Is gold about to go on another lifeboat expedition exercise in plain sight??
I have occasionally stated that I believe nearly everyone should hold at least some gold in their portfolio. And if you are RE and living off your income and worried about SORR then you should definitely hold some gold - why? because in the 2 historic periods where virtually all supposedly sensible combinations of stock/bond mixes struggled badly, an allocation to gold would have performed a critical rescue operation.
In fact, it has historically been much better portfolio diversifier than bonds.
Looking at the performance of 3 stock/bond/gold portfolio mixes at key times:
portfolio 1 - 100/0/0
portfolio 2 - 80/20/0
portfolio 3 - 80/0/20
$1m retirement portfolio, standard 4% WR
Exhibit A - modern era (so far), starting month Sept 2021
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Gold would have softened drawdown seen so far. Your x25 portfolio would now be a
x18.05 pot under a 100/0/0
x18.15 pot under a 80/20/0
x18.80 pot under a 80/0/20
You would have been slightly better off holding gold instead of bonds. That said, I would say that a 0.65 pot difference is not insignificant given the smallish allocation. Overall your performance is still going to be dictated by the large allocation to stocks.
Exhibit B - Y2k retiree, starting month Jan 2000
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The last time paper assets struggled (moreso stocks than bonds, but still) we are still seeing the endgame unfold. Your all-stock portfolio is down to a fraction of the original size, and while bonds would have helped, gold would have really saved your ass.
Your x25 portfolio would now be a
x6.1 pot under 100/0/0
x10.7 pot under 80/20/0
x17.6 pot under 80/0/20
Exhibit C - 1970s
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We only have history back to 1972 and maybe that is unfairly bullish to gold's case, but the data is what it is. Paper assets got absolutely crushed in this period as waves of inflation gripped all developed economies. Here is what gold did for your portfolio, with a x25 pot now becoming a:
x28.9 pot under a 100/0/0
x19.77 pot under a 80/20/0
x180 pot under a 80/0/20
All 3 portfolios survive to the modern day, but the small allocation to gold in portfolio 3 positively sends it into the stratosphere, even as one is living from it under a 4% initial WR. That's pretty impressive.
If I increase the WR from an initial 4% to a more taxing 6% - now the result are
100/0/0 fails after 16 years around 1987
80/20/0 fails after 17 years around 1988
80/0/20 fails after 45 years, around 2017
so there again, I present the case for holding a small but significant allocation to gold. Will it make you rich? Maybe - if we have another run like we saw in the 1970s. But you shouldn't think of that as its primary purpose. It's role is as a wealth preserver, and a small allocation has been shown to help people trying to live off their portfolio survive the historic rocky patches. It has always been more reliable than the traditional preferred diversifying asset class - bonds - in this regard.