Bullion against the stock market.

Discussion in 'Bullion Investing' started by CoinBlazer, Sep 26, 2019.

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  1. CoinBlazer

    CoinBlazer Numismatic Enthusiast

    Analysts would have the general conclusion that PMs work against the stock market, since many people use PMs as a defense for the possibility of a failing stock market. When evaluating your PM holdings, do you take the current conditions of traditional markets into consideration? If so, what factors do you consider, if you don't, why not?
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  3. Randy Abercrombie

    Randy Abercrombie Supporter! Supporter

    My stock market is my business. It is where my future is tied into. At one time I had considered using some of my company's funds to make a large PM purchase. It was in fact at an election cycle and I believed... And was correct at the time that I could turn those company purchased PM's into a small windfall..... Now mind you, I could have just as easily been wrong. But in the end I chose not to do so. It was unfair to this company gambling with it's cash like that....... I think the casual PM buyer like most of us probably are would be best to keep separate our true financial future from our PM's. It really makes the best sense to me. I'll never consider it again.
  4. geekpryde

    geekpryde Husband and Father Moderator

    For most people, if they hold PM at all, it is part of an overall asset allocation. Meaning, they are NOT holding 100% of one or the other. A normal safe allocation might be 5% of at most 10% of your overall "investment" portfolio. Precious Metals do act as a hedge in some bearish stock markets, but not always. Not all stock crashes, corrections, or just plain old bearish type conditions are caused for the same reasons.

    Likewise, there are plenty of examples of periods of time when both PM and overall US stock market do fantastic. 2019 would be an example of that, both are up considerably AND to boot, inflation if quite low at 2%.

    I think what you are really asking for is what the correlation between the two is and how do people use this correlation to make money. Since I am a "passive" investor, I have no advice to give. But I would suggest holding anything beyond 10% in PM is to your peril.

    You could also use something like this site, to crunch your own numbers and draw your own conclusions. Both PM and Gold are listed, along with many other sectors. I use this site all the time: https://www.portfoliovisualizer.com/historical-asset-class-returns
    Last edited: Sep 26, 2019
  5. crazyd

    crazyd Active Member

    Besides just being a fun hobby, my modest PM is simply part of an over all plan to keep an emergency reserve of readily accessible assets. Basically a Edited event for a few months. Same with some food stores. Its not a serious investment plan.
    Last edited by a moderator: Oct 1, 2019
    fiddlehead likes this.
  6. mpcusa

    mpcusa "Official C.T. TROLL SWEEPER"

    My PM.S have bailed me out on more then one occasion, and lucky for me it
    was a time when everything was high, so made a few bucks on the deal :)
    and that always good news :)
  7. fiddlehead

    fiddlehead Well-Known Member

    I have a friend who was holding high 5 figures worth of gold bullion in 2008. I don't know when she originally purchased most of it, but my impression is it that it was some time ago. She took it to market after the stock crash and made a killing. It happens.
  8. zachary ethington

    zachary ethington New Member

    Silver dimes and quarters will do you well in the post apocalyptic wasteland.
    Last edited by a moderator: Oct 1, 2019
    fiddlehead likes this.
  9. GoldFinger1969

    GoldFinger1969 Well-Known Member

    PM's are SPECULATIONS......stocks and bonds are INVESTMENTS.

    The 2 are NOT the same.

    Never forget that.
  10. Prez2

    Prez2 Well-Known Member

    Realistic! :) Wishful thinking also applies.
  11. Santinidollar

    Santinidollar Supporter! Supporter

    Gold is a HEDGE to stock and bond investments and never should be the whole show.
  12. Gilbert

    Gilbert Part time collector Supporter

    The FED through QE and artificially low interest rates has created a bubble in financial assets. Without their interference things would be brighter for PMs.
  13. Prez2

    Prez2 Well-Known Member

    PM's are notoriously manipulated (although some disagree). We're in the last days anyway, just sayin'.
    fiddlehead likes this.
  14. GoldFinger1969

    GoldFinger1969 Well-Known Member

    Although for the last few years and decades, gold has not tracked or inversely tracked stocks or bonds.

    The hedge to stock prices is being long U.S. Treasury bonds. Maximum duration.

    Maybe, but maybe not. And maybe PM's would be lower too with higher (real) interest rates, no ?

    Besides, as Jim Cramer says, when you cash in your gains at the bank they don't ask if they came from QE, a bubble, or inflated financial assets. :D
  15. Gilbert

    Gilbert Part time collector Supporter

    “$15 trillion in buybacks, nearly $17 trillion in central bank intervention. No reasonable person can state with a straight face that this has not had an artificial inflationary impact on asset prices.”
    -Sven Henrich
    Last edited: Oct 1, 2019
  16. Gilbert

    Gilbert Part time collector Supporter

    Not long ago if you had written that here on CT many would be calling you a conspiracy theorist.
    GoldFinger1969 likes this.
  17. GoldFinger1969

    GoldFinger1969 Well-Known Member

    Buybacks are a capital allocation program, has nothing to do with central banks directly.

    I don't know who Sven Henrich is, but he isn't a bond trader.:D
  18. Paul M.

    Paul M. Well-Known Member

    You would be missing out on portfolio allocations like the Golden Butterfly (20% gold) and the Permanent Portfolio (25% gold). Gold as part of an overall asset allocation is a great tool for reducing volatility.

    Gold is an investment, as are all commodities.
    Ana Silverbell likes this.
  19. GoldFinger1969

    GoldFinger1969 Well-Known Member

    Commodities are not investments in the sense that they can grow their capital stock organically. All commodity production is of a depleting asset. Hence, they cannot generate free cash flow to pay a dividend or interest.

    Commodities may reduce volatility or they may increase it.
  20. GoldFinger1969

    GoldFinger1969 Well-Known Member

    Even if your scenario comes to pass, you won't be around to see it even if you are 10 years old.

    It took 3 decades for Greece, a minor piss-poor 3rd rate socialist economy, to hit the skids. You'll be waiting a long time for a global financial reserve currency superpower to get into trouble. :D
  21. Paul M.

    Paul M. Well-Known Member

    True. A bar of gold or a barrel of oil doesn't increase in value because it starts offering new products, for example.

    Not true. Gold is not a depleting asset in the sense that it's ever "used up." All the gold in the world is recoverable and able to be reused. Commodities like soybeans are also not depleting assets, because there will always be another crop next year.

    True, as far as it goes, but not relevant. Many stocks pay no dividends. They are still a fine addition to a portfolio.

    True. When I was talking about reducing volatility, I was speaking specifically about gold.
    GoldFinger1969 likes this.
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