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Buy/Sell/Hold

Hampshirelad
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Buy/Sell/Hold

#99362

Postby Hampshirelad » November 27th, 2017, 8:52 pm

Wondered what others are doing in terms of PM's

I hold a lot of both Au & Ag.....after 5 years of doing pretty much nothing (except the brexit £ drop bonus) and watching pretty much every other asset class rise, I'm getting pretty hacked off.....

Ag has been particuarly dreadful experience over the last 5 years.........

I used to listen to the likes of Schiff et al and now see them for the snake oil salesmen they are.

I'm nearing capitulation and hating this asset class.

On this basis it must now be a great time to buy.

How are others feeling

CommissarJones
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Re: Buy/Sell/Hold

#99724

Postby CommissarJones » November 28th, 2017, 9:45 pm

Hampshirelad wrote:How are others feeling


You are correct to note that the last five years haven't been the greatest for holders of precious metals, but the period includes part of the decline that followed gold's record high in September 2011, so perhaps bullion was set up for a fall at that point. In any case, looking at a weekly chart of the past five years, I see gold clearly making higher lows out of the bottom in late 2015. That looks constructive to me, although the $1,350-$1,375/ounce area seems to be serving as upside resistance for the moment.

I have no particular plans for now as far as activity, but was having vague thoughts a couple of months ago about maybe buying some silver coins to add to my holding. I view my bullion as a "forever" position, and my motivations for continuing to hold are pretty much the classic ones addressed in the infographic below.

http://www.visualcapitalist.com/billion ... us-metals/

In my case, there's particular emphasis on 1) portfolio diversification (gold and equities have a low correlation, so bullion sits nicely alongside my income-generating stocks) and 2) doubt that the removal of extreme monetary accommodation by central banks will be easy or painless.

1nv35t
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Re: Buy/Sell/Hold

#100954

Postby 1nv35t » December 2nd, 2017, 11:51 pm

Since 2010 gold bettered stock yearly total gains in 4 of the 7 years (stock best in 3 years). Last year saw +30% gain. Yearly rebalanced 75/25 stock/gold has compared in reward to 100% stock since 2010 (measured to year end 2016).

Looked at in isolation and you will see doom/gloom. What matters is its pairing. 50/50 stock/gold is a barbell of two extremes that compares to a central bond bullet (albeit with more volatility).

Over the last 120 years 75/25 stock/gold (which might be considered as a form of 50/50 stock/bond asset allocation) was as productive as all-stock, but endured lower volatility (better risk adjusted reward).

Instead of looking at gold in isolation, mentally pair it with a equal amount of stock and look at the combined value as a form of 'bond'. Rebalancing will tend to sell some stock to buy more gold after prices fall back; sell gold to buy stock when prices spike (or stocks decline).

That all said, gold can go onto back burner simmer (flat/decline) for long periods. If after such a relatively short period of time (handful of years or two) you're not comfortable with the mental image of the likes of stock gains compensating and buying more gold (cost averaging) and instead see gold as flat/down, then yes perhaps capitulate. Many investors lag the average due to behaviour factors (tending to add-high, sell-low) which typically in itself adds a 1.5%/year drag. If you're not comfortable with your asset allocation then you'll be more inclined to follow that track, perhaps dumping gold after its fallen back 50% (rather than buying more). 1 oz of gold put into a safe and left as-is had just 1oz/gold available after many years. 50/50 1oz gold with a comparable amount of stock value, yearly rebalanced and over time your safe broadly saw the number of ounces of gold within it rise.

Equally you'd need to consider what you'd do with the sale proceeds from selling your gold. Buy bonds? Increase stock exposure? IMO 50/50 stock/gold is a better choice of 'bond' (less exposed to regular taxation risks such as interest taxation). Swapping out gold for stocks and you scale up equity risk exposure ... perhaps more rewarding, however long term 100% stock comparing to 75/25 stock/gold rewards, but with all stock having higher volatility, is swapping out for similar reward but with greater risk (assuming volatility is considered as a risk factor).

baldchap
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Re: Buy/Sell/Hold

#100994

Postby baldchap » December 3rd, 2017, 10:10 am

Buy in small amounts and just hold.

Ag is a waste of time due to VAT
Au on the other hand is a safety net I use, and I don't worry about price fluctuations. If it ever doubles or quadruples this will say more about the health of fiat currencies rather than the price of gold.
I try to hold 10% of my SIPP/ISA in physical Au.
Laugh, tell me it is archaic, I know it doesn't have a yield, but it is my doomsday insurance, and with Corbyn & co on the horizon I am glad I have it.
If I never use it, fine. I'll dip it into in my later years or use it to give someone else a better start.

1nv35t
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Re: Buy/Sell/Hold

#101085

Postby 1nv35t » December 3rd, 2017, 4:12 pm

baldchap wrote:Laugh, tell me it is archaic, I know it doesn't have a yield, but it is my doomsday insurance, and with Corbyn & co on the horizon I am glad I have it.
If I never use it, fine. I'll dip it into in my later years or use it to give someone else a better start.

The financial sector is the worlds largest/richest sector, and they have vested interest to get you to hand over as much of your wealth to them.

https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=2&startYear=1972&endYear=2017&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&portfolio1=Custom&portfolio2=Custom&portfolio3=Custom&TotalStockMarket1=75&TotalStockMarket2=100&TotalStockMarket3=50&TreasuryNotes3=50&Gold1=25

100% stock if oft cited as having been the historic 'best' asset allocation, however that historic data is riddled with holes. Often they ignore inflation, or when inflation is counted they use CPI/RPI inflation figures that have benefited from technology helping to lower production costs. Measure relative to a inflation rate of the average of house price, stock price and consumer price inflation and the real inflation figure is moderately higher.

They also tend to ignore costs. Historically costs were much higher than in more recent decades, market makers for instance had a field day with postal based trade orders and spreads of 10%+ were common. Historic taxation since the early 1900's averaged around 38% for a basic rate taxpayer ...etc.

They also tend to use simple arithmetic average figures for yearly gains, which were substantially more than the median (central). Events were such that single rare events saw massive swings and including those isolated events distorts the average upwards considerably. In reality you're more likely to encounter a lower median outcome. A bit like a room filled with people when a 100 foot tall giant walks in to be included ... the average height of the room substantially rises whereas in practice that bias is more likely not included.

Yet another factor is that of survivorship. Historic average figures are measured retrospectively and exclude failures that never reached that date of measure. The US for instance was a right tail economy (good case) over the 1900's. Even then they include the better cases, such as Dow and Jones having devised three indexes of which the most successful (Dow and Jones Industrial Average) has become referenced as the historic average indicator. Their Utility and Transport averages simply faded (still around, but generally saw selective elements of those being migrated into the Industrial Average that is presented as a 'historic average guide').

Yet another factor is investor behaviour. The tendency to buy high (greed) sell low (fear). That broadly sees 1.5%/year of rewards vanish on average.

Factor in the above and those that would have you laughed at for holding gold are either ignorant or have vested interests. A stock/gold 50/50 barbell as a bond proxy helps reduce taxation and geopolitical risks. In an attempt to belittle that however the tendency is to look at just gold in isolation in order to suggest that as being a lousy asset/investment. The realities are however that on a mathematical average basis holding some gold was as beneficial as the all-stock average, and more likely was more rewarding in the real-world case. Investors typically invest across multiple decades and during that time may encounter a wide range of circumstances. Providing you hold through thick and thin and rebalance, then you'll become more Zen like in your investment character. Bad times ... I hold some gold. Good times and gold lagging ... I'll top up on some gold. ... etc. But that might not be suitable for those that look at things from a shorter term perspective (less than 10 years).

I think that if you must look at gold in isolation then looking at ounces held rather than the value held helps ease the mind as over time you'll tend to see the number of ounces being held expand as you 'trade' (and where trading is as simple as just rebalancing a broader portfolio back to target weightings) . Similar to as though gold had produced and accumulated dividends. More coins/ounces along with each coin broadly tending to offset inflation type of thought train. But with variability along the way (sometimes ounces decline as they're deployed to buy stock, sometimes replenished and more as a safety measure against potential stock declines).

CommissarJones
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Re: Buy/Sell/Hold

#109121

Postby CommissarJones » January 9th, 2018, 11:22 pm

Gold made another higher low last month, coming down to $1,245 an ounce or so versus $1,210-ish back in July, so bullion is certainly looking well supported at the moment. But it's interesting to me that at the same time, gold recently made lower lows against both the pound and the euro, which leads me to wonder whether the perkier dollar chart might simply reflect weakness in the U.S. currency.


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