The risk of having too much Gold in your portfolio?

Discussion in 'Gold' started by TreasureHunter, Aug 11, 2019.

  1. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

    Joined:
    May 25, 2018
    Messages:
    2,197
    Likes Received:
    1,247
    Trophy Points:
    113
    Location:
    Singapore

    This maybe inconceivable for most of us, but if you look at some countries like India where half the population are basically jobless, unless you consider subsistence farming to be a job, it's not that far fetched to have a future where the majority of people are unemployed and living off basic income.
     
    JOHNLGALT likes this.
  2. openeyes

    openeyes Well-Known Member Silver Stacker

    Joined:
    Aug 26, 2014
    Messages:
    1,184
    Likes Received:
    973
    Trophy Points:
    113
    Location:
    Canberra
    I have a pretty pessimistic view of the future but I have also been through a few cycles and have thought things will have terrible endings but they didn’t. Things will change but what doesn’t change is people and governments. For governments to stay in power people have to be fed and housed close to what they have been used to. Governments will do the most wild things to maintain that. So gradual change will occur.
    Look at the amount of funds that have been put into the marketplace to maintain growth. And negative interest rates. More of that will occur in ways we can’t currently imagine. If it can kind of maintain people’s lives then things will basically be the same. For a while longer.

    However if it can’t be maintained (becoming more likely) then there will be a revolution. No one can guess what that will look like. We have not seen this type of event in the western world since perhaps the French Revolution. That’s not people losing jobs that is a restructuring of society.

    Back to gold two charts
    This one looks risky
    upload_2019-9-13_21-1-1.png

    This one not quite so much right now
    upload_2019-9-13_21-2-10.png

    Silver looks much better in both currencies but that’s a different conversation.

    What the charts do indicate imho is the risk profile and golds attractiveness has grown considerably since circa 2000.
     
    Tokyo, JOHNLGALT and 66rounds like this.
  3. SilverDJ

    SilverDJ Well-Known Member

    Joined:
    Nov 1, 2014
    Messages:
    4,038
    Likes Received:
    1,254
    Trophy Points:
    113
    Location:
    Australia
    Why does the AUD look more risky than the USD? Just because it's spiked higher?
    The AUD gold price is an exact match for the USD gold price, except it adds in the aussie dollar variation.
    The AUD gold price has gone up more than the USD price solely because our AUD has dropped vs the USD.
    If you think AUD gold is "risky" then what you are really saying is one of two things:
    1) that the AUD is going to go back UP vs the USD (and hence AUD gold will fall)
    and/or
    2) that the price of gold will fall faster than the AUD will fall (and hence AUD gold will fall)
     
    Ivykoin likes this.
  4. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

    Joined:
    May 25, 2018
    Messages:
    2,197
    Likes Received:
    1,247
    Trophy Points:
    113
    Location:
    Singapore
    https://www.bloomberg.com/news/arti...ight-spot-for-billionaire-who-forecasts-crash

    Egypt’s Sawiris a billionaire has half his networth in gold stocks, which is billions. This article was more than a year ago and which made me decide to buy some gold, but unfortunately I didn't believe in it sufficiently enough to put half my funds into gold. There were a lot of skeptics then which includes my family and I've been scolded for buying gold.
     
  5. openeyes

    openeyes Well-Known Member Silver Stacker

    Joined:
    Aug 26, 2014
    Messages:
    1,184
    Likes Received:
    973
    Trophy Points:
    113
    Location:
    Canberra
    I don’t know what is going to happen but when I see steep charts like that I always feel concern.
     
    66rounds and sgbuyer like this.
  6. SilverDJ

    SilverDJ Well-Known Member

    Joined:
    Nov 1, 2014
    Messages:
    4,038
    Likes Received:
    1,254
    Trophy Points:
    113
    Location:
    Australia
    That's ballsy.
    I wonder if he thinks gold stocks will come out unscathed (or prosper) during the next crash?
    Sure, but the trick is knowing what's coming.
    Look at what gold did after the GFC in 2008, it skyrocketed.
    The world is now in a bigger financial bubble than 2008 and it's been more than 10 years of consistent growth, bordering on a record.
    Another GFC will happen, and gold will again take on it's role as the safe haven.
    The AUD price means nothing, look at the USD, gold's not near it's previous high, and we are still pre-GFC bust.
    Sure the party can still go on for a while, maybe a few more years, but it's coming crashing down like it always does. You have to be in gold when this happens.
     
  7. TreasureHunter

    TreasureHunter Well-Known Member

    Joined:
    Oct 29, 2012
    Messages:
    3,114
    Likes Received:
    566
    Trophy Points:
    113
    Location:
    Treasure Island
    There's no such thing as "too much gold" in GENERAL, what I actually meant was "too high percentage" within PORTFOLIO.

    Imagine someone having a finite amount of savings: 10,000 USD, let's say. Then one has to decide upon diversification, splitting it into multiple assets.

    In my opinion, even at 10,000 USD, it's good having 40-60% gold, 30-40% in fiat CASH (for emergencies) - not at the bank, but max. 10-20 % in silver within this portfolio (but even that only if you can buy without premium). And all of these only if you have a decent constant income.

    If you are having financial problems, then it's prolly better to go for a 50-50 % portfolio (half gold, half cash). Cash is not trash if you suddenly end up jobless or in economic crisis.
     
  8. JOHNLGALT

    JOHNLGALT Well-Known Member

    Joined:
    Apr 3, 2017
    Messages:
    2,822
    Likes Received:
    953
    Trophy Points:
    113
    Location:
    Country Victoria Australia
    In case people watching this thread haven't seen this Video posted by @classic in the another Forum (The YouTube Thread 'ANY VIDEOS YOU WANT TO SHARE'), I think you will find it worth watching.

     
  9. JOHNLGALT

    JOHNLGALT Well-Known Member

    Joined:
    Apr 3, 2017
    Messages:
    2,822
    Likes Received:
    953
    Trophy Points:
    113
    Location:
    Country Victoria Australia
    @openeyes charts are instructional, but the same chart inverted to show the $ cost to buy an oz. of Gold, i.e. the loss of purchasing power of the currency we are FORCED to deal in by our Govvy shows the THEFT of peoples wealth that is occurring. RANT OFF. _JLG.

    INVERTED GOLD PRICE CHART IN $AUD SINCE 1971.jpg
     
  10. JOHNLGALT

    JOHNLGALT Well-Known Member

    Joined:
    Apr 3, 2017
    Messages:
    2,822
    Likes Received:
    953
    Trophy Points:
    113
    Location:
    Country Victoria Australia
    I know this is a Gold Thread, but considering the stored wealth that is in the true Monies that are currently suppressed by the manipulators in the Futures Markets(?), having plenty of small weighted, minted, assayed, Gold & Silver coins or bars in your personal possession seems like a no-brainer.
     
    sgbuyer likes this.
  11. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    19,627
    Likes Received:
    2,806
    Trophy Points:
    113
    Location:
    昆士蘭
    Depending upon your risk appetite and goals, and bearing in mind the total value of your portfolio is probably immaterial as it is everything you own, I would think 40-60% of your holdings in gold would be too high. Gold is a currency hedge and hedging half of your portfolio will likely lead you nowhere most of the time. A cluey former member of this forum used to say that gold should make up about 10% of your portfolio.

    So if the total value of a portfolio is $10 000 then it could be allocated accordingly:

    10% gold = $1000 as a hedge
    15% cash = $1500 for costs, rainy days, buying opportunities etc
    20% stocks = for income, capital gain, trading
    20% property = $2000 generating income
    15% USD = $1500 as a gold and falling AUD hedge
    TOTAL = $10 000

    In the event say that the Australian economy crashes and we see a general downturn in value of 50% in Australian only assets, then the value of the components of your portfolio could be:

    21% gold = $1500
    21% cash = $1500 the $ amount hasn't changed but your buying power when it comes to purchasing assets may be higher
    14% stocks = $1000
    14% property = $1000
    31% USD = $2250
    TOTAL = $7250

    So you're down about 27% if there is a 50% mainstream market correction. Then you'd liquidate some gold, cash and USD and buy income producing assets re-allocating the portfolio to match the original % asset allocation in the hope the market turns, eventually erasing the losses and making you a profit. Simplistic I know. Naturally a portfolio heavy in gold would see a greater return in the event of a market wide crash but it would also see negative gains in the good times.
     
    sgbuyer likes this.
  12. mrsilverservice

    mrsilverservice Well-Known Member

    Joined:
    Feb 10, 2019
    Messages:
    881
    Likes Received:
    379
    Trophy Points:
    63
    Location:
    North of Tasmania
    Gold is like underpants,you can never have enough :confused: :D

    -

    -

    -

    -

    -

    The Book of Psalms Chapter 145 verse 3

    Great is the Lord,and greatly to be praised,and His greatness is unsearchable :)
     
    Last edited: Sep 14, 2019
    openeyes and 66rounds like this.
  13. JOHNLGALT

    JOHNLGALT Well-Known Member

    Joined:
    Apr 3, 2017
    Messages:
    2,822
    Likes Received:
    953
    Trophy Points:
    113
    Location:
    Country Victoria Australia
    This has to go here as well.
    For the whingers & whiners this is the 2nd & only duplicate I will do of it:
    A bit of colour & BOLD, just to get up their noses, LOL.

    Egon von Greyerz - Compared to Gold Assets Will Fall 95%.
     
  14. TreasureHunter

    TreasureHunter Well-Known Member

    Joined:
    Oct 29, 2012
    Messages:
    3,114
    Likes Received:
    566
    Trophy Points:
    113
    Location:
    Treasure Island
    I wouldn't put anything in stocks/bonds/shares. It's worse than fiat.

    Regardless, it depends on how much money you have:

    VERY MUCH MONEY:
    If you have a large portfolio: Real estate, PM's, USD, EUR, perhaps CHF, art (if you have a huge portfolio), diamonds (yeah, not the best investment lately), very little in numismatic coins.

    LITTLE MONEY:
    If you have a small portfolio: gold, silver, USD, EUR.

    VERY LITTLE (POOR MAN SCENARIO):
    If you can save 50-100 $ each month, then: USD, 1-2 oz silver each month and the rest all in canned food and water!
    (As sad as it sound many people can't buy a single ounce of silver in an entire month!)

    Obviously the proportions vary from category to category. Still, I'd put PM's ahead of fiat, with the exception of the POOR MAN SCENARIO.

    It also depends on the country you're living in, because besides the Anglo-saxon world, Western Europe and a few EU and Asian countries, you can barely even sell your silver. So, gold should be the primary focus for the poor man.

    In most European countries you cave to pay a VAT of around 25-30+% when buying pure silver. Reason why many people buy numismatic/old coins.
    Selling the silver is much harder, because most dealers only want gold.

    Notice that I didn't include crypto. It's just way too unreliable. I think it's rather for speculation.
     
    sgbuyer, 66rounds and openeyes like this.
  15. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

    Joined:
    May 25, 2018
    Messages:
    2,197
    Likes Received:
    1,247
    Trophy Points:
    113
    Location:
    Singapore
    Wise statement on hindsight.
     
    TreasureHunter likes this.
  16. madaw1

    madaw1 Well-Known Member

    Joined:
    Dec 5, 2011
    Messages:
    1,455
    Likes Received:
    970
    Trophy Points:
    113
    Location:
    Great Western Country
    Nothing to add-everything has been said!!!
     
    mrsilverservice likes this.
  17. TreasureHunter

    TreasureHunter Well-Known Member

    Joined:
    Oct 29, 2012
    Messages:
    3,114
    Likes Received:
    566
    Trophy Points:
    113
    Location:
    Treasure Island
    ^
    Yep, I was meaning: within portfolio. No-one has infinite portfolio, not even Bill Gates or George Soros.

    Regardless whether you have 5,000 $, 10,000 $, 50,000 $, 100,000 $, you have to seriously think about the portfolio.

    Of course, most people won't have this kind of money. Perhaps 1,000-3,000 $.

    The smaller the portfolio, the more cash. The bigger, the more PM's. And if it's very big, then land/real estate can come in increasingly.
     
  18. Freaksta

    Freaksta Member

    Joined:
    Nov 13, 2019
    Messages:
    82
    Likes Received:
    42
    Trophy Points:
    18
    Location:
    Melbourne
    Whats the aversion to stocks? I'm not suggesting you do individual stock picking but it's very easy today to buy a very diversified portfolio at the click of a button. I know a lot of people see stocks as highly risky but interested to understand why you are against it?

    Last year VAS/VGS which are two broad based ETFs (200+ shares/2000+ shares) returned 26%+. Sure I agree they are pretty heated at the moment and may come tumbling down, but over the long term they consistently beat inflation and grow wealth. I'm not saying put all your eggs into one basket but shares at the end of the day are little pieces of companies that pay most people wages on this forum. Yes you can't physically go in and touch and feel it but they company is there, it sells products you buy and the rest of the world buys.
     
    Silverling and mmm....shiney! like this.
  19. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

    Joined:
    Mar 16, 2019
    Messages:
    1,357
    Likes Received:
    1,034
    Trophy Points:
    113
    Weeks like this makes me feel good I'm in metals.
    With the new inflation reports it will only get better.
    I'll diversify into stocks after the coming crash.
     
    TreasureHunter, 66rounds and sgbuyer like this.
  20. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

    Joined:
    Mar 16, 2019
    Messages:
    1,357
    Likes Received:
    1,034
    Trophy Points:
    113
    Risk of what? That it will skyrocket? Haha
    I've taken a lot of risks in my life and lost everything once.
    With metals I feel like a stripper getting dollar bills stuffed in my panties.
    You might lose out on a stock market gain or not, but theres no risk.
     

Share This Page