Gold?

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All Seasons
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Re: Gold?

Post by All Seasons » Sat Jul 20, 2019 3:06 pm

permport wrote:
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.
+1000

My sentiments exactly. If we lived in a world where holding stocks/bonds precluded you from holding gold, then Buffett's argument would have some merit. However, we don't live in that world at all. This pile A vs. pile B stuff is nonsense.
The market portfolio is always a legitimate portfolio.

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Re: Gold?

Post by abuss368 » Sat Jul 20, 2019 3:07 pm

I always like Warren Buffett's explanation and rationale with gold in his shareholder letter years ago. Makes sense that it is speculation. Jack Bogle typically did not recommend an allocation to gold calling it speculation as well.
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Re: Gold?

Post by abuss368 » Sat Jul 20, 2019 3:08 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. 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.”
Keep your portfolio simple and do not speculate. And yes, gold is speculating.
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Re: Gold?

Post by abuss368 » Sat Jul 20, 2019 3:09 pm

Boglegrappler wrote:
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.
That was the letter I was referring too - just could not remember the year!
Thanks!
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Re: Gold?

Post by Silence Dogood » Sat Jul 20, 2019 3:11 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.

Watch this video.
Jack Bogle wrote:I for one--I hope it's all right for me to say this--have no conviction that commodities belong in anybody's portfolio, at any time, under any circumstances. Did I make that clear?
Jack Bogle wrote:I say that for a very particular reason. I don't think it came up in the commodities session today; I wasn't able to hear all of it. But stocks and bonds are investments. What does that mean? That means they generate an internal rate of return.

In bonds, it happens to be the current coupon on the bonds. And in stocks, it's the discounted cash flow on the investments. Let's look at the stock market in total. Or put in a more easily familiar way, the dividend yield at the time you buy, I guess a little bit to the earning's yield when you buy in, to the interest rate yield when you buy in. And the subsequent earnings growth. That's the internal rate of return on an investment.

Now the speculative return, whether people are paying 40 times earnings or 10 times earnings can change that, but that's the internal return.

What is the internal return on a commodity? It is zero. A commodity is therefore a total speculation. That doesn't mean that if you want to speculate in it you can't make money, but somebody else is going to lose the money. In the long run, just look at gold over a couple of hundred years. With no internal rate of return, there is no way it could possibly match even a Treasury bill, and it doesn't.

So if you think you can spot highs and lows, if you think the demand from the underdeveloped countries is going to push the price of wheat and those kinds of things, or copper or whatever it might be--each of which has had their own crisis--speculate in the commodity. I wouldn't tell you not to do that. I wouldn't do it myself, and I wouldn't consider it an investment. It's a gamble.
By the way, no one here is being "stuck up." You are free to invest however you want, but let's be honest about what Bogle's opinion was.

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Re: Gold?

Post by Silence Dogood » Sat Jul 20, 2019 3:14 pm

willthrill81 wrote:
Wed Jul 17, 2019 2:55 pm
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.
This is incredibly disingenuous. See my post above.

An off-the-cuff remark about a small (5%) allocation in an endowment fund (which, to be clear, he did not manage) does not equate to him "explicitly recommending" gold for an individual investor.

In fact, I wouldn't even consider his off-the-cuff remark a recommendation. He simply stated that the 5% allocation in gold was, "a hedge against some kind of catastrophe." I wouldn't consider that comment a recommendation.

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Re: Gold?

Post by willthrill81 » Sat Jul 20, 2019 3:42 pm

Silence Dogood wrote:
Sat Jul 20, 2019 3:14 pm
willthrill81 wrote:
Wed Jul 17, 2019 2:55 pm
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.
This is incredibly disingenuous. See my post above.

An off-the-cuff remark about a small (5%) allocation in an endowment fund (which, to be clear, he did not manage) does not equate to him "explicitly recommending" gold for an individual investor.

In fact, I wouldn't even consider his off-the-cuff remark a recommendation. He simply stated that the 5% allocation in gold was, "a hedge against some kind of catastrophe." I wouldn't consider that comment a recommendation.
Calling what I said "incredibly disingenuous" is very hyperbolic. Bogle specifically called for a 5% allocation to gold for the endowment, whose goals pretty closely mirror that of an early retiree using the perpetual withdrawal rate. Whether it was "off the cuff" or not is irrelevant. He didn't say "if you wanted to hedge against some kind of catastrophe, allocate 5% of the portfolio to gold." He called for a 5% allocation to gold for that purpose.

You may point to other comments from Bogle that indicate that he did not like gold. But Bogle often contradicted himself. Despite being a huge proponent of indexing, he was not entirely opposed to active management. He told people to stay the course, even though he timed the market himself on occasion.
“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

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Re: Gold?

Post by Silence Dogood » Sat Jul 20, 2019 3:47 pm

willthrill81 wrote:
Sat Jul 20, 2019 3:42 pm
Silence Dogood wrote:
Sat Jul 20, 2019 3:14 pm
willthrill81 wrote:
Wed Jul 17, 2019 2:55 pm
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.
This is incredibly disingenuous. See my post above.

An off-the-cuff remark about a small (5%) allocation in an endowment fund (which, to be clear, he did not manage) does not equate to him "explicitly recommending" gold for an individual investor.

In fact, I wouldn't even consider his off-the-cuff remark a recommendation. He simply stated that the 5% allocation in gold was, "a hedge against some kind of catastrophe." I wouldn't consider that comment a recommendation.
Calling what I said "incredibly disingenuous" is very hyperbolic. Bogle specifically called for a 5% allocation to gold for the endowment, whose goals pretty closely mirror that of an early retiree using the perpetual withdrawal rate. Whether it was "off the cuff" or not is irrelevant. He didn't say "if you wanted to hedge against some kind of catastrophe, allocate 5% of the portfolio to gold." He called for a 5% allocation to gold for that purpose.

You may point to other comments from Bogle that indicate that he did not like gold. But Bogle often contradicted himself. Despite being a huge proponent of indexing, he was not entirely opposed to active management. He told people to stay the course, even though he timed the market himself on occasion.
willthrill81,

You don't think that's it's disingenuous to tell an individual investor, here on the Bogleheads, that Bogle himself "explicitly recommended" 5% gold, without giving more context (epecially in regards to my post above, in which Bogle clearly states that he does not recommend commodities)?

The reason why I used the word "disingenuous" is because I think that it's important to add more context.
Last edited by Silence Dogood on Sat Jul 20, 2019 3:54 pm, edited 1 time in total.

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Re: Gold?

Post by onourway » Sat Jul 20, 2019 3:49 pm

Can we clarify exactly what we mean when we are talking about gold? Are we talking about holding the actual, physical gold itself? Because I see two problems it seems are being overlooked. If we are talking about holding physical gold, then I agree that it’s probably a good insurance policy in the long run against some remote tail risk. However that of course then brings up the issue of how we actually hold that gold safely for many years. Is it possible? Yeah, but it’s an additional risk and/or cost. Also with physical gold there are fairly significant transaction costs for the average investor. These costs are almost certainly not included in any analysis.

If we are not talking about physical gold, which I’m quite sure an analysis done over timespans of decades or longer are using (ie. gold as a proxy fund in some investment analysis program), it loses most of its value as an insurance policy, and completely glosses over the fact that nobody could actually have owned gold in some mythical fund that didn’t actually exist over the last 50+ years.

I don’t have any particularly strong feeling for or against holding gold, other than I don’t personally want to hold any meaningful amount in my home where it would be most effective as an insurance policy. I just don’t see any way that people can actually own it and get the kind of returns that the analyses assume, so it feels largely like an academic exercise that has little real-world, practical application.

I am open to being convinced otherwise, however.

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Re: Gold?

Post by willthrill81 » Sat Jul 20, 2019 3:51 pm

Silence Dogood wrote:
Sat Jul 20, 2019 3:47 pm
willthrill81 wrote:
Sat Jul 20, 2019 3:42 pm
Silence Dogood wrote:
Sat Jul 20, 2019 3:14 pm
willthrill81 wrote:
Wed Jul 17, 2019 2:55 pm
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.
This is incredibly disingenuous. See my post above.

An off-the-cuff remark about a small (5%) allocation in an endowment fund (which, to be clear, he did not manage) does not equate to him "explicitly recommending" gold for an individual investor.

In fact, I wouldn't even consider his off-the-cuff remark a recommendation. He simply stated that the 5% allocation in gold was, "a hedge against some kind of catastrophe." I wouldn't consider that comment a recommendation.
Calling what I said "incredibly disingenuous" is very hyperbolic. Bogle specifically called for a 5% allocation to gold for the endowment, whose goals pretty closely mirror that of an early retiree using the perpetual withdrawal rate. Whether it was "off the cuff" or not is irrelevant. He didn't say "if you wanted to hedge against some kind of catastrophe, allocate 5% of the portfolio to gold." He called for a 5% allocation to gold for that purpose.

You may point to other comments from Bogle that indicate that he did not like gold. But Bogle often contradicted himself. Despite being a huge proponent of indexing, he was not entirely opposed to active management. He told people to stay the course, even though he timed the market himself on occasion.
willthrill81,

You don't think that's it's disingenuous to tell an individual investor, here on the Bogleheads, that Bogle himself "explicitly recommended" 5% gold, without giving more context (epecially in regards to my post above, in which Bogle clearly states he does not recommend commodities)?
It's hard to reconcile Bogle stating that he does not recommend commodities with the video where he did just that. As I noted above, the man seemingly contradicted himself with some regularity.

And no, I don't believe that his recommendation for the endowment to be wholly inapplicable to an individual investor. How many people have taken David Swenson's advice regarding how he's managed the Yale endowment fund? About the only meaningful difference is that the endowment is using the perpetual withdrawal rate, which is probably what an early retiree should be using as well.

Beyond that, a 5% allocation to anything isn't going to 'sink the ship'. In fact, I would argue that in nearly all cases, you need at least a 10% allocation to an asset class for it move the needle much.
“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

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Re: Gold?

Post by onourway » Sat Jul 20, 2019 3:54 pm

willthrill81 wrote:
Sat Jul 20, 2019 3:42 pm
Calling what I said "incredibly disingenuous" is very hyperbolic. Bogle specifically called for a 5% allocation to gold for the endowment, whose goals pretty closely mirror that of an early retiree using the perpetual withdrawal rate. Whether it was "off the cuff" or not is irrelevant. He didn't say "if you wanted to hedge against some kind of catastrophe, allocate 5% of the portfolio to gold." He called for a 5% allocation to gold for that purpose.

You may point to other comments from Bogle that indicate that he did not like gold. But Bogle often contradicted himself. Despite being a huge proponent of indexing, he was not entirely opposed to active management. He told people to stay the course, even though he timed the market himself on occasion.
I think the fact that he often, even in that very video, had the opportunity to recommend gold for individual investors, yet didn’t speaks a whole lot more clearly regarding his opinion on the matter than a single remark about a single endowment that may have had additional considerations of which he didn’t have time or reason to get in to.

In any case, I don’t think, when we are talking about 5 or 10% of ones portfolio, that it matters at all if you choose something that you believe in or are excited about to invest in. These are exactly the same kind of proportions we suggest people do their individual stock picking or trading with, because it’s small enough not to have a meaningful impact if it goes wrong.

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Re: Gold?

Post by willthrill81 » Sat Jul 20, 2019 3:57 pm

onourway wrote:
Sat Jul 20, 2019 3:49 pm
Can we clarify exactly what we mean when we are talking about gold? Are we talking about holding the actual, physical gold itself? Because I see two problems it seems are being overlooked. If we are talking about holding physical gold, then I agree that it’s probably a good insurance policy in the long run against some remote tail risk. However that of course then brings up the issue of how we actually hold that gold safely for many years. Is it possible? Yeah, but it’s an additional risk and/or cost. Also with physical gold there are fairly significant transaction costs for the average investor. These costs are almost certainly not included in any analysis.

If we are not talking about physical gold, which I’m quite sure an analysis done over timespans of decades or longer are using (ie. gold as a proxy fund in some investment analysis program), it loses most of its value as an insurance policy, and completely glosses over the fact that nobody could actually have owned gold in some mythical fund that didn’t actually exist over the last 50+ years.

I don’t have any particularly strong feeling for or against holding gold, other than I don’t personally want to hold any meaningful amount in my home where it would be most effective as an insurance policy. I just don’t see any way that people can actually own it and get the kind of returns that the analyses assume, so it feels largely like an academic exercise that has little real-world, practical application.

I am open to being convinced otherwise, however.
There are good arguments for physical ownership and electronic ownership. Remember that gold isn't just for some kind of apocalyptic scenario; it would have been a significant help to retirees in several historic situations. As, electronic ownership would have probably worked out better in the U.S. due to simplicity, low cost, and liquidity. However, physical ownership would certainly be preferable in some scenarios, such as that facing Venezuela right now.

Someone who is holding gold to benefit their portfolio should probably own one of the low cost ETFs out there for it. Someone is holding it for more dire scenarios may want physical. And still others may want to hold both.
onourway wrote:
Sat Jul 20, 2019 3:54 pm
In any case, I don’t think, when we are talking about 5 or 10% of ones portfolio, that it matters at all if you choose something that you believe in or are excited about to invest in. These are exactly the same kind of proportions we suggest people do their individual stock picking or trading with, because it’s small enough not to have a meaningful impact if it goes wrong.
I agree.
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Re: Gold?

Post by Silence Dogood » Sat Jul 20, 2019 3:59 pm

willthrill81 wrote:
Sat Jul 20, 2019 3:51 pm
It's hard to reconcile Bogle stating that he does not recommend commodities with the video where he did just that. As I noted above, the man seemingly contradicted himself with some regularity.

And no, I don't believe that his recommendation for the endowment to be wholly inapplicable to an individual investor. How many people have taken David Swenson's advice regarding how he's managed the Yale endowment fund? About the only meaningful difference is that the endowment is using the perpetual withdrawal rate, which is probably what an early retiree should be using as well.

Beyond that, a 5% allocation to anything isn't going to 'sink the ship'. In fact, I would argue that in nearly all cases, you need at least a 10% allocation to an asset class for it move the needle much.
If you had said, "Bogle did at one point, regarding an endowment fund, recommend 5% gold, and I think this would be applicable to an individual investor as well," then I think that would have been fine. I think the context matters here. The way you worded it, it sounds like you could easily misinform someone.

I agree with you that a 5% allocation isn't going to matter much.

I also don't think that it's a big deal if someone allocates 10% toward gold.

But I think that it's pretty obvious that Bogle wasn't a proponent of gold.

I view gold as a (volatile, inefficient) store-of-value - but gold itself is not an investment.

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Re: Gold?

Post by abuss368 » Sat Jul 20, 2019 4:29 pm

I would not want the headaches that would be involved in managing and protecting physical gold.
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Re: Gold?

Post by jibantik » Sat Jul 20, 2019 4:32 pm

Gold is not an investment. And I wouldn't keep it for catastrophic events either because in those events of rather have food and water.

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Re: Gold?

Post by willthrill81 » Sat Jul 20, 2019 4:46 pm

jibantik wrote:
Sat Jul 20, 2019 4:32 pm
Gold is not an investment. And I wouldn't keep it for catastrophic events either because in those events of rather have food and water.
Gold, food, and water are not mutually exclusive.
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Re: Gold?

Post by abuss368 » Sat Jul 20, 2019 4:56 pm

jibantik wrote:
Sat Jul 20, 2019 4:32 pm
Gold is not an investment. And I wouldn't keep it for catastrophic events either because in those events of rather have food and water.
:sharebeer

Makes a lot of sense. Not sure what good it would do. Gold is speculation. Always has been and always will be.
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Re: Gold?

Post by willthrill81 » Sat Jul 20, 2019 5:01 pm

abuss368 wrote:
Sat Jul 20, 2019 4:56 pm
jibantik wrote:
Sat Jul 20, 2019 4:32 pm
Gold is not an investment. And I wouldn't keep it for catastrophic events either because in those events of rather have food and water.
:sharebeer

Makes a lot of sense. Not sure what good it would do. Gold is speculation. Always has been and always will be.
Gold is useful to Venezuelans right now for buying food or, better yet, getting out of the country. Beyond that, the theory is that gold would be useful for helping you rebuild your life after the catastrophic event is over.
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Re: Gold?

Post by abuss368 » Sat Jul 20, 2019 5:03 pm

jibantik wrote:
Sat Jul 20, 2019 4:32 pm
Gold is not an investment. And I wouldn't keep it for catastrophic events either because in those events of rather have food and water.
This makes sense. Most investment experts such as Jack Bogle, David Swensen, Rick Ferri, and Warren Buffett do not recommend gold and consider it speculation.
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Re: Gold?

Post by 7eight9 » Sat Jul 20, 2019 5:25 pm

A Bloomberg column from May of this year is titled You Can Still Buy a House With Gold Bars in Vietnam.

Excerpt: Vietnam may be one of the world’s fastest-growing economies, yet it’s still in the dark ages when it comes to joining the global trend toward cashless transactions. To understand why, look no further than to consumers like Tran Van Nhan, who recently bought his two-bedroom home in Hanoi with gold and a sack of cash.

“We paid almost half in gold bars and the rest in cash,” Nhan, a 47-year-old shopkeeper, said of his new $138,000 condo. “We did that because we and the flat’s owner didn’t want to do a bank transfer. We are so used to buying things with cash and gold.”


Read the entire article here --- https://www.bloomberg.com/news/articles ... the-masses

Based on this article it sounds like in Vietnam gold is money. Not speculation.
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Re: Gold?

Post by FIREchief » Sat Jul 20, 2019 5:31 pm

The only reason gold has any "investment" value is because it is not currently plentiful. That will change when NASA brings back Psyche 16 worth $10,000 quadrillion.

https://www.foxnews.com/science/nasa-he ... illionaire

I've heard an asteroid could destroy our economy, but this isn't exactly what I was expecting.
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Re: Gold?

Post by Tdubs » Sat Jul 20, 2019 6:07 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'.
I own no gold, but the case against gold made on this and previous threads seems really weak. Other than pointing out that data before 1975 is pretty hinky, I haven't seen anything that undermines the case that gold produces more stable portfolios with better SWRs. The points made by willthrill are drawn from Portfolio Charts where three of the best portfolios all have gold in them.

The case against gold so far is:

1) It isn't an investment.

If it produces a better portfolio, so what?

2) Jack Bogle didn't like gold.

Using a famous name isn't evidence. It is hiding from evidence.

3) I don't want to own physical gold.

Neither do I. How about GLD? IAU? That is what is used in Portfolio Charts. The case for gold isn't that it a few bars hidden under the bed is useful in the collapse of Western civilization, it is that it is an excellent inflation hedge in constructing a portfolio.

So, is there any good case against gold? Or, are BHers just so reflexively biased against gold by now that the case really hasn't been examined with the kind of rigor I usually see here?

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Re: Gold?

Post by GRP » Sat Jul 20, 2019 6:58 pm

Silence Dogood wrote:
Sat Jul 20, 2019 3:11 pm

By the way, no one here is being "stuck up." You are free to invest however you want, but let's be honest about what Bogle's opinion was.
You've never seen people on the Bogleheads forum being stuck up about gold? You must be new here. :wink:

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Re: Gold?

Post by All Seasons » Sat Jul 20, 2019 7:05 pm

7eight9 wrote:
Sat Jul 20, 2019 5:25 pm
A Bloomberg column from May of this year is titled You Can Still Buy a House With Gold Bars in Vietnam.

Excerpt: Vietnam may be one of the world’s fastest-growing economies, yet it’s still in the dark ages when it comes to joining the global trend toward cashless transactions. To understand why, look no further than to consumers like Tran Van Nhan, who recently bought his two-bedroom home in Hanoi with gold and a sack of cash.

“We paid almost half in gold bars and the rest in cash,” Nhan, a 47-year-old shopkeeper, said of his new $138,000 condo. “We did that because we and the flat’s owner didn’t want to do a bank transfer. We are so used to buying things with cash and gold.”


Read the entire article here --- https://www.bloomberg.com/news/articles ... the-masses

Based on this article it sounds like in Vietnam gold is money. Not speculation.
Yup, and gold has proved useful in this way in many economies over many years.

Yet, people will still mechanically parrot the "It'd be better to have bullets, food, and water!" line again and again when it's so demonstrably not true.
The market portfolio is always a legitimate portfolio.

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Re: Gold?

Post by nedsaid » Sat Jul 20, 2019 7:12 pm

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.

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.
This is very good post. Also, study the Harry Browne Permanent Portfolio. It has a pretty good record and its 25% in Gold is a major factor. It is 25% Stocks, 25% Long Treasuries, 25% Cash, and 25% Gold. It reminds me a lot of the Ray Dalio All-Weather Portfolio.
A fool and his money are good for business.

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Re: Gold?

Post by Silence Dogood » Sat Jul 20, 2019 7:14 pm

GRP wrote:
Sat Jul 20, 2019 6:58 pm
Silence Dogood wrote:
Sat Jul 20, 2019 3:11 pm

By the way, no one here is being "stuck up." You are free to invest however you want, but let's be honest about what Bogle's opinion was.
You've never seen people on the Bogleheads forum being stuck up about gold? You must be new here. :wink:
Not particularly, and I've been visiting this forum for quite a while (most of my adult life :shock: ).

People on here have strong opinions both for and against gold.

My main issue with this thread was the misinformation regarding what Bogle thought about gold. I think that it is most accurate to say that Bogle, overall, was not in favor of gold.

I am a proponent of investing in international stocks, but I'm not going to pretend that Bogle was enthusiastic about this.

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Re: Gold?

Post by jibantik » Sat Jul 20, 2019 7:28 pm


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Re: Gold?

Post by jibantik » Sat Jul 20, 2019 7:32 pm

willthrill81 wrote:
Sat Jul 20, 2019 4:46 pm
jibantik wrote:
Sat Jul 20, 2019 4:32 pm
Gold is not an investment. And I wouldn't keep it for catastrophic events either because in those events of rather have food and water.
Gold, food, and water are not mutually exclusive.
With my income and my retirement goals, they are for me.

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Re: Gold?

Post by Silence Dogood » Sat Jul 20, 2019 7:33 pm

bertilak wrote:
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.
Probably the most sensible comment in this thread.

Personally, I'd rather own Series I Savings Bonds (as far as a store of value).

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Re: Gold?

Post by Silence Dogood » Sat Jul 20, 2019 7:38 pm

permport wrote:
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.
People have limited resources. If I buy $10K worth of gold then that's $10K I don't have for investing in stocks and bonds.

By your logic, shouldn't we also invest in bitcoin, pork bellies, etc.?

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Re: Gold?

Post by DarkHelmetII » Sun Jul 21, 2019 2:48 am

nedsaid wrote:
Sat Jul 20, 2019 7:12 pm
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.

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.
This is very good post. Also, study the Harry Browne Permanent Portfolio. It has a pretty good record and its 25% in Gold is a major factor. It is 25% Stocks, 25% Long Treasuries, 25% Cash, and 25% Gold. It reminds me a lot of the Ray Dalio All-Weather Portfolio.
And to give credit where due, my notion of Gold as "insurance" came directly from Harry Browne's Permanent Portfolio. Which while I am largely a 3-fund BH investor, I still think the book is helpful along many fronts:

1) During deep, systematic, global events (such as Great Recession) traditional diversification e.g. multi industry index fund, large cap vs. small & medium, international etc... equities were still fairly correlated
2) High quality long-term bonds behave a certain way unlike other assets in certain economic scenarios
3) There exists institutional risk irrespective of chosen asset allocation
4) Provides real examples of political risk that may seem in distant history but are actually relatively recent when you consider the bigger picture
5) For those who want to own gold, numerous ways to do so

Again, I am in no way disparaging the prevailing sentiment of the 3-fund BH portfolio or similar; that approach will serve most people much better than all of the other junk out there. But having said that, I still found the Permanent Portfolio literature helpful to broaden my understanding of risk.
Last edited by DarkHelmetII on Sun Jul 21, 2019 6:25 am, edited 3 times in total.

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Re: Gold?

Post by DarkHelmetII » Sun Jul 21, 2019 6:22 am

[ erroneous post ]

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Re: Gold?

Post by nedsaid » Sun Jul 21, 2019 8:50 am

DarkHelmetII wrote:
Sun Jul 21, 2019 2:48 am
nedsaid wrote:
Sat Jul 20, 2019 7:12 pm
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.

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.
This is very good post. Also, study the Harry Browne Permanent Portfolio. It has a pretty good record and its 25% in Gold is a major factor. It is 25% Stocks, 25% Long Treasuries, 25% Cash, and 25% Gold. It reminds me a lot of the Ray Dalio All-Weather Portfolio.
And to give credit where due, my notion of Gold as "insurance" came directly from Harry Browne's Permanent Portfolio. Which while I am largely a 3-fund BH investor, I still think the book is helpful along many fronts:

1) During deep, systematic, global events (such as Great Recession) traditional diversification e.g. multi industry index fund, large cap vs. small & medium, international etc... equities were still fairly correlated
2) High quality long-term bonds behave a certain way unlike other assets in certain economic scenarios
3) There exists institutional risk irrespective of chosen asset allocation
4) Provides real examples of political risk that may seem in distant history but are actually relatively recent when you consider the bigger picture
5) For those who want to own gold, numerous ways to do so

Again, I am in no way disparaging the prevailing sentiment of the 3-fund BH portfolio or similar; that approach will serve most people much better than all of the other junk out there. But having said that, I still found the Permanent Portfolio literature helpful to broaden my understanding of risk.
Long term US Treasuries are almost the perfect diversifier for the US Stock Market. The only exception would have been the 1973-74 bear market which in large part was caused by the oil shocks which in term caused Stagflation, which was a nightmare for Stock and Bond investors.
A fool and his money are good for business.

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Re: Gold?

Post by abuss368 » Sun Jul 21, 2019 8:59 am

nedsaid wrote:
Sun Jul 21, 2019 8:50 am
DarkHelmetII wrote:
Sun Jul 21, 2019 2:48 am
nedsaid wrote:
Sat Jul 20, 2019 7:12 pm
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.

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.
This is very good post. Also, study the Harry Browne Permanent Portfolio. It has a pretty good record and its 25% in Gold is a major factor. It is 25% Stocks, 25% Long Treasuries, 25% Cash, and 25% Gold. It reminds me a lot of the Ray Dalio All-Weather Portfolio.
And to give credit where due, my notion of Gold as "insurance" came directly from Harry Browne's Permanent Portfolio. Which while I am largely a 3-fund BH investor, I still think the book is helpful along many fronts:

1) During deep, systematic, global events (such as Great Recession) traditional diversification e.g. multi industry index fund, large cap vs. small & medium, international etc... equities were still fairly correlated
2) High quality long-term bonds behave a certain way unlike other assets in certain economic scenarios
3) There exists institutional risk irrespective of chosen asset allocation
4) Provides real examples of political risk that may seem in distant history but are actually relatively recent when you consider the bigger picture
5) For those who want to own gold, numerous ways to do so

Again, I am in no way disparaging the prevailing sentiment of the 3-fund BH portfolio or similar; that approach will serve most people much better than all of the other junk out there. But having said that, I still found the Permanent Portfolio literature helpful to broaden my understanding of risk.
Long term US Treasuries are almost the perfect diversifier for the US Stock Market. The only exception would have been the 1973-74 bear market which in large part was caused by the oil shocks which in term caused Stagflation, which was a nightmare for Stock and Bond investors.
Agreed. David Swensen wrote about this in Unconventional Success.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!"

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Re: Gold?

Post by oldzey » Sun Jul 21, 2019 12:44 pm

I stick with stocks and bonds and don't own gold anymore. Whenever I'm tempted to buy gold, I pull up this chart to remind myself that there are better things to invest in.

Image
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Re: Gold?

Post by TxInjun » Sun Jul 21, 2019 3:41 pm

nedsaid wrote:
Sun Jul 21, 2019 8:50 am

Long term US Treasuries are almost the perfect diversifier for the US Stock Market. The only exception would have been the 1973-74 bear market which in large part was caused by the oil shocks which in term caused Stagflation, which was a nightmare for Stock and Bond investors.
How would you characterize TIPS? IMO, they combine the liquidity of the market, Inflation protection of Gold, and guarantee of Uncle Sam. Are TIPS be considered a possible replacement for Gold?

TxIn

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Re: Gold?

Post by nedsaid » Sun Jul 21, 2019 4:26 pm

TxInjun wrote:
Sun Jul 21, 2019 3:41 pm
nedsaid wrote:
Sun Jul 21, 2019 8:50 am

Long term US Treasuries are almost the perfect diversifier for the US Stock Market. The only exception would have been the 1973-74 bear market which in large part was caused by the oil shocks which in term caused Stagflation, which was a nightmare for Stock and Bond investors.
How would you characterize TIPS? IMO, they combine the liquidity of the market, Inflation protection of Gold, and guarantee of Uncle Sam. Are TIPS be considered a possible replacement for Gold?

TxIn
I do own TIPS and had they existed back in 1973-1974, they would have benefitted investors. Probably the best diversifier back then would have been commodities but that was because oil prices spiked. Each bear market is different and thus what worked in one bear market may not work in the next. Back to TIPS, I was very surprised that when the financial crisis hit in September 2008 that while nominal US Treasuries rallied strongly, TIPS actually fell 10-12% which took me by surprise. For one thing, the financial crisis was deflationary and for another thing, TIPS are far less liquid than regular treasury bills and notes because there are far fewer of them. In fact, demand for huge sections of the bond market just dried up. There literally were no buyers. Later on, TIPS rallied strongly along with the rest of the bond market. So what I am trying to say is that TIPS may not act the way we expect during the next crisis.

My expectation is that TIPS will act well during times of unexpected inflation, gold may not. We know that gold holds its purchasing power over the very long term but shorter run about anything can happen. It has been said that Gold is a very imperfect inflation hedge. TIPS should react positively to unexpected inflation rather quickly, it may take Stocks a decade or more, and Gold perhaps even longer.

So I look at TIPS not as a replacement for gold but as another tool in the toolbox to fight inflation. The tools would be TIPS, REITs, Stocks, Gold, and perhaps commodities. I use the first three but do not hold gold or commodities. I see Gold more as a currency hedge if we have a dollar crisis. All I know is that Gold has been universally valued by humans during all of recorded history. So I see it as a hard asset whereas TIPS are a financial instrument.

So the answer is yes and no.
A fool and his money are good for business.

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Re: Gold?

Post by DarkHelmetII » Sun Jul 21, 2019 4:35 pm

nedsaid wrote:
Sun Jul 21, 2019 4:26 pm
TxInjun wrote:
Sun Jul 21, 2019 3:41 pm
nedsaid wrote:
Sun Jul 21, 2019 8:50 am

Long term US Treasuries are almost the perfect diversifier for the US Stock Market. The only exception would have been the 1973-74 bear market which in large part was caused by the oil shocks which in term caused Stagflation, which was a nightmare for Stock and Bond investors.
How would you characterize TIPS? IMO, they combine the liquidity of the market, Inflation protection of Gold, and guarantee of Uncle Sam. Are TIPS be considered a possible replacement for Gold?

TxIn
I do own TIPS and had they existed back in 1973-1974, they would have benefitted investors. Probably the best diversifier back then would have been commodities but that was because oil prices spiked. Each bear market is different and thus what worked in one bear market may not work in the next. Back to TIPS, I was very surprised that when the financial crisis hit in September 2008 that while nominal US Treasuries rallied strongly, TIPS actually fell 10-12% which took me by surprise. For one thing, the financial crisis was deflationary and for another thing, TIPS are far less liquid than regular treasury bills and notes because there are far fewer of them. In fact, demand for huge sections of the bond market just dried up. There literally were no buyers. Later on, TIPS rallied strongly along with the rest of the bond market. So what I am trying to say is that TIPS may not act the way we expect during the next crisis.

My expectation is that TIPS will act well during times of unexpected inflation, gold may not. We know that gold holds its purchasing power over the very long term but shorter run about anything can happen. It has been said that Gold is a very imperfect inflation hedge. TIPS should react positively to unexpected inflation rather quickly, it may take Stocks a decade or more, and Gold perhaps even longer.

So I look at TIPS not as a replacement for gold but as another tool in the toolbox to fight inflation. The tools would be TIPS, REITs, Stocks, Gold, and perhaps commodities. I use the first three but do not hold gold or commodities. I see Gold more as a currency hedge if we have a dollar crisis. All I know is that Gold has been universally valued by humans during all of recorded history. So I see it as a hard asset whereas TIPS are a financial instrument.

So the answer is yes and no.
From the 2012 Harry Browne Permanent Portfolio rewrite: "The idea that TIPS could serve the same role as gold in an investment portfolio is unrealistic; it would be like buying fire insurance from an arsonist."

Not saying this is true or untrue, but thought worth referencing.

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Re: Gold?

Post by nedsaid » Sun Jul 21, 2019 4:56 pm

DarkHelmetII wrote:
Sun Jul 21, 2019 4:35 pm

From the 2012 Harry Browne Permanent Portfolio rewrite: "The idea that TIPS could serve the same role as gold in an investment portfolio is unrealistic; it would be like buying fire insurance from an arsonist."

Not saying this is true or untrue, but thought worth referencing.
TIPS and Gold are two different things. TIPS are a financial instrument and Gold is a hard asset. Gold has been universally valued by humans throughout recorded history and TIPS are a more recent invention, first issued in 1997.

I would put Gold, Commodities, Precious Metals funds in the category of portfolio insurance. No guarantee that any of these will deliver returns above inflation over time. TIPS I would regard as an investment as they are bonds and I expect bonds to deliver a positive return over inflation over time.
A fool and his money are good for business.

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Re: Gold?

Post by willthrill81 » Sun Jul 21, 2019 5:03 pm

oldzey wrote:
Sun Jul 21, 2019 12:44 pm
I stick with stocks and bonds and don't own gold anymore. Whenever I'm tempted to buy gold, I pull up this chart to remind myself that there are better things to invest in.
I would never criticize anyone for choosing not to own gold. However, a graph of the long-term results of an asset class does not describe how that asset would perform as part of a portfolio with other assets. For instance, while gold's cumulative returns since 1980 have been poor (real CAGR = -.64%), this does not tell the whole story. Examine the results below.

1980-1999
TSM: real CAGR 12.22%
Gold: real CAGR -6.54%

2000-2009
TSM: real CAGR -2.73%
Gold: real CAGR 11.10%

2010-Jun., 2019
TSM: real CAGR 10.88%
Gold: real CAGR .48%

Viewed in that light, gold appears to have been a good diversifier from stocks over the last ~40 years. This is especially important for retirees, for whom returns are only part of the story, or else we'd recommend that they be 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

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Re: Gold?

Post by TxInjun » Sun Jul 21, 2019 7:15 pm

nedsaid wrote:
Sun Jul 21, 2019 4:26 pm
...
Back to TIPS, I was very surprised that when the financial crisis hit in September 2008 that while nominal US Treasuries rallied strongly, TIPS actually fell 10-12% which took me by surprise. For one thing, the financial crisis was deflationary and for another thing, TIPS are far less liquid than regular treasury bills and notes because there are far fewer of them. In fact, demand for huge sections of the bond market just dried up. There literally were no buyers. Later on, TIPS rallied strongly along with the rest of the bond market. So what I am trying to say is that TIPS may not act the way we expect during the next crisis.
Thank you for reminding me of the TIPS reaction during the Great Recession. What you state - deflationary expectations - was actually at least part of the cause for the TIPS to behave strangely. See this link from the Fed. Not saying it was the entire reason.

I too believe that TIPS should behave well during times of inflation, at least in all non-dystopian scenarios. REITs and TIPS for me!

TxIn

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Re: Gold?

Post by nedsaid » Sun Jul 21, 2019 9:59 pm

TxInjun wrote:
Sun Jul 21, 2019 7:15 pm
nedsaid wrote:
Sun Jul 21, 2019 4:26 pm
...
Back to TIPS, I was very surprised that when the financial crisis hit in September 2008 that while nominal US Treasuries rallied strongly, TIPS actually fell 10-12% which took me by surprise. For one thing, the financial crisis was deflationary and for another thing, TIPS are far less liquid than regular treasury bills and notes because there are far fewer of them. In fact, demand for huge sections of the bond market just dried up. There literally were no buyers. Later on, TIPS rallied strongly along with the rest of the bond market. So what I am trying to say is that TIPS may not act the way we expect during the next crisis.
Thank you for reminding me of the TIPS reaction during the Great Recession. What you state - deflationary expectations - was actually at least part of the cause for the TIPS to behave strangely. See this link from the Fed. Not saying it was the entire reason.

I too believe that TIPS should behave well during times of inflation, at least in all non-dystopian scenarios. REITs and TIPS for me!

TxIn
Wow. I was actually right about something. I am just speechless. :wink:
A fool and his money are good for business.

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Re: Gold?

Post by FIREchief » Sun Jul 21, 2019 11:25 pm

nedsaid wrote:
Sun Jul 21, 2019 4:26 pm
My expectation is that TIPS will act well during times of unexpected inflation, gold may not.

TIPS should react positively to unexpected inflation rather quickly
??!! Expectation? Should??

TIPS are ABSOLUTELY guaranteed to cover ALL unexpected inflation. There simply isn't any question here. TIPS are rock solid investments. :annoyed
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Gold?

Post by petulant » Sun Jul 21, 2019 11:37 pm

FIREchief wrote:
Sun Jul 21, 2019 11:25 pm
nedsaid wrote:
Sun Jul 21, 2019 4:26 pm
My expectation is that TIPS will act well during times of unexpected inflation, gold may not.

TIPS should react positively to unexpected inflation rather quickly
??!! Expectation? Should??

TIPS are ABSOLUTELY guaranteed to cover ALL unexpected inflation. There simply isn't any question here. TIPS are rock solid investments. :annoyed
They are as guaranteed as the U.S. government's ability and willingness to honor that guarantee.

I am reminded of a certain poem:
I met a traveller from an antique land,
Who said—“Two vast and trunkless legs of stone
Stand in the desert. . . . Near them, on the sand,
Half sunk a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them, and the heart that fed;
And on the pedestal, these words appear:

My name is Ozymandias, King of Kings;
Look on my Works, ye Mighty, and despair!

Nothing beside remains. Round the decay
Of that colossal Wreck, boundless and bare
The lone and level sands stretch far away.”
I would not assume the U.S. is so far off Ramses II.

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Re: Gold?

Post by willthrill81 » Sun Jul 21, 2019 11:53 pm

petulant wrote:
Sun Jul 21, 2019 11:37 pm
FIREchief wrote:
Sun Jul 21, 2019 11:25 pm
nedsaid wrote:
Sun Jul 21, 2019 4:26 pm
My expectation is that TIPS will act well during times of unexpected inflation, gold may not.

TIPS should react positively to unexpected inflation rather quickly
??!! Expectation? Should??

TIPS are ABSOLUTELY guaranteed to cover ALL unexpected inflation. There simply isn't any question here. TIPS are rock solid investments. :annoyed
They are as guaranteed as the U.S. government's ability and willingness to honor that guarantee.
And there was a 'minor' default on T-bills back in 1979. If you haven't read about it, it's interesting if nothing else.
“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

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Re: Gold?

Post by Forester » Mon Jul 22, 2019 4:39 am

Bogleheads cite the fact that gold is an unproductive asset as a strike against gold. 10-year treasuries are supposedly "good" because they pay a real return of 0.25%(!)

The inability to rationally price an inanimate lump of metal may work to the advantage of an investor who diligently rebalances. Gold provokes strong emotions both positive and negative, I think this is why it has worked in a portfolio.

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Re: Gold?

Post by oldcomputerguy » Mon Jul 22, 2019 5:39 am

willthrill81 wrote:
Wed Jul 17, 2019 2:55 pm
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.
Can you provide a link to substantiate that statement?

I went looking around, and found this interview from 2011 with CNN, in which (starting at 1:58 in) Mr. Bogle states outright that "gold is not an investment at all". He does say that, for those "bitten by the gold bug", putting 1, 2, 3, or even 5 percent of their assets in gold "is probably not the worst idea in the world, but I wouldn't do it myself and I wouldn't advise most investors to do it." But this seems a far cry from recommending a 5% allocation to gold. I'd be interested to see where he does make such a recommendation.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

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Re: Gold?

Post by rascott » Mon Jul 22, 2019 6:45 am

permport wrote:
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.
The more important part of that letter re: gold is that it's value is entirely based upon the greater fool theory.

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Re: Gold?

Post by DecumulatorDoc » Mon Jul 22, 2019 7:15 am

oldcomputerguy wrote:
Mon Jul 22, 2019 5:39 am


I went looking around, and found this interview from 2011 with CNN, in which (starting at 1:58 in) Mr. Bogle states outright that "gold is not an investment at all". He does say that, for those "bitten by the gold bug", putting 1, 2, 3, or even 5 percent of their assets in gold "is probably not the worst idea in the world, but I wouldn't do it myself and I wouldn't advise most investors to do it." But this seems a far cry from recommending a 5% allocation to gold. I'd be interested to see where he does make such a recommendation.
This was also my recollection of Jack Bogle's feelings about gold for the average investor...speculation with no intrinsic value and no internal rate of return. I recall Rick Ferri felt the same way during some lively debates back in the day with Larry Swedroe.

What is interesting to me about Jack Bogle's Blair Academy fund is his 5% allocation to gold and 5% to emerging markets. How often do we hear folks say 5% can't move the needle, don't bother? Well, apparently Jack felt differently.

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Re: Gold?

Post by Forester » Mon Jul 22, 2019 7:38 am

Last 47 years. 60-40 gold beats 60-40 treasuries. https://www.portfoliovisualizer.com/bac ... 0&total3=0

Gold sidestepped two awful decades for a 60-40 portfolio, the 1970s & 2000s. Gold has no intrinsic value; except for when it's held in a portfolio :beer then it can be very valuable (for the patient).

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