To add on the Gold topic, trading it is one thing. I know nothing about that, but I'm sure there are some here that can weigh in.
I'm of the camp that it's an uncorrelated asset to hold for the long term as it can provide rebalancing opportunities, reduce overall portfolio drawdowns, and ultimately increase a retirement portfolio's safe withdrawal rate.
I hold no more than 2-3% in gold ever.
When it’s a cheap suit I buy it…when it’s the price of an expensive suit I sell it.
I only have ever owned NEM. So best in class guys who dig for it.
I don’t care for the actual commodity.
I have heard the gold pitch my entire investment life. It has not been a great long term investment.
I started posting about gold on this website as far back as 2001 when I first started posting here. The late great Shining Path called me "Auric Goldfinger" because I hammered it so hard. Back then, it was under $300/Oz. Wish I had listened to myself more. $300/Oz to $2,800/Oz seems like a decent long term investment to me.
I see investment in Bitcoin similarly. It's a finite commodity that acts as a hedge to the dollar.
But I'm an idiot.
Look, I get the arguments against gold.
It doesn't do anything! It has no cash flow and pays no dividends! It's relying on someone willing to pay you more for it in the future than you buy it for!
Also Gold -
has outperformed the S&P this century.
But the challenge with gold is that it while it has really long periods where it outperforms equities, it also has really long periods where it underperforms. Even if you start after the Hunt-bros related spike in '79-80 and use the peak in October of 1980 - it
took about 44 years to get back there (inflation adjusted) this past October (it briefly touched the high in 2011 as well). That's because it was a mess for the 2+ decades through most of the 80s, 90s, and early 2000s.
So to
@Todem's point, if you zoom all the way out to look at 1978 through today,
it's been terrible! It would be hard to have done worse.
But that's not the right way to look at it, imho. Nobody is holding 100% gold (well, nobody should). The discussion should be whether it has a place in a long-term portfolio. And a lot of people a whole lot smarter than me sure seem to think so. This
article on the efficient frontier sums it up well:
Two things can be true at the same time:
- An asset is a critical component in many of the most desirable portfolios.
- The same asset is disastrously undesirable when studied only in isolation.
Most of the "best portfolios" in this analysis contain some gold.
So for me, from what I've gleaned, it has a place in a drawdown portfolio (which I'm in the process of transitioning to) with a goal of maximizing the ability to spend by providing the best balance of risk and return.