dicker

5 minutes ago, Bratnia said:

https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=7CWLsLH6XBfchAuw5rqYHr

The likes of a 4% SWR is a common choice of guideline withdrawal rate during retirement, start by drawing 4% of the total portfolio value, and then increase that amount by inflation as the amount drawn in subsequent years. Where 4% was the historic worst case that ended 30 years (age 65 to 95) with nothing remaining. More often (much) better, leaving a comparable amount as the inflation adjusted start date portfolio value or more.

Viewed as 50/50 stock/gold and typically in a bad decade for one the other did well, drawing 8% from one half, 0% from the other ... tended to work out OK. Or simplified further, just take each years SWR from whichever of the two is the most up at that time. Yearly best out of stock or gold compounded together provided a historic return of something like 17% annualised, 13% real (after inflation), the compounded yearly worst asset - lost money. In effect having one half invested in a 'asset' (best of the two) that yields a 17% annualised is ... good enough.

Over the 1970's mostly gold provided the gains, across 1980 and 1990's it was stocks, 2000's and it was gold again, 2010's were stocks again ...etc. a tendency for alternations. Where 50/50 of both stocks and gold does ... OK.

The above chart is for US data (stock total returns, US inflation etc.), I don't know of a UK equivalent site, but when applied to the UK was generally similar.

Will 2020's end with gold or stocks having been the 'winner' ??? Can't really predict that so the next best is to 50/50 both, be neither fully right nor fully wrong. I'd guess maybe gold, but don't care to go all-in on such a bet.

Another factor that tends to be over-looked is that at times of stress, high dividends and/or cash interest rates, so also do taxes tend to rise. Gold broadly offsets inflation via price appreciation, bonds do so via interest payments, as interest is a regular/consistent flow so that has tended to be more highly taxed than price appreciation (where you can defer selling until gains are being less punitively taxed).

Noteworthy is that over enough time (decades) the tendency is for 50/50 total returns to more align with whichever is the top line of stocks or gold, less a case of running midway between the two. Another factor is that rebalancing is a form of trading, where the tendency is to add-low/reduce-high. 1980 to 1999 whilst the price of gold was poor, rebalancing had you end 1999 with something like 7 times more ounces of gold than was being held at the start. In the 2000's that swung around, ounces of gold were reduced to buy more relatively cheaper stock shares.

Welcome back Wonger

All of the usual nations who use the premise of worshipping different sky fairies as a reason for war are ready for a big one.  

I don’t relish it but gold is likely to be a beneficiary 

I cant predict short term prices but I can pretty much be sure of increased volatility this week.  

If you rock up with 200 Sovs my betting is you will get Spot.  

For those at in the U.K. / U.K. timezone who watched gold breach 1900, you are either:

- Shift workers 

- Insomniacs

Whatever you are - all the best to you and enjoy while others sleep.  

Shorts in incineration territory.  

For me, it is:

- A discipline

- Obviously sane if you look at the macro-economic picture

- Collected by nice people

If the bottom two change then I might stop.