Author Topic: Precious Metals  (Read 64306 times)

vand

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Re: Precious Metals
« Reply #350 on: February 24, 2020, 07:23:05 AM »
Timely bump. Doubters are gonna doubt, all the way up.

Btw, if you think gold has done well recently in USD you should check out how well it has done in other currencies, especially euros.

Stand by my prediction that there will come a time when everyone who has no gold allocation will wish they had some, and those who did have some will probably wish they had a lot more. Dunno about you, I would rather not wait until CNBC is telling us we should hold some gold. I Ďd rather get ahead of the curve.
« Last Edit: February 24, 2020, 08:14:53 AM by vand »

waltworks

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Re: Precious Metals
« Reply #351 on: February 24, 2020, 07:47:05 AM »
Of course that time will come. Broken clocks, and all.

Problem is, there's no way to predict when that is in advance, and it's a drag on your portfolio the rest of the time.

Market timing is still market timing, even if it's the gold market. Except the gold market doesn't get you exponential gains over long time periods...

-W

MaaS

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Re: Precious Metals
« Reply #352 on: February 24, 2020, 07:48:11 AM »
Timely bump. Doubters are gonna doubt, all the way up.

Btw, if you think gold has done well recently in USD you should check out how well it has done in other currencies, especially euros.

Stand by my prediction that there will come a time when everyone who has no gold allocation will wish they had some, and those who did have some will probably wish they had a lot more. Dunno about you, I would rather not wait until CNBC is telling us we should have hold some gold. I Ďd rather get ahead of the curve.

I never, ever thought I'd buy gold.

I changed my mind late last year and have about 6%. My decision was more based upon the interest rate race to the bottom than the stock market price, however.

vand

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Re: Precious Metals
« Reply #353 on: February 24, 2020, 08:26:57 AM »
Here is the gold/vti price over 20 years. Interpret it however you want..


vand

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Re: Precious Metals
« Reply #354 on: February 24, 2020, 08:38:35 AM »
Of course that time will come. Broken clocks, and all.

Problem is, there's no way to predict when that is in advance, and it's a drag on your portfolio the rest of the time.

Market timing is still market timing, even if it's the gold market. Except the gold market doesn't get you exponential gains over long time periods...

-W

Not really about being a broken clock. Markets go in cycles, and public sentiment necessarily reflects that. As previous chart shows there is ample opportunity to favour your investments one way or the other depending on the trend. Prices do no jump from a price where everyone despises it to one where everyone loves it overnight. It is a process in yje cycle that takes years. By the time the pendulum has swung back towards gold the sentiment will have shifted in line with the prices.

waltworks

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Re: Precious Metals
« Reply #355 on: February 24, 2020, 08:54:28 AM »
Yeah, that's what all the market timers say. If you can predict market cycles, more power to you. I can't, so I don't try.

-W

appleshampooid

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Re: Precious Metals
« Reply #356 on: February 24, 2020, 08:59:18 AM »
For better/worse/crazy/irrational I recently decided I wanted to add to my PM stash a bit....I have what amounts to about 1.5% of my total NW right now, last purchases in 2014. I want to keep it around 3%.

This was not based on the current PM prices at all, and of course, now is a really terrible time to buy. So the question is....do I try to time the PM market and wait a bit? I think I will wait a bit. My crystal ball says that after the Corona virus fears blow over, Gold/Silver prices will come down a bit. Since I buy so rarely, and buying in volume gets you some discount, I don't feel toooo bad about waiting for a dip.

JAYSLOL

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Re: Precious Metals
« Reply #357 on: February 24, 2020, 10:08:52 AM »
I buy sporadically, not based on what prices are or anything, but based on when I find a deal.  I buy coin collections privately at garage sales, estate sales etc, so Iím usually buying way below whatever the spot price is at the time.  Most of it I put aside, some of it I sell off.  I try to keep silver and gold to 5% or less of my portfolio, but it surges based on spot price or if I find a big collection all at once, currently up to 9% because of spot price and me being lazy to sell off some that I donít need.  I would have a really hard time buying silver or gold at retail prices when you take such a hit on the selling side.  Plus random collections are just way more interesting than bullion. 

vand

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Re: Precious Metals
« Reply #358 on: February 24, 2020, 10:22:04 AM »
For better/worse/crazy/irrational I recently decided I wanted to add to my PM stash a bit....I have what amounts to about 1.5% of my total NW right now, last purchases in 2014. I want to keep it around 3%.

This was not based on the current PM prices at all, and of course, now is a really terrible time to buy. So the question is....do I try to time the PM market and wait a bit? I think I will wait a bit. My crystal ball says that after the Corona virus fears blow over, Gold/Silver prices will come down a bit. Since I buy so rarely, and buying in volume gets you some discount, I don't feel toooo bad about waiting for a dip.

People asked the same after last monthsí missile exchanges in Iraq ďcausedĒ gold to spike above the $1600, and yet here we are just a few weeks later and people taking advantage of that panic to sell must be wondering if theyíll ever be able to get back in lower than they sold.

My take is that wether it is geopolitics or viruses, ďeventsĒ never drive a market where they do not ultimately want to go. The underlying driver of this bull market in gold has noting to do with the scare stories of the day; it is driven by the manipulation and abuse of currencies by virtually all those with the monopoly power to issue them. It is far worse than the sort of abuse which drove the 1972-1980 and 2000-2011 bull markets, and there should be no reason why, in the face of this action, gold will not perform in similar fashion compared to other financial assets as it did in those periods.

TomTX

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Re: Precious Metals
« Reply #359 on: February 24, 2020, 05:18:17 PM »
Here is the gold/vti price over 20 years. Interpret it however you want..
Doesn't that leave out the ~2% per year in dividends from VTI?

waltworks

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Re: Precious Metals
« Reply #360 on: February 24, 2020, 07:16:14 PM »
VTI with dividends reinvested is about a 6.2% annual return over the last 20 years. Gold does indeed beat that return handily, as that's a low point for gold prices and a (relative) high point for equities.

Longer time comparisons are not so kind to gold (which loses by about 3% annually since 1971), nor are shorter ones.

But we've been over all that before. I doubt anyone's mind is going to be changed. If gold makes you sleep better at night, then by all means buy some.

-W

« Last Edit: February 24, 2020, 07:19:50 PM by waltworks »

celerystalks

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Re: Precious Metals
« Reply #361 on: February 24, 2020, 08:00:22 PM »
VTI with dividends reinvested is about a 6.2% annual return over the last 20 years. Gold does indeed beat that return handily, as that's a low point for gold prices and a (relative) high point for equities.

Longer time comparisons are not so kind to gold (which loses by about 3% annually since 1971), nor are shorter ones.

But we've been over all that before. I doubt anyone's mind is going to be changed. If gold makes you sleep better at night, then by all means buy some.

-W

Properly used in a portfolio, gold should be treated as an asset class. It should not be loaded up on all at once. It should be bought or sold regularly to maintain a desired percentage.This takes advantage of the inherent short term volatility gold, stocks, and bonds, and it takes advantage of goldís long term ability to do well during periods of high inflation.

If they had to be bought all at once at a single point in time, the same cherry picking of starting points or time periods arguments could be made with respect to stocks v. Bonds, or bonds v. Cash, or even stocks v. Cash in some cases.

hodedofome

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Re: Precious Metals
« Reply #362 on: February 25, 2020, 09:22:34 AM »

JetBlast

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Re: Precious Metals
« Reply #363 on: February 25, 2020, 09:54:17 AM »
Dunno about you, I would rather not wait until CNBC is telling us we should hold some gold. I Ďd rather get ahead of the curve.

Just switch the channel to Fox News.  They have elderly B-List actors telling you to buy gold and silver during every commercial break! 

Here is the gold/vti price over 20 years. Interpret it however you want..



OMG!!!!  17-year head and shoulders pattern almost complete!  Gold is bound to fall shortly!  Top is in!

Radagast

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Re: Precious Metals
« Reply #364 on: February 29, 2020, 10:18:16 AM »
Properly used in a portfolio, gold should be treated as an asset class. It should not be loaded up on all at once. It should be bought or sold regularly to maintain a desired percentage.This takes advantage of the inherent short term volatility gold, stocks, and bonds, and it takes advantage of goldís long term ability to do well during periods of high inflation.

If they had to be bought all at once at a single point in time, the same cherry picking of starting points or time periods arguments could be made with respect to stocks v. Bonds, or bonds v. Cash, or even stocks v. Cash in some cases.
This is a good point. Gold is a perfect asset for dollar cost averaging. With no dividends and no expectation for compounding growth exceeding the relative cost of yoghurt (inflation) there is not a mean or median expectation of losing out by delayed investing. But it is very volatile, so you will get on average a slightly lower cost basis by DCA in. For PM, DCA is a winning strategy.

That is a dream head and shoulders chart.

vand

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Re: Precious Metals
« Reply #365 on: March 12, 2020, 12:27:34 PM »
Sill no love for the precious metals?

Dow/Gold ratio, having topped out at 22.5 in mid-2018 (coincidentally just about when this thread started) is now trading at 13.8.

That means gold has outperformed stocks by about 60% over the last 20 months.

The drivers of the long term gold bull - endless debt and monetary expansion - have just shifted into a new gear.


dougules

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Re: Precious Metals
« Reply #366 on: March 12, 2020, 02:34:08 PM »
Sill no love for the precious metals?

Dow/Gold ratio, having topped out at 22.5 in mid-2018 (coincidentally just about when this thread started) is now trading at 13.8.

That means gold has outperformed stocks by about 60% over the last 20 months.

The drivers of the long term gold bull - endless debt and monetary expansion - have just shifted into a new gear.

It's still a lifeless metallic substance last time I checked. 

vand

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Re: Precious Metals
« Reply #367 on: March 12, 2020, 03:55:56 PM »
Sill no love for the precious metals?

Dow/Gold ratio, having topped out at 22.5 in mid-2018 (coincidentally just about when this thread started) is now trading at 13.8.

That means gold has outperformed stocks by about 60% over the last 20 months.

The drivers of the long term gold bull - endless debt and monetary expansion - have just shifted into a new gear.

It's still a lifeless metallic substance last time I checked.

It's MONEY. Everything else is credit.

J.P. Morgan's words, not mine.

dougules

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Re: Precious Metals
« Reply #368 on: March 13, 2020, 07:57:37 AM »
Sill no love for the precious metals?

Dow/Gold ratio, having topped out at 22.5 in mid-2018 (coincidentally just about when this thread started) is now trading at 13.8.

That means gold has outperformed stocks by about 60% over the last 20 months.

The drivers of the long term gold bull - endless debt and monetary expansion - have just shifted into a new gear.

It's still a lifeless metallic substance last time I checked.

It's MONEY. Everything else is credit.

J.P. Morgan's words, not mine.

Yes, it's just money.  It makes no profits and no interest.  It's not busy reinvesting in itself, buying back its own shares, or buying other gold.  It's not providing any services like manufacturing surgical masks, transporting food, or building housing.  It's a lifeless metallic substance. 

waltworks

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Re: Precious Metals
« Reply #369 on: March 13, 2020, 08:01:09 AM »
Am I crazy, or is it also acting correlated with stocks right now?

I was expecting (I don't own any and don't plan to) gold to be on a tear, but it's certainly not doing the inverse of the stock market thus far.

-W

JAYSLOL

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Re: Precious Metals
« Reply #370 on: March 13, 2020, 08:07:15 AM »
You are right, they sometimes rise and fall together in times of great volatility. 

dougules

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Re: Precious Metals
« Reply #371 on: March 13, 2020, 08:09:38 AM »
Am I crazy, or is it also acting correlated with stocks right now?

I was expecting (I don't own any and don't plan to) gold to be on a tear, but it's certainly not doing the inverse of the stock market thus far.

-W

They mentioned on NPR this morning that stocks, bonds, and gold are not moving relative to each other in their normal fashion at the moment.  It is kind of odd. 

maizefolk

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Re: Precious Metals
« Reply #372 on: March 13, 2020, 08:11:07 AM »
Am I crazy, or is it also acting correlated with stocks right now?

I was expecting (I don't own any and don't plan to) gold to be on a tear, but it's certainly not doing the inverse of the stock market thus far.

-W

Yesterday stocks, bonds, and gold all fell together. The best explanation I've read is that some major investors/companies may be facing a serious cash crunch and are selling any assets they have.

MustacheAndaHalf

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Re: Precious Metals
« Reply #373 on: March 13, 2020, 11:07:32 AM »
Even when U.S. stocks have dropped this week, gold hasn't dropped as far.  it has "outperformed" by losing less.
Today looks a bit more normal, since right now U.S. stocks are up +3% and gold is down -3%.

Monday (Mar 9) was the first time I've ever sold equities and bought gold.  I expect it will perform better in a panic than stocks do, and I'm waiting for a panic when U.S. cases hit 10,000.  Assuming they even test 10,000 people for COVID-19...

dougules

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Re: Precious Metals
« Reply #374 on: March 13, 2020, 03:15:40 PM »
Even when U.S. stocks have dropped this week, gold hasn't dropped as far.  it has "outperformed" by losing less.
Today looks a bit more normal, since right now U.S. stocks are up +3% and gold is down -3%.

Monday (Mar 9) was the first time I've ever sold equities and bought gold.  I expect it will perform better in a panic than stocks do, and I'm waiting for a panic when U.S. cases hit 10,000.  Assuming they even test 10,000 people for COVID-19...

So you sold equities after a 19% drop?

markbike528CBX

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Re: Precious Metals
« Reply #375 on: March 13, 2020, 09:06:50 PM »
Even when U.S. stocks have dropped this week, gold hasn't dropped as far.  it has "outperformed" by losing less.
Today looks a bit more normal, since right now U.S. stocks are up +3% and gold is down -3%.

Monday (Mar 9) was the first time I've ever sold equities and bought gold.  I expect it will perform better in a panic than stocks do, and I'm waiting for a panic when U.S. cases hit 10,000.  Assuming they even test 10,000 people for COVID-19...

So you sold equities after a 19% drop?

Mmmmmmm......does not compute.......

MustacheAndaHalf

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Re: Precious Metals
« Reply #376 on: March 13, 2020, 09:46:45 PM »
Monday (Mar 9) was the first time I've ever sold equities and bought gold.  I expect it will perform better in a panic than stocks do, and I'm waiting for a panic when U.S. cases hit 10,000.  Assuming they even test 10,000 people for COVID-19...
So you sold equities after a 19% drop?
Do you think it's realistic to measure from the exact peak of the S&P 500?

The market is down this week, even after Friday's jump of +9%.

JAYSLOL

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Re: Precious Metals
« Reply #377 on: March 13, 2020, 10:32:08 PM »
Monday (Mar 9) was the first time I've ever sold equities and bought gold.  I expect it will perform better in a panic than stocks do, and I'm waiting for a panic when U.S. cases hit 10,000.  Assuming they even test 10,000 people for COVID-19...
So you sold equities after a 19% drop?
Do you think it's realistic to measure from the exact peak of the S&P 500?

The market is down this week, even after Friday's jump of +9%.

Well, 19% isnít exactly rounding-error territory.  I mean if you sold sub-5% off the Top, Iím sure nobody would bring it up, but bailing after 19% on the other hand...

MustacheAndaHalf

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Re: Precious Metals
« Reply #378 on: March 14, 2020, 12:34:42 AM »
Monday (Mar 9) was the first time I've ever sold equities and bought gold.
So you sold equities after a 19% drop?
Do you think it's realistic to measure from the exact peak of the S&P 500?
Well, 19% isnít exactly rounding-error territory.  I mean if you sold sub-5% off the Top, Iím sure nobody would bring it up, but bailing after 19% on the other hand...
You ignored my question, and refused to acknowledge or explain where you're getting "19%".

Gains are the difference between purchase and sale price.  The only way to get a "19% drop" as of March 9 is to assume I went from 100% cash to 100% equities on Feb 19, the very peak.  Anyone didn't buy at the exact peak isn't seeing a "19% drop" as you claim.

Classical_Liberal

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Re: Precious Metals
« Reply #379 on: March 14, 2020, 03:20:28 AM »
Yesterday stocks, bonds, and gold all fell together. The best explanation I've read is that some major investors/companies may be facing a serious cash crunch and are selling any assets they have.
This is correct.  It happens initially as margin calls come in and is expected by noncorrelation investors in the first stages of a very volatile market. Treasuries specifically, in my unprofessional opinion, just don't have much more to give.  I don't think the US will go negative. On the long end there is still a bit of upside thanks to convexity, but it could go the other way just as fast. The interesting thing about this market is that the gold upside started well before the equity panic, whereas historically it tends to lag a bit.  I think gold still has a decent amount of upside.

JAYSLOL

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Re: Precious Metals
« Reply #380 on: March 14, 2020, 08:10:21 AM »
Monday (Mar 9) was the first time I've ever sold equities and bought gold.
So you sold equities after a 19% drop?
Do you think it's realistic to measure from the exact peak of the S&P 500?
Well, 19% isnít exactly rounding-error territory.  I mean if you sold sub-5% off the Top, Iím sure nobody would bring it up, but bailing after 19% on the other hand...
You ignored my question, and refused to acknowledge or explain where you're getting "19%".

Gains are the difference between purchase and sale price.  The only way to get a "19% drop" as of March 9 is to assume I went from 100% cash to 100% equities on Feb 19, the very peak.  Anyone didn't buy at the exact peak isn't seeing a "19% drop" as you claim.

What?  Lol.  Thatís how drops work though.  Just because you live on the 4th floor of your apartment building for 2 years, and then suddenly decided to run up to the 19th floor and jump out the window, that doesnít mean you fell from 4 stories cause thatís where you were most of the time. 

MustacheAndaHalf

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Re: Precious Metals
« Reply #381 on: March 14, 2020, 10:20:54 AM »
Monday (Mar 9) was the first time I've ever sold equities and bought gold.
So you sold equities after a 19% drop?
Do you think it's realistic to measure from the exact peak of the S&P 500?
Well, 19% isnít exactly rounding-error territory.  I mean if you sold sub-5% off the Top, Iím sure nobody would bring it up, but bailing after 19% on the other hand...
You ignored my question, and refused to acknowledge or explain where you're getting "19%".

Gains are the difference between purchase and sale price.  The only way to get a "19% drop" as of March 9 is to assume I went from 100% cash to 100% equities on Feb 19, the very peak.  Anyone didn't buy at the exact peak isn't seeing a "19% drop" as you claim.
What?  Lol.  Thatís how drops work though.  Just because you live on the 4th floor of your apartment building for 2 years, and then suddenly decided to run up to the 19th floor and jump out the window, that doesnít mean you fell from 4 stories cause thatís where you were most of the time.
A drop in what?

waltworks

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Re: Precious Metals
« Reply #382 on: March 14, 2020, 10:33:09 AM »
So, I think most people would consider selling when the market is down by 20% from the peak a "loss".

If you prefer to think of the price you purchased the stock for vs. the price you sold it for, that's also a legitimate way to look at it, but it's not how most people would think about it.

So I think you guys are mostly just talking past each other.

-W

MustacheAndaHalf

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Re: Precious Metals
« Reply #383 on: March 14, 2020, 10:55:32 AM »
Okay, focusing on just this week for a moment.  I sold roughly -6% down at the beginning of the week.  People who did nothing are now -9.74% for the week, according to morningstar data for VTI (Vanguard Total Stock Market EtF):
https://www.morningstar.com/etfs/arcx/vti/performance
So I lost about -6% while others lost about -10%.  I avoided a -4% additional loss.

So if someone is tracking my loss from the peak, and saying -20%, shouldn't everyone else be tracking their own losses from the peak, of -24%?

waltworks

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Re: Precious Metals
« Reply #384 on: March 14, 2020, 11:13:58 AM »
Okay, focusing on just this week for a moment.  I sold roughly -6% down at the beginning of the week.  People who did nothing are now -9.74% for the week, according to morningstar data for VTI (Vanguard Total Stock Market EtF):
https://www.morningstar.com/etfs/arcx/vti/performance
So I lost about -6% while others lost about -10%.  I avoided a -4% additional loss.

So if someone is tracking my loss from the peak, and saying -20%, shouldn't everyone else be tracking their own losses from the peak, of -24%?

Assuming the stocks were pretty appreciated, right? What will the tax hit be?

-W

Joe Schmo

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Re: Precious Metals
« Reply #385 on: March 14, 2020, 11:55:42 AM »
They mentioned on NPR this morning that stocks, bonds, and gold are not moving relative to each other in their normal fashion at the moment.  It is kind of odd.
Odd for sure. Gold moved as it should when the market jumped up on Friday but when it doesn't move up in relation to market moving down it kinda defeats the purpose of the "golden butterfly" does it not?

PS: Looks like a good gold buying opportunity is staring us in the face...if we truly believe.

TomTX

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Re: Precious Metals
« Reply #386 on: March 14, 2020, 01:22:28 PM »
They mentioned on NPR this morning that stocks, bonds, and gold are not moving relative to each other in their normal fashion at the moment.  It is kind of odd.
Odd for sure. Gold moved as it should when the market jumped up on Friday but when it doesn't move up in relation to market moving down it kinda defeats the purpose of the "golden butterfly" does it not?

PS: Looks like a good gold buying opportunity is staring us in the face...if we truly believe.

Liquidity crunch. Hedge funds, etc needed to raise cash and sold off whatever assets they could.

ChpBstrd

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Re: Precious Metals
« Reply #387 on: March 14, 2020, 08:49:21 PM »
They mentioned on NPR this morning that stocks, bonds, and gold are not moving relative to each other in their normal fashion at the moment.  It is kind of odd.
Odd for sure. Gold moved as it should when the market jumped up on Friday but when it doesn't move up in relation to market moving down it kinda defeats the purpose of the "golden butterfly" does it not?

PS: Looks like a good gold buying opportunity is staring us in the face...if we truly believe.

Liquidity crunch. Hedge funds, etc needed to raise cash and sold off whatever assets they could.

Or maybe weakly correlated assets are not hedges. Goldbug Theory says this is exactly the sort of environment you wait years holding gold for, but fiat dollars have outperformed gold by 4.7%. What would it take to disprove the theory?

Here's an alternative idea. If investors hold an average asset allocation of gold at X%, and rebalance when that percentage changes, then a drop in stock prices will require them to sell gold, right? Stocks dropped. Investors are selling gold. I'm not even going to go into detail about how Zales is not moving nearly as many New Jersey gold necklaces or starter marriage rings now that retail stores are considered hot zones.

Classical_Liberal

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Re: Precious Metals
« Reply #388 on: March 14, 2020, 09:14:49 PM »
They mentioned on NPR this morning that stocks, bonds, and gold are not moving relative to each other in their normal fashion at the moment.  It is kind of odd.
Odd for sure. Gold moved as it should when the market jumped up on Friday but when it doesn't move up in relation to market moving down it kinda defeats the purpose of the "golden butterfly" does it not?

PS: Looks like a good gold buying opportunity is staring us in the face...if we truly believe.

Liquidity crunch. Hedge funds, etc needed to raise cash and sold off whatever assets they could.

Or maybe weakly correlated assets are not hedges. Goldbug Theory says this is exactly the sort of environment you wait years holding gold for, but fiat dollars have outperformed gold by 4.7%. What would it take to disprove the theory?

Here's an alternative idea. If investors hold an average asset allocation of gold at X%, and rebalance when that percentage changes, then a drop in stock prices will require them to sell gold, right? Stocks dropped. Investors are selling gold. I'm not even going to go into detail about how Zales is not moving nearly as many New Jersey gold necklaces or starter marriage rings now that retail stores are considered hot zones.

Well, timeframes matter too.  It's not like we are looking as historical data from a weekly or even monthly standpoint.  What really matters from a withdrawal rate perspective is years. Because any type of short term V bear market doesn't really matter over 50 years.  What matter are long term cyclical bears. So, how does one asset correlate to another asset in these longer term circumstances. A long term 30-50% drawdown in equities is the only thing that kills the 4% rule.  If you own 10-15% in something that has a long term cyclical bull over those years, it makes a huge difference.

Davnasty

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Re: Precious Metals
« Reply #389 on: March 14, 2020, 10:02:10 PM »


bicyclical?

MustacheAndaHalf

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Re: Precious Metals
« Reply #390 on: March 15, 2020, 01:26:33 AM »
Okay, focusing on just this week for a moment.  I sold roughly -6% down at the beginning of the week.  People who did nothing are now -9.74% for the week, according to morningstar data for VTI (Vanguard Total Stock Market EtF):
...
Assuming the stocks were pretty appreciated, right? What will the tax hit be?
True, but I considered tax impact in my Monday sales (or I would have sold more).  One had a +0.5% gain, the others were all net loss.  I did some buying in Feb owing to drops in other countries, before I realized the U.S. was about to be hit, while being under-prepared.  We agree taxes are an important consideration.

v8rx7guy

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Re: Precious Metals
« Reply #391 on: March 15, 2020, 04:05:22 PM »
I think Gold is going to have a nice little bump with the most recent 0% and QE announcement.

vand

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Re: Precious Metals
« Reply #392 on: March 16, 2020, 02:38:22 AM »
We got beat up a bit last week, but the Fed has made its intentions quite clear: QE infinity is now a reality and the Fed will do "whatever it takes" to try preserving the dysfunctional system.

There has never been a better time to hold some gold.

Dow/Gold is still around ~14 and the course of action is only going to take it lower.

And if I'm wrong then hey, my stocks holdings will go up to compensate me.  Nothing like being well diversified.

dougules

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Re: Precious Metals
« Reply #393 on: March 16, 2020, 11:23:03 AM »
Monday (Mar 9) was the first time I've ever sold equities and bought gold.
So you sold equities after a 19% drop?
Do you think it's realistic to measure from the exact peak of the S&P 500?
Well, 19% isnít exactly rounding-error territory.  I mean if you sold sub-5% off the Top, Iím sure nobody would bring it up, but bailing after 19% on the other hand...
You ignored my question, and refused to acknowledge or explain where you're getting "19%".

Gains are the difference between purchase and sale price.  The only way to get a "19% drop" as of March 9 is to assume I went from 100% cash to 100% equities on Feb 19, the very peak.  Anyone didn't buy at the exact peak isn't seeing a "19% drop" as you claim.
What?  Lol.  Thatís how drops work though.  Just because you live on the 4th floor of your apartment building for 2 years, and then suddenly decided to run up to the 19th floor and jump out the window, that doesnít mean you fell from 4 stories cause thatís where you were most of the time.
A drop in what?

I said "drop" not "loss."  There has definitely been a big drop.  My point was that the sudden urge to go to gold sounds like an emotional reaction to the big drop, whether or not there was an actual loss. 
« Last Edit: March 16, 2020, 11:24:42 AM by dougules »

MustacheAndaHalf

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Re: Precious Metals
« Reply #394 on: March 16, 2020, 01:52:37 PM »
That's not accurate.  When China had an outbreak, and markets dropped, I bought at the bottom (Feb 28).  I saw pure panic, and pushed my equity allocation up +2% to buy more stocks.  That day had pure panic, and I bought equities.

Lumping all drops together ignores the separate events that went into them.  There's the China outbreak, outbreaks outside China, the U.S. outbreak, and the oil price war between Russia and Saudi Arabia.

When I saw the U.S. outbreak reaching significant numbers on the weekend of Mar 7-8, the market saw it, too.   I saw country after country follow the same pattern, and cause panic.  When U.S. futures markets priced in a -5% drop, I couldn't reconcile such a small drop against such a major problem.  The U.S. was poorly prepared, with denials of a problem and inadequate testing.  Many people can't afford to visit doctors, nor can they afford to skip work, and would make it harder to contain the outbreak in the U.S.  All together, the market reaction looked too small, so I accepted a -6% drop as the price to avoid a much larger drop.

Tomorrow I expect the U.S. to hit 5,000 cases.  I've been saying that since last week, and the U.S. has 4,000 cases now.  More importantly, I predict 10,000 cases roughly by Friday, March 20.  I'm expecting 10,000 cases to be picked up by the media and cause another panic - just like last Friday, and like Feb 28th.

Since I sold, U.S. markets have dropped about -14%.  Italy, France and Spain are on lock down.  The two choices seem to be locking down, or allowing mass infections.  What I've seen is every country locks down regions (China) or the entire country in response to the pressure to save lives.  I don't see how the U.S. can avoid locking down cities and regions, impacting both consumption and production.  That's why I predicted more drops, and why markets have been very panicked for the past 6 trading days.

Now that U.S. markets are down -9%, with additional damage to small caps and international?  Now, I'm buying equities.

dougules

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Re: Precious Metals
« Reply #395 on: March 16, 2020, 02:44:27 PM »
Nonetheless still a reaction to current events instead of sticking with the plan. 

Radagast

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Re: Precious Metals
« Reply #396 on: March 16, 2020, 09:47:23 PM »
There is very little historical evidence that gold is negatively correlated, even in a crisis. In fact it seems to have had little discernible pattern of correlation with anything. Though I do generally feel it does not do well during a crisis (when it is, as ever, an inert lump) but might transfer precrisis value to the postcrisis era, when there could be a little lift. Or not.

MustacheAndaHalf

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Re: Precious Metals
« Reply #397 on: March 16, 2020, 10:22:24 PM »
There is very little historical evidence that gold is negatively correlated, even in a crisis.
To say that you need to ignore the 1970s oil crisis, 9/11 and the 2008 financial crisis, to name a few.

Radagast

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Re: Precious Metals
« Reply #398 on: March 16, 2020, 10:56:39 PM »
There is very little historical evidence that gold is negatively correlated, even in a crisis.
To say that you need to ignore the 1970s oil crisis, 9/11 and the 2008 financial crisis, to name a few.
Attachment: Morningstar graph of GLD and SPY for 2008. Note very little correlation. Portfolio visualizer correlations of these two in 2008: 0.03 for mothly correlation, -0.12 for daily correlation. Essentially none.
https://www.portfoliovisualizer.com/asset-correlations?s=y&symbols=%5EGOLD%2C+SPY&startDate=12%2F01%2F2007&endDate=01%2F31%2F2009&timePeriod=2&tradingDays=60&months=12

Attachment: Portfolio visualizer graph of SPY and gold price for 2001. There was some negative correlation around 9/11. PV correlations in 2001: -0.35 for monthly, -0.08 for daily. Weak to none.
https://www.portfoliovisualizer.com/asset-correlations?s=y&symbols=%5EGOLD%2CSPY&startDate=12%2F01%2F2000&endDate=01%2F31%2F2002&timePeriod=1&tradingDays=60&months=12

Oil crisis: Indistinguishable from other events. In 1970 the government-set price of gold was at its lowest in real terms in essentially the history of civilization, and it then recovered to its average value by around 1975. From that point the price recovery would have happened in any circumstance, you could argue whether there was a common cause in the government giving up on fixing gold and the other crises around that time.

2020: in progress, but right now highly correlated at a bad time.

The good and bad thing about gold is that it is like a roulette wheel at all times.

MustacheAndaHalf

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Re: Precious Metals
« Reply #399 on: March 16, 2020, 11:05:26 PM »
You're counting the 8 months before 9/11 happened, but ignoring 2002?

According to Portfolio Visualizer, U.S. stocks lost -20% in 2002 while gold rose +25%.  In 2008 U.S. stocks plunged -37% while gold rose +4%.