pm

The problem with that Buffett article is that, in my opinion, Buffett's logic is fatally flawed.

He's committing the logical fallacy of the false dichotomy. He's presenting two choices as mutually exclusive when they are not mutually exclusive:

"Would you rather have Pile A or Pile B?"

Obviously, if you had a mutually exclusive choice between farmland/stocks/cash and a pile of gold, everyone would choose the productive assets.

However, investment allocations are not mutually exclusive decisions. The Pile A vs. Pile B thought experiment has no relevance as to whether, say, a 10% allocation of gold is a good diversifier to a stock/bond portfolio.

I think that as a group we should stop leaning on that Buffett article. It's got a hole in its logic large enough to drive a truck right through it.
Buy right and hold tight.

User avatar
willthrill81
Posts: 11930
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Gold?

Post by willthrill81 » Sat Jul 20, 2019 2:38 pm

DesertDiva wrote:
Sat Jul 20, 2019 1:45 pm
willthrill81 wrote:
Fri Jul 19, 2019 9:53 am
DesertDiva wrote:
Fri Jul 19, 2019 9:23 am
willthrill81 wrote:
Wed Jul 17, 2019 2:55 pm
mbasherp wrote:
Wed Jul 17, 2019 1:31 pm
As an accumulator for several more decades, I have a harder time owning bonds than gold. The things bonds protect my portfolio from are behavioral and emotional in nature. The things gold protects my portfolio from are structural. Real tail risk stuff. Not that I hold a lot, but I see a genuine role for it in my own portfolio.

95% equities, 5% gold for the foreseeable future. Cash for known upcoming expenditures.
Bogle himself explicitly recommended a 5% allocation to gold, so it can't be argued that doing so isn't Bogle-approved, even if it isn't Boglehead-approved.
Not being snarky here, just genuinely curious... where did Bogle explicitly recommend a 5% allocation to gold? Was it in a book or an interview? I haven’t seen it in print and thought maybe I overlooked something. Thanks.
There was a thread about it earlier this year. He said it in an interview.
I did see the thread and have watched the video on YouTube several times. I listened again for context around the 5% Gold statement.

He stated regarding gold - “how that could be considered an investment... I don’t know” (paraphrased) - around the 54:17 mark

Around 54:34 - he said that the huge number of investors should be limited to marketable securities.

Around 55:30 - Jack Bogle’s personal asset allocation was about 50/50 entirely in index funds. No mention of gold in his own portfolio.

Around 56:15 - he starts talking about his work with the Blair Academy scholarship fund and recommended a mix for them “on the assumption that nobody will touch it”. He had them divide 90% between Wellington and a balanced index fund; the other 10% between emerging markets (indexed) and gold. He said “I wouldn’t call it the perfect portfolio” and added this strategy is distinctive, meaning you cannot touch it.

My conclusion is that Bogle wasn’t advocating gold for individual investors (and didn’t admit to holding it himself). His recommendation for a small % of gold was for a small, niche investor- an institution.

I might still buy some jewelry I’ve been keeping my eye on 😊
The point is that Bogle demonstrated in that interview that he was open to a small allocation to gold. And the institution's needs that he was discussing are little different from an early retiree who is relying on the perpetual withdrawal rate.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Post Reply