GOLD in Mutual Funds, mainstream portfolios, asset-allocation, etc.

I would never worry about that, believing such a thing to be a real long shot. To me, the worry on industrial usage would be technical innovation. I read just the other day the new way they are constructing solar panels either uses no silver or 10 times less silver. Similarly, the article posted by Desertgem a few months ago about the creation of artificial catalysts has me very worried about Pt.

That is why life is a crapshoot. No one ever knows if these things will come to pass, or alternatively if some uberuse for silver, gold, or another metal will be just around the corner jacking up prices dramatically. This is why I simply plead ignorance of the future, and spread my bets around. Just like I wouldn't be wanting to be holding just a stock like Enron, I don't want to be holding all one PM. I am willing to give up homeruns in exchange for lots of singles. Always remember home run hitters ALSO strike out the most. I simply do not want a major strikeout and be eating cat food when I get old.

Like I said man, we mainly agree, its just a lot of time CT readers wouldn't think so.

 

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No worries here. Nuclear fusion as it is now understood and as known to operate in stars isn't sustainable beyond the iron stage. Ag & Au are much higher up on the table and could not be produced by earth bound fusion.

 

Agreed. As far as mankind knows, the only way to create past iron is with intense energy infusions, which would make most metal creation economically unviable even if it became technically feasible.

 

Question: given the early portions of this thread where the pros and cons of SDBs versus "home storage" were discussed would any of you speculate the short and long term effects of the home-retained assets that were lost in the wake of Sandy?

My thoughts are that it will negligible on the macro scale but that a number of folks in local markets will try to rebuild their stores and that at the micro level some opportunities may be available.

Thoughts?

 

I don't think there are enough stores in the heavily damaged areas to make a difference. Some individuals undoubtedly lost substantial personal collections, but they have much larger problems to deal with and probably won't be rebuilding collections in the near future.

 

I think bullionists are hoarders by nature; I think hoarders don't like to share and (frequently) don't trust banks or custodians generally either.
The bullionists who get wiped out in any natural disaster are apt to have 'lost it all' because they are NOT insured for home-bullion storage.

I had a concerned client in NYC and after looking at her policy, strongly advised she get a safe-deposit box. She did, but wasn't from Breezy Point either. I just read this: "approximately 70 percent of New Yorkers in flood zones do not have flood insurance in place, putting their claims – even their wind and fire claims – at risk, according to the statement from the {Consumer Federation of America}."

I'd agree with Cloudsweeper99 : many who held assets in the flood-zone are wiped out! Most Breezy Pointers were overpaid city workers, their pensions are the next thing to take a big hit (circa 2014-7.) With what assets will they rebuild their home-retained assets in coming years?

Hurricane Sandy was the best advertisement for vault-secure PM custodians that a coastal doomer could imagine, realistically. Forget the zombie apocalypse: the devastating storm surge is now a twice-proven reality. A provident hoarder doen't keep his/her stash in what amounts to a beach cottage, anyway.

 

Founded in 1998, DDSC is typically used as the storage company for custodians that facilitate investment in precious metals through self directed IRAs in the United States.
A ten-fold increase represents the lion's share of the market (largest storage facility outside NYC: two warehouses.) It was listed as a COMEX facility but its a small co w/ less than $750,000 annual revenue in 2011 or ~$ 3,800,000.00 between the two companies (incl Fidelitrade.)

No idea how much (metric tonnes) PM they stored in 2002 or now.

http://www.marketplace.org/topics/business/golden-business-gold-vaults

Some interesting information on allocated storage here:
http://www.scribd.com/doc/101976450...-of-gold-from-the-futures-and-forwards-market

 

Wow, sorry that I've missed this thread. First off, thanks to Juan for starting it. Investing in pm's has long been an area of keen interest to me.

Most PM mutual funds are exclusively investing in mining stocks. Toqueville is an exception and I've owned it taxable for well over a decade. PermPort is not a pm fund but a fund of fund master fixed allocation variation of what was ideated by Harry Browne http://en.wikipedia.org/wiki/Fail-Safe_Investing. Supposedly, this fund will weather all storms. You'll have to do your own d/d but I have about 10% in each of our accounts (deferred, exempt and taxable).

I've also owned PCRIX in a deferred acct for years, but not for PM's. In my deferred acct, I've got CEF, SIL and GDXJ. And I've still got my SLW if for no other reason than it was my first Home Run. I took profits when it first started to crack a bit and it's fallen back to the mid-30's, but when you're buying it around $4 . . .

These are securities and traditional investments. Everyone should have some. That said, I am also of the school that everyone should have some physical bullion. All told, I think folks should have anywhere from 5% ==>> ? where ever your heart rests easy. My grandsons have their stuffed animal 'bed buddies'. Whelp, my gold and silver are my bed buddies. Folks need to store it somewhere that allows them to rest easy. I've always said, you could take a tube of AGE's and hide it in the oatmeal box. ~$38K? Buy a 1000z ingot of silver an paint it black and use it as a door stop. Or, get a big safe or a SDB at the local bank. Whatever makes you happy. If you don't like gold coins, you can do jewelry.

One thing I do have to mention is something I read several years ago from the Elder Baron Rothschild - that to preserve your wealth, you needed to keep 1/3 in securities, 1/3 in real estate and 1/3 in rare art. Feel free to define the latter as you wish, but it doesn't mean Beanie Babies.

and so it goes,

peace,

rono

 

Even if the tag is attached and NOT creased??????

 

Thanks Rono. Sounds right to me!

Interesting, I had not heard that before. But it reminds me of the Talmud (c. 310 CE) One third in real estate, one third in merchandise, and one third in cash.

 

Hi Juan,

When I first read it I ran the numbers in my head and almost blew chunks on my monitor. 90/8/2. Ouch. Over the past 4-5 years, I've moved it to ~60/25/15. I'm still working at it.

Where so many folks I've been chatting with over the years get trapped is thinging that asset allocation only applies to their 401K or IRA . . . their securities, if you will. Good as far as it goes but they need to learn that diversification applies to life. For example, anyone still in the labor force that's not diversifying their job skills is exposing themselves and their income to needless to risk. And perhaps that's a good ending. It's all about risk management. Recognizing the probabilities of each possible outcome, the costs and benefits of each, and the consequences of any coming to pass.

I doubt that the Fed is going to run us up to hyperinflation that results in a financial meltdown. I'd give it a 15-20% chance. That's not much of a risk. However, the costs and consequences in the event we did would be so dire, that one simply has to take some modest precautions. Anything else is silly.

peace,

rono

 

On a more sophisticated level, this sort of Au hedge may increase demand/support Paper Gold from institutional investors in coming years:
http://www.forbes.com/sites/kitcone...lay-works-as-currency-hedge-in-em-currencies/