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From 2011 to now there have been 100s of billions injected to make it all go.... so I’d say it should go higher than 2011....
 

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Then again, all of this has been well known for a long time so I think what we already know and expect of QE has been priced in.

Of course, the central banks can always surprise us with new levels of stupidity.

I also wouldn't rule out the possibility of a deflationary collapse, in which case both stocks & gold would do very badly. Only cash and bonds hold up well in that scenario.

I have no clue what will happen... there are many ways this could play out. Which is why I diversify across all of these :) That approach has produced 5.4% CAGR for me for over 3 years. Not bad for a passive bet which doesn't commit to a single asset class.
 

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Not sure about bonds holding up in deflationary crash. Last month i shares investment grade corporate bond ETF inflow was nearly double its previous monthly record.

On June 21 TLT open interest put call ratio spiked to 3.11 its highest level in over seven years.

Just recently the 30 day DSI was @ 85% bond bulls its highest level since the 86% reading @ the July 2016 peak.

Price pattern in the 30 year US treasuries futures from the June 20th peak has recently completed a 5 wave triangle pattern @ 155.22 low. Triangles are seen in the last correction before the final move. Across the board seams to be setting up for a deflationary crash though not there yet.

The DJI should make an all time high in wave D of an expanding triangle then wave E decline below the wave C low of Dec 26 then rally to all time highs which should top out in 2021 then crash below the 2008 low in a series of crashes
 

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A gold bond is similar to a conventional dollar bond. Except the interest is paid in gold & the face value of the bond is paid in ounces of gold. Issuers of gold bonds have gold income such refineries, miners & depositories

Gold real bills do not earn interest. Instead it sells for less gold then its face value based on the discount rate & time to maturity i.e., if the discount rate is 1% then a 100 oz bill would sell for 99.75 ounces 90 days from maturity.

source monetary metals
 

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Was looking @ the gold 3 month lease chart @ the 1999 bear market low you could lease your gold out @ over 9%. In 2009 -2011 the gold lease rate went negative. Owning gold & leasing the gold can boast profits of owning gold.
 

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Back above $2,000 again today. I'm surprised how little interest there is in this. Imagine you found a stock ETF with the following stats

Annualized performance (before fees)
10 years: 6.7%
15 years: 9.3%
20 years: 8.5%
25 years: 5.4%

Move in bear market years:
2000 ... -2.60%
2001 ... +8.40%
2002 ... +23.30%
2008 ... +28.80%


Someone correct me if I'm wrong but I think people would be tripping over themselves to get into that. These are the returns of gold in CAD.
 

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Back above $2,000 again today. I'm surprised how little interest there is in this. Imagine you found a stock ETF with the following stats

Annualized performance (before fees)
10 years: 6.7%
15 years: 9.3%
20 years: 8.5%
25 years: 5.4%

Move in bear market years:
2000 ... -2.60%
2001 ... +8.40%
2002 ... +23.30%
2008 ... +28.80%


Someone correct me if I'm wrong but I think people would be tripping over themselves to get into that. These are the returns of gold in CAD.
Last week managed money accounts moved to a net long of 285,082 futures contracts with in aprox 2000 contracts of their record bullish position. These guys chase the market & get caught with large wrong one way bets @ trend reversals. Aug 5 & 6 had back to back DSI 98% bulls (trade futures.com)
 

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New all time, historic highs on gold today. MNT and CGL.C also hitting new all time highs as it tracks.

Aren't you glad your asset allocation has a weight in gold? I sure am.
 

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New all time, historic highs on gold today. MNT and CGL.C also hitting new all time highs as it tracks.

Aren't you glad your asset allocation has a weight in gold? I sure am.
The rally from 1046 low will retrace fib.618 of the decline from the 2011 high @ 1587

The decline from the 2011 high was 5 waves down

The retrace rally from the 1046 low looks to be tracing out a corrective wave i.e., ABC with wave B contracting triangle Wave C will equal wave A @ 1595 (A common relationship)

Looking to short gold using options near the above mentioned levels.
 

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About a year ago, I bought a small 0.1 oz Maple Leaf gold coin for a friend's baby ... meant to be held in safe keeping. A small thing, size of a penny (quite attractive, see below). Checking the value today, I see that its value has gained 31% since I bought the gift.

It's like giving a mini ETF to someone. You just put it in a box or something, and it performs. Pretty neat I think!

If you're curious, I bought the coin with gold at 1200 USD @ 1.308 = $1570 CAD, and gold is now 1546 USD @ 1.333 = $2060 CAD per oz, an increase of 31% and just about at all time historical highs. And the cost of the coin wasn't too bad. I only paid $26 in excess of the intrinsic gold value of the coin. I feel that around $20 is a pretty reasonable price to pay for an attractive, pure bullion coin that will have value forever.

mapleleaf-0.1oz.jpg
 

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I haven't watched it yet john.cray, I will check it out. My allocation is only 20% gold, quite minimal. It's the smallest weight of anything in my portfolio.

And there is no way I am changing it. If I reconsidered my allocations every time someone made an argument, I'd never stick with my plans... and it's extremely important to stick with the plan. I did a huge amount of research over 2 years. In that time period, I actually adjusted from 25% down to 20% gold. But the plan will not change now. I might re-evaluate in 10 or 20 years.

Remember, asset allocation choices have to withstand market volatility, market craziness, and peer pressure as well.
 

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About a year ago, I bought a small 0.1 oz Maple Leaf gold coin for a friend's baby ... meant to be held in safe keeping. A small thing, size of a penny (quite attractive, see below). Checking the value today, I see that its value has gained 31% since I bought the gift.

It's like giving a mini ETF to someone. You just put it in a box or something, and it performs. Pretty neat I think!

If you're curious, I bought the coin with gold at 1200 USD @ 1.308 = $1570 CAD, and gold is now 1546 USD @ 1.333 = $2060 CAD per oz, an increase of 31% and just about at all time historical highs. And the cost of the coin wasn't too bad. I only paid $26 in excess of the intrinsic gold value of the coin. I feel that around $20 is a pretty reasonable price to pay for an attractive, pure bullion coin that will have value forever.

View attachment 19618
Very nice. I received many of those when I got married and when my kids where born. Ironically, in a jewelry format. When my parents left there home country, they were not allowed to bring anything with them. Many people, especially women back then were not allowed to have their own wealth, as it was 'owned' by the male. As a result, my mother when she arrived to Canada, scrimped and saved and bought .1 oz and 1 oz coins a little bars when ever should could. At the fear of having it taken from her, she wanted to ensure that the females in the family received something. So she had them mounted as bracelets and necklaces and they have been passed down over the years. My girls will never have to worry about everything they have being 'owned' by their spouses, but as a tradition, we have continued with gold coins as gifts. Though I don't mount the coins any more.

I find it interesting how gold has stood as a symbol of wealth. This was just a total side note when I saw your picture of the gold coin.
 

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It seems to me that gold adds value to a portfolio, not because of an intrinsic return, but because of its high volatility and being out of sync with other volatile assets. So for example it works very well in the permanent portfolio, where you get to rebalance between gold, stocks, and LT bonds. That means you are buying low and selling high, which creates a significant portion of its returns.

I can't get a grasp on how gold prices behave. Sometimes it pops on inflation (or in anticipation of inflation), sometimes on deflation, sometimes on weakening of the USD...
 

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Very nice. I received many of those when I got married and when my kids where born. Ironically, in a jewelry format. When my parents left there home country, they were not allowed to bring anything with them. Many people, especially women back then were not allowed to have their own wealth, as it was 'owned' by the male. As a result, my mother when she arrived to Canada, scrimped and saved and bought .1 oz and 1 oz coins a little bars when ever should could. At the fear of having it taken from her, she wanted to ensure that the females in the family received something. So she had them mounted as bracelets and necklaces and they have been passed down over the years. My girls will never have to worry about everything they have being 'owned' by their spouses, but as a tradition, we have continued with gold coins as gifts. Though I don't mount the coins any more.

I find it interesting how gold has stood as a symbol of wealth. This was just a total side note when I saw your picture of the gold coin.
Thanks for sharing, that's very interesting that your mother had them mounted as jewelry. I've also seen family members use gold as a store of wealth. It's amazing how many countries around the world have some traditions or historical experiences where gold was vital.

Somehow, I don't think a metal that's been considered precious for 5,000 years ... and which has repeatedly saved families from ruin ... is suddenly going to stop being relevant. Countries appear to agree; they hold about 30,000 tonnes of gold as a store of wealth.

It seems to me that gold adds value to a portfolio, not because of an intrinsic return, but because of its high volatility and being out of sync with other volatile assets. So for example it works very well in the permanent portfolio, where you get to rebalance between gold, stocks, and LT bonds. That means you are buying low and selling high, which creates a significant portion of its returns.
Yes, this is a very tangible benefit to portfolio design. Low correlation with both stocks and bonds means better diversification, resulting in smoother returns and better returns due to the magic of rebalancing. Counterintuitive, and not something one can see until they play with the numbers.
 

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By the way, for people wondering how I ended up with my crazy 20% gold allocation, the biggest influences on my decision were

(1) Argonaut -- a forum regular -- and his 20% allocation in gold, discussed in his book and described in this thread

(2) the Permanent Portfolio, which is even higher at 25% gold

(3) the math of risk parity, which I won't get into here, but which also told me 20% weight
 

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I had been asking myself what the real return of gold is. Generally I've read that it's had about zero real return after inflation.

In 1872, the price of gold of gold was $18.94
https://www.nma.org/pdf/gold/his_gold_prices.pdf

Today it's $1485. This is over 147 years.
The annual growth rate = (1485/18.94)^(1/147) = 3.0%

US inflation since 1872 has averaged 2.2%
https://www.multpl.com/inflation

Therefore it appears that the real return of gold over 147 years has been positive 0.8%.

Which isn't too bad! It's hardly dead money; gold has preserved purchasing power. In fact, the real return is in the same ballpark as bonds.

And don't we all mostly agree that bonds are worth holding because, despite the low return, they diversify against stocks?
 

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The main objection to gold appears to be at it has no intrinsic value; it does not generate any income. Warren Buffet has a saying to the effect that if one had bought a few acres of farm land at the time of the American revolution, it would have generated income many times more than the price of the land. Same with corporations. An ounce of gold would still be an ounce of gold.

Historically, it seems to have provided a good store of value. It seems to respond to inflation and deflation alike.

If one invests through ETFs, there would be a 0.4% to 0.5% cost to owning gold, which should be taken into account.

Personally, I don't own gold but could see allocating up to 10% and aggressively rebalancing it. I thought about writing covered calls on GLD as a way to make it a "productive asset", but the premiums do not appear to be high enough.
 

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Yes if you add gold to the portfolio you must rebalance it annually. Part of the benefit is the weak correlation and the opportunity for volatility harvesting... you need to rebalance to realize this advantage. (Stocks & bonds have the same, but to a lesser extent, because bonds aren't volatile)

I agree that gold has no intrinsic value (other than its useful chemical/industrial uses), but would make the counter argument that stocks don't really trade on intrinsic value either (which was thoroughly described by Shiller in his famous work). All of these things are human constructs. Equities have an intrinsic value, yes, that is FAR below where the market values them. In the blink of an eye, the market P/E of 30 can shrink to 10 or less. Stocks prices, too, are a figment of the human imagination [in short time horizons]

The wildly changing stock market multiple tells us that most of the pricing isn't on fundamentals. I think Shiller's study showed that only at about 40+ year horizon does stock market movements appear to track economic fundamentals quite well. If you deal with shorter horizons such as 20 years... the movements are anyone's guess.

Therefore I believe that the "rationality" and "fundamental-driven" reasons for stock investment are FAR over hyped.

I think that for the time horizon that most people deal with in real life, including me, at perhaps 5 to 25 years, nobody is going to capture stock market fundamentals-driven performance. You may get lucky and catch the market on a P/E expansion cycle (1980-2000 and 2009-today), and most people mistake that for fundamentals-based stock performance.

Honestly, at under 25 year time horizon, I see very little difference between stocks & gold. Each could do literally anything. I think it would be crazy to just hold one or the other, a gamble on what it may do.

But another reality is that there are very few places where people store wealth. Stocks, bonds, gold, commodities, real estate -- that's pretty much it. Dalio's concept is that you should pretty much hold all of these because that way, no matter how money sloshes between those things, you benefit over time. It's also one of the core ideas behind the Risk Parity concept.

However if you were to just pick one in isolation (e.g. just hold stocks, or just hold gold) you could get absolutely destroyed, at under 25 yr horizon.
 
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