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If so, what is your rationale, and what has your experience been?
I ask this, BTW, knowing that such funds can be very volatile, and thinking that it would be a small % of my portfolio, as a hedge against, you know, regime breakdown or wider world war(s). Any other thoughts on hedging against such events are welcome, BTW.
Observations: 1) Gold has been a terrible investment for a long term holders. 2) If you are a good trader, why bother with gold. 3) Investing small % is meaningless longer term. 4) The breakdown of the world is a long term scare that hasn't materialized.
NOTE: a fellow I worked with for 30 years was/is a guns and gold kinda person. He became so freaked out with the market melt in 2008, that he cashed out a portion of his T-IRA to purchase physical gold at a local coin dealer store. That wasn't a good plan.
If so, what is your rationale, and what has your experience been?
I have some limited indirect exposure. But I do not hold any gold / precious metals funds or stocks at this time..
My experience: Gold / PC miners are explosive (no pun intended). There is a string of 5 consecutive years (2011-2015) where most gold / precious metals mining funds lost money every year, losing about 90% of value over those 5 years. Breathtaking. But gold is prone to sharp “up” years as well. A mining fund can gain 50% + in a good year.
Performance / Yahoo / Click the “show more” tab to pull up longer term performance for both OPGSX and the broader fund category.
I won’t touch the miners at my age. They are more volatile than the metal. (Albeit - those in the know say the miners are currently undervalued relative to the metal.) Like @Derf I own PRPFX. One of my CEFs has a bit of exposure to the miners. When I feel like gambling I buy a little GLTR. It combines gold bullion with some silver and platinum using derivatives. Don’t feel like gambling right now. Prices look rich to me.
Rationale for owning / not owning? When rising sharply gold is cited as a hedge against inflation and a “safe haven” during times of war or social upheaval. Also as a way of diversifying. When falling, critics say it hasn’t done nearly as well as equities longer term, does’t generate any income, can be difficult to trade (very narrow market) and is expensive to store.
Not currently. At one we time owned PRPFX. We also previously traded GLD and GDX. There are just so many more reliable and less volatile ways to make money.
EDIT: We owned them back when we traded more. We currently (and likely from here on out) only like to own funds that outperform the S&P over LONG periods. GLD, GDX, SDLV and/or PRPFX do not. Over the past 10 years, it ain't even close. If you want diversifiers and/or intend to trade them, have at it. Otherwise, be prepared for their LT underperformance.
@Shostakovich, fwiw, I've held IAU since the start of covid in 2020. I've added and subtracted slightly during that time. This year I'm probably at my highest total. I believe it to be a good diversifier. Portfolio Visualizer shows gold to have a low .27 correlation to the S&P 500, SPY, from the start of 2020 to present. That's what I'm looking for. It's made 9.7% annual return during that time frame which isn't too shabby.
I like it as a diversifier, but it's only been 3-5% of portfolio. I held SLV for a short time, but it was much more volatile for my liking.
@Derf - no, was something that I had thought about for some time, since one of my taxable fund holdings (FESGX) has a position in gold, and I respect them as a conservative value manager.
Of note, FESGX has gold / gold exposure at ~15% last I checked. I would limit it to 5% or so of portfolio total.
OP, as of this writing, gold comprises 5.8% of my financial assets. Most of that is bullion in the form of 1oz Maple Leafs which I self-custody. A lesser portion is in the bullion ETF SGOL, in my IRA. Most of the bullion was acquired in 2000-2003. My investment framework does not consider gold to be an investment, but rather portfolio insurance. We insure our home, our car, our health, and our life. Seems like a no-brainer to insure the portfolio which makes these other assets possible. Unlike those other insurances -- where your premium is paid to an insurance company, gold is still your asset.
Have to laugh at the silly objections I sometimes read from the gold-haters.
Go to portfoliovizualizer.com. Run a asset comparison from 2000-current. Gold has actually outperformed the S&P. Its true if you stretch back the time to include the 80s-90's Superbull, the S&P outperforms. But keep in mind, the 'setup' for that 20 year period of outperformance was very cheap equities. We have no such setup for equities here. So the likelihood of a massive outperformance by equities vs gold strikes me as unlikely.
Some argue 'if you are a good stock trader, why buy gold'. Well, some people seem to inhabit Lake Woebegone, where everyone is 'above average'. I don't live there.Moreover, think back to the great traders of the 1990s. Where are they now? Consider, a lot of people who manage money professionally, are highly overrated, IMO. Consider Bruce Berkowitz (Fairholme). Or more recently, Kathy Woods Retail investors have increasingly moved to indexing because 'trading' is less of an investment strategy, and more of a hobby/recreational activity. Most professionals do not beat their best-fit index over time. Buy an index. And buy some gold.
I know, I know, Warren Buffet hates gold. You know who likes gold? The Federal Reserve, the BOJ, the ECB, the BOE, the Bank of China, and every other CB. Maybe they are just too dumb to understand that gold is a worthless 'barbarous relic'? More likely, they have an institutional understanding of long-term cycles of what we call 'money', and that gold is, ultimately, the "base money" on which every monetary system is based. Many Asian cultures prominently use gold as a way to store their household wealth. They do this because they know their govts end up ruining their fiat and banking systems. Gold is UNDER-owned bigly in the West, because no living person has experienced what it is like to have a major monetary reset. Maybe we won't experience it -- but taking out some insurance seems prudent to me.
Bringing it back to a more 'personal' perspective, the bullion which I self-custody is 'private money'. No custodian is telling the govt you have it. No future ex-spouse, can demand a chunk of the asset which she doesn't know about. No future creditor can lay claim to it, unless you volunteer the info.
My post is long in the tooth. It's late. I'm tired. So I will stop here.
Central banks have been buying gold for their reserves more heavily since after the GFC. It may be a small % of their reserves, but that % is rising. Twitter LINK
Excerpt: From 1990 to 2020, the price of gold increased by around 360%. Over the same period, the Dow Jones Industrial Average (DJIA) gained 991%.
Not. Even. Close.
Then there's the most popular gold ETF on the planet, GLD, that is more than 2x the size of the next most popular gold ETF. How has GLD done since its inception on 11/18/04?
Growth of $10,000 GLD: $48,539 +385% FXAIX: $69,484 +595%
Again. Not. Even. Close.
@Edmond: "Have to laugh at the silly objections I sometimes read from the gold-haters." Chuckle, chuckle backatcha!.
OP, As I mentioned, the 1980s-90s represented a stock supercycle. The starting point for that supercycle in the very early 1980's had interest rates at record highs, equity P/Es in the single digits, with people shunning equities (so lots of potential buyers). Famously there was an emblematic cover on Businessweek, in 1979, proclaiming "The Death of Equities". The "setup" or starting point for the supercycle could not have been more favorable.
Here, now, today, in 2024, equities are not underowned by the public. Everybody's in them. An entire subsector of media dedicated to promoting the cult of equities is ubiquitous. US equities in particular, now comprise 2/3 of global public equity capitalization. Much of that capitalization is in a dozen or so names. Per Barrons, as of 7/7. the DJIA index trades at a P/E of 27.
Repeating equity returns from the 1980s/90s would of course be wonderful. If any poster has a Delorean to travel Back to the Future, well, go for it.
The setup now doesn't feel like 1980/81 in terms for forward returns, to me. Of course, opinions will differ. That is what makes a market.
Perhaps those who think gold has no place in a portfolio can go about persuading the Fed to sell off its bullion, and replace it with NVDA and ARKK. As for me, I am holding/adding to my gold position, just as I do with my equities, Tbills, and fxd income.
Great attempt at pivoting from the cold hard facts of long-term historical performance.
And, got it.
Simply ignore the so called "supercycle" in stocks from 1980-2000 and concentrate solely on gold's outperformance of the S&P from 2000-current (the period to conclude that gold definitely deserves a place in an investor's portfolio. Or something like that.
So then, what's your explanation for the S&P outperforming GLD by a whopping 210%** since GLD's inception on 11/18/04, and how does an investor reconcile that monster difference in total return with the first wild-eyed conclusion ?
** Growth of $10,000 GLD: $48,539 +385% FXAIX: $69,484 +595%
Never owned a gold fund/etf. And should the time come when I might need to own some, I'd probably only hold just enough physical gold to bribe the border guards....
Fed Debt is $34T now. Fed Debt in 20 years = ??. What would that CAGR be? More bonds being sold each year + probable increased interest rates on both existing debt rolling over + new issued debt. Many existing debt at 2% rolling over to 4%.
It's good to raise the issue of alarming growth in the US debt. But CAGR isn't the proper tool for it. As mentioned, 20-yr T-Bond bought today will have the CAGR of 4.57% if held to maturity.
Of course, the real-returns and the returns on bond funds that never mature may be BAD.
If you have initial value, end value and number of periods you can calculate CAGR for anything. I think what you mean is that CAGR is not terminology normally applied to Fed Debt growth. Yes, but that is exactly why I bring it up. It should be considered. The going forward dollar returns of SPY CAGR are being eroded while GLD IMO will benefit. Opposite directions. My investment thesis is based on my belief in future debt growth. The most encouraging thing about my GLD /SLV conviction is that so many do not agree with it. Gold can't be manufactured only discovered at a cost. Like they say.... you go bankrupt in two ways. Gradually then suddenly. My opinion, make your own investment decisions.
Yes, @shipwreckedandalone. And IAU up 30% YTD. I forgot about this thread. I have to laugh at a couple of the (divisive) comments. Every category has its day, so might as well ride the wave.
Comments
1) Gold has been a terrible investment for a long term holders.
2) If you are a good trader, why bother with gold.
3) Investing small % is meaningless longer term.
4) The breakdown of the world is a long term scare that hasn't materialized.
GDX vs GLD vs SPY chart 2006 to present
Chart August 2008 - August 2010, 2 years during 2008 market melt
Chart COVID period, January 2020 - January 2022
Chart Ukraine invasion, January, 2022 - July, 2024
Chart YTD
NOTE: a fellow I worked with for 30 years was/is a guns and gold kinda person.
He became so freaked out with the market melt in 2008, that he cashed out a portion of his T-IRA to purchase physical gold at a local coin dealer store. That wasn't a good plan.
My experience: Gold / PC miners are explosive (no pun intended). There is a string of 5 consecutive years (2011-2015) where most gold / precious metals mining funds lost money every year, losing about 90% of value over those 5 years. Breathtaking. But gold is prone to sharp “up” years as well. A mining fund can gain 50% + in a good year.
Performance / Yahoo / Click the “show more” tab to pull up longer term performance for both OPGSX and the broader fund category.
I won’t touch the miners at my age. They are more volatile than the metal. (Albeit - those in the know say the miners are currently undervalued relative to the metal.) Like @Derf I own PRPFX. One of my CEFs has a bit of exposure to the miners. When I feel like gambling I buy a little GLTR. It combines gold bullion with some silver and platinum using derivatives. Don’t feel like gambling right now. Prices look rich to me.
Rationale for owning / not owning? When rising sharply gold is cited as a hedge against inflation and a “safe haven” during times of war or social upheaval. Also as a way of diversifying. When falling, critics say it hasn’t done nearly as well as equities longer term, does’t generate any income, can be difficult to trade (very narrow market) and is expensive to store.
Not currently. At one we time owned PRPFX. We also previously traded GLD and GDX. There are just so many more reliable and less volatile ways to make money.
EDIT: We owned them back when we traded more. We currently (and likely from here on out) only like to own funds that outperform the S&P over LONG periods. GLD, GDX, SDLV and/or PRPFX do not. Over the past 10 years, it ain't even close. If you want diversifiers and/or intend to trade them, have at it. Otherwise, be prepared for their LT underperformance.
I like it as a diversifier, but it's only been 3-5% of portfolio. I held SLV for a short time, but it was much more volatile for my liking.
Of note, FESGX has gold / gold exposure at ~15% last I checked. I would limit it to 5% or so of portfolio total.
best evidenced takes on gold by experienced real-world allocaters is via unlim., and verdad adv.
https://go.unlimitedfunds.com/the-role-of-gold-in-a-portfolio
Have to laugh at the silly objections I sometimes read from the gold-haters.
Go to portfoliovizualizer.com. Run a asset comparison from 2000-current. Gold has actually outperformed the S&P. Its true if you stretch back the time to include the 80s-90's Superbull, the S&P outperforms. But keep in mind, the 'setup' for that 20 year period of outperformance was very cheap equities. We have no such setup for equities here. So the likelihood of a massive outperformance by equities vs gold strikes me as unlikely.
Some argue 'if you are a good stock trader, why buy gold'. Well, some people seem to inhabit Lake Woebegone, where everyone is 'above average'. I don't live there.Moreover, think back to the great traders of the 1990s. Where are they now? Consider, a lot of people who manage money professionally, are highly overrated, IMO. Consider Bruce Berkowitz (Fairholme). Or more recently, Kathy Woods Retail investors have increasingly moved to indexing because 'trading' is less of an investment strategy, and more of a hobby/recreational activity. Most professionals do not beat their best-fit index over time. Buy an index. And buy some gold.
I know, I know, Warren Buffet hates gold. You know who likes gold? The Federal Reserve, the BOJ, the ECB, the BOE, the Bank of China, and every other CB. Maybe they are just too dumb to understand that gold is a worthless 'barbarous relic'? More likely, they have an institutional understanding of long-term cycles of what we call 'money', and that gold is, ultimately, the "base money" on which every monetary system is based. Many Asian cultures prominently use gold as a way to store their household wealth. They do this because they know their govts end up ruining their fiat and banking systems. Gold is UNDER-owned bigly in the West, because no living person has experienced what it is like to have a major monetary reset. Maybe we won't experience it -- but taking out some insurance seems prudent to me.
Bringing it back to a more 'personal' perspective, the bullion which I self-custody is 'private money'. No custodian is telling the govt you have it. No future ex-spouse, can demand a chunk of the asset which she doesn't know about. No future creditor can lay claim to it, unless you volunteer the info.
My post is long in the tooth. It's late. I'm tired. So I will stop here.
Twitter LINK2
Ugh, well that's a great place to start your (cherry-picked) comparison period, right at the start of "The Lost Decade" for stocks!
Let's go back a bit further, say to 1990, eh?
https://www.investopedia.com/ask/answers/020915/has-gold-been-good-investment-over-long-term.asp
Excerpt:
From 1990 to 2020, the price of gold increased by around 360%.
Over the same period, the Dow Jones Industrial Average (DJIA) gained 991%.
Not. Even. Close.
Then there's the most popular gold ETF on the planet, GLD, that is more than 2x the size of the next most popular gold ETF. How has GLD done since its inception on 11/18/04?
Growth of $10,000
GLD: $48,539 +385%
FXAIX: $69,484 +595%
Again.
Not. Even. Close.
@Edmond: "Have to laugh at the silly objections I sometimes read from the gold-haters."
Chuckle, chuckle backatcha!.
As I mentioned, the 1980s-90s represented a stock supercycle. The starting point for that supercycle in the very early 1980's had interest rates at record highs, equity P/Es in the single digits, with people shunning equities (so lots of potential buyers). Famously there was an emblematic cover on Businessweek, in 1979, proclaiming "The Death of Equities". The "setup" or starting point for the supercycle could not have been more favorable.
Here, now, today, in 2024, equities are not underowned by the public. Everybody's in them. An entire subsector of media dedicated to promoting the cult of equities is ubiquitous. US equities in particular, now comprise 2/3 of global public equity capitalization. Much of that capitalization is in a dozen or so names. Per Barrons, as of 7/7. the DJIA index trades at a P/E of 27.
Repeating equity returns from the 1980s/90s would of course be wonderful. If any poster has a Delorean to travel Back to the Future, well, go for it.
The setup now doesn't feel like 1980/81 in terms for forward returns, to me. Of course, opinions will differ. That is what makes a market.
Perhaps those who think gold has no place in a portfolio can go about persuading the Fed to sell off its bullion, and replace it with NVDA and ARKK. As for me, I am holding/adding to my gold position, just as I do with my equities, Tbills, and fxd income.
And, got it.
Simply ignore the so called "supercycle" in stocks from 1980-2000 and concentrate solely on gold's outperformance of the S&P from 2000-current (the period to conclude that gold definitely deserves a place in an investor's portfolio. Or something like that.
So then, what's your explanation for the S&P outperforming GLD by a whopping 210%** since GLD's inception on 11/18/04, and how does an investor reconcile that monster difference in total return with the first wild-eyed conclusion ?
**
Growth of $10,000
GLD: $48,539 +385%
FXAIX: $69,484 +595%
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202407
More bonds being sold each year + probable increased interest rates on both existing debt rolling over + new issued debt. Many existing debt at 2% rolling over to 4%.
Of course, the real-returns and the returns on bond funds that never mature may be BAD.
My opinion, make your own investment decisions.
In 1984 my father took 10 Krugerrands for payment. Gold was about $600/OZ then. Now its $2600 40 years later.