Asset Allocation

[investorman]

Hi all,

I have only just started acquiring precious metals, and I would be interested to hear how big a part precious metals play in your overall investment strategies.

Seeing some of the forum members stacks on youtube and threads, some of you seem all in PMs!

If I look at mine I am:

74% Equities (in ISAs and SIPPS)

23% Cash

3% Gold, Silver and Platinum

[Pete]

The fairy godmother says don't put more than 15% of your total assets into commodities like gold & silver however tempting it may be to invest more.
If you play roulette and continually place all your chips on red you will eventually win provided you keep doubling up but you would need tremendously deep pockets running into perhaps millions but the house limit might ruin you first.

[dicker]

A very small percentage for me 3pct - bought from and kept for me by a dealer

[Lowlow]

Two charts.

First, the banking crisis of 1907.

During that banking crisis, intra-bank lending caused a panic that JP Morgan had to put a stop to by essentially covering short term loans between banks, it was an event that later caused the formation of the Federal Reserve bank.

Here's a graph of the 2008/2009 financial crisis, similar situation, LIBOR rates went up, banks stopped lending to other banks, etc.

Note the similarity in those two charts.

I'm allocating assets as if 2008 / 2009 were a precursor to a much more serious financial crisis to come, which I truly believe is going to happen - not because of the similarities between these two charts, but because of a similarity in the over-investment, massive debt, low personal savings, and general fragility of the economic system now and for the past few decades.

Bull markets don't last forever ... and the "Great Recession" .. wasn't.  It was just a small financial crisis, a shot across the bow, a warning of ominous things to come.  Leading up to the Crash of 1929 in the United States there were a number of panics, but after 1907 there were none until 1929, 22 years later, as the markets went into a full scale bubble.

Like they say .. history doesn't repeat, but it does rhyme.

If you were alive in 1907 and you KNEW what was going to happen in 1929, how would you allocate your assets ?

[JunkBond]

1 hour ago, investorman said:

Seeing some of the forum members stacks on youtube and threads, some of you seem all in PMs!

How can you tell the percentage of someones PM investment by the size of their stack.

[HawkHybrid]

invest in gold up to what your understanding of gold allows.

(belangp on youtube)

 

HH

[investorman]

2 hours ago, JunkBond said:

How can you tell the percentage of someones PM investment by the size of their stack.

Just an assumption.

There are some people with circa £250k stacks. If they are following the no more than 5-10% in PMs rule of thumb they would need £2.5-5m total invested assets. If you have £5m to invest would you be buying £1000 1oz gold coins at 0.02% of your portfolio each? 

[HawkHybrid]

 

make decisions based on what you know and not on some

generalisation of the population as a whole?

 

HH

[Tingles]

18 minutes ago, HawkHybrid said:

 

make decisions based on what you know and not on some

generalisation of the population as a whole?

 

HH

I like his thought processes, listened to many of his videos.

 

[Money2Metal]

This is where I've probably made a mistake. 60% cash 40% PM's

[TerryGriffiths]

Cash 85%

PM's 14%

Stock Market 1%

[investorman]

16 minutes ago, Money2Metal said:

This is where I've probably made a mistake. 60% cash 40% PM's

I like cash for two uses:

1. Upcoming expenditure

2. Emergency Fund

For me, if there is nothing on the horizon you need the money for, and you have a suitable emergency fund, then I would say investing the rest will make sure you at least keep up with inflation.

Over the last 30 years inflation has averaged 3.3%, if your interest doesnt beat inflation you are losing spending power in real terms.

[Martlet]

5 hours ago, Lowlow said:

If you were alive in 1907 and you KNEW what was going to happen in 1929, how would you allocate your assets ?

Heavy into stocks until about mid-1929 and exit.

[Lowlow]

5 minutes ago, Martlet said:

Heavy into stocks until about mid-1929 and exit.

Absolutely ... but what if you didn't know the exact date ?  The month, or the year ?

[vand]

For many people this greatly depends if you count your home as an asset.

FWIW here is how I approach it

https://thesilverforum.com/topic/13895-revisiting-how-much-pms-should-you-hold/

[vand]

5 hours ago, JunkBond said:

How can you tell the percentage of someones PM investment by the size of their stack.

I agree.. be wary of some of the "big stacks" you see on youtube channels. You have no idea the overall financial position of these 'tubers and what their stack represents in terms of their overall position. It is not unlikely that a good number of them have staked far more on silver and are far less diversified than is sensible.

[vand]

belangp says 20% of your income into PMs is a good number to aim for if you don't have a crystal ball: