Posted this a few days after Adam Grossman's article and I don't think many saw it. Anyway, I think it applies to the question of whether gold is a viable investment. It has been for me over the past 20 years. Reading a lot of knee-jerk reactions and not much thought in the responses to Adam’s article. It’s clear by their thumbs up/down reactions that a majority of HD readers won’t consider gold.It seems there are generally two trains of thought when it comes to gold. First, those who believe in the USD (or other fiat currencies) and that generating income on that is the source of wealth and income. Second, those who don’t trust fiat currencies and wish to hold other stores of value such as gold. Over history, the value of fiat currencies trends toward zero in all cases. So that implies an investor must keep the currency working to offset inflation (or currency valuation loss).There’s no doubt that most times stocks do a good job of that. But there are times such as the Great Depression and 1970s when they don’t do well, and real assets have their day. That said, I have come to the conclusion (beginning in 2006) that an allocation to gold (and other real assets) is preferable. I’m a hedger by nature and I can see the scenarios (such as this year) when gold has its day while equities may struggle. Building that allocation when gold is relatively high is difficult and probably not advisable. But when gold is relatively low is when many dis it and wouldn’t consider buying.Here is one statistical analysis of how much gold is appropriate in an allocation: https://www.incrementum.li/en/journal/the-optimal-gold-allocation-how-much-gold-does-your-portfolio-need/ I’m sure that’s too much for this readership but something folks might consider.
Reading a lot of knee-jerk reactions and not much thought in the responses to Adam's article. It's clear by their thumbs up/down reactions that a majority of HD readers won't consider gold.
It seems there are generally two trains of thought when it comes to gold. First, those who believe in the USD (or other fiat currencies) and that generating income on that is the source of wealth and income. Second, those who don't trust fiat currencies and wish to hold other stores of value such as gold. Over history, the value of fiat currencies trends toward zero in all cases. So that implies an investor must keep the currency working to offset inflation (or currency valuation loss).
There's no doubt that most times stocks do a good job of that. But there are times such as the Great Depression and 1970s when they don't do well, and real assets have their day. That said, I have come to the conclusion (beginning in 2006) that an allocation to gold (and other real assets) is preferable. I'm a hedger by nature and I can see the scenarios (such as this year) when gold has its day while equities may struggle. Building that allocation when gold is relatively high is difficult and probably not advisable. But when gold is relatively low is when many dis it and wouldn't consider buying.
Here is one statistical analysis of how much gold is appropriate in an allocation: https://www.incrementum.li/en/journal/the-optimal-gold-allocation-how-much-gold-does-your-portfolio-need/
I'm sure that's too much for this readership but something folks might consider.
This has been an enjoyable forum to read with a number of different perspectives. I'm approaching 56 and have wanted to retire early but didn't know how to get there and am cautious about making a mistake in this decision. HD has been very informative in the thought process. Philip Stein's HD article (https://humbledollar.com/2023/10/a-profitable-read/) and its citation of Bernstein's Four Pillars of Investing unlocked a retirement income path I've become inclined to trust. The part that helped the most is having as much 'safe assets' as possible to pay for a number of years of living expenses. From this I created a spreadsheet that focuses on annual income from 2028 to 2070 to see what I could reasonably expect. I broke our assets into risk assets (all but safe and nonliquid), safe assets (as defined by Bernstein), and nonliquid assets (mostly our home). I transfer 6% of safe assets per year into withdrawal for income and replenish that amount annually from the risk assets. I assume no growth on the safe assets, providing a semblance of accounting for inflation. The risk assets grow at 6% per year. The annual withdrawals amount to about 2% of total assets. The nonliquid assets grow at 2% per year and aren't reduced along the way, thinking this may account for wherever we live, including long term care. To this I add expected income from annuity-like (though with more uncertain upside and downside) investments in first 10 years of retirement and then SS starting at age 70. The pretax retirement income is roughly 70% of present pretax income. I'd like to work on rough budget for this income, as well as which accounts withdrawals should come from, but it looks like retiring at 59 is reasonable. Using conservative assumptions adds to the likelihood of success. So I offer this as an income-focused approach to the retirement date decision.
I tried editing this spreadsheet to what I think most folks might have to work with and it seems like one would need a fairly large net worth, annuity-like income, or SS to make retirement sustainable. Going back to saving and investing for many years is again a take-home lesson.
Wow, Jonathan. That is heavy news and it stunned me. I've been following you since the mid 90s on the WSJ Sunday column. You've shaped my financial habits and approach to life. Whenever someone is looking to get on the right track financially, I offer a bit of input but mostly refer them to Humble Dollar. And I've learned that experiences and people are much more fulfilling than stuff.
The grace and equanimity in how you're dealing with this unfortunate health outcome are true to the person I've come to know these past decades. It doesn't surprise me but it is nonetheless remarkable. You should feel good about the life you've lead and will lead in your remaining time. Go forth as you've described and know that you have affected many lives in tremendously positive fashion. With the utmost gratitude and respect, Chris
Understand, Joe. Driving is fun and very effective if they don't handle it well. Drop is great though if it's working and you can keep them from driving it back at you. I'm more of a finesse player so inclined to drop but I find mixing it up keeps other side off balance. Like throwing in an occasional topspin lob to their backhand, too. Guess it depends on the situation, what's working, and who I'm playing.
Lived in Missoula for one winter in '96-97. Had a great time teaching skiing at Snowbowl. Guess you have to play pball indoors this time of year.
Glad you made it to retirement and are enjoying it, Joe.
I've been interested in early retirement for many years. Thanks to this site, I'm getting a lot of input on how to do that. Super helpful. Target is 4 years away at 59.
Question for you - third shot drive or drop;?
Love pickleball and tennis, as well.
Comments
Posted this a few days after Adam Grossman's article and I don't think many saw it. Anyway, I think it applies to the question of whether gold is a viable investment. It has been for me over the past 20 years. Reading a lot of knee-jerk reactions and not much thought in the responses to Adam’s article. It’s clear by their thumbs up/down reactions that a majority of HD readers won’t consider gold. It seems there are generally two trains of thought when it comes to gold. First, those who believe in the USD (or other fiat currencies) and that generating income on that is the source of wealth and income. Second, those who don’t trust fiat currencies and wish to hold other stores of value such as gold. Over history, the value of fiat currencies trends toward zero in all cases. So that implies an investor must keep the currency working to offset inflation (or currency valuation loss). There’s no doubt that most times stocks do a good job of that. But there are times such as the Great Depression and 1970s when they don’t do well, and real assets have their day. That said, I have come to the conclusion (beginning in 2006) that an allocation to gold (and other real assets) is preferable. I’m a hedger by nature and I can see the scenarios (such as this year) when gold has its day while equities may struggle. Building that allocation when gold is relatively high is difficult and probably not advisable. But when gold is relatively low is when many dis it and wouldn’t consider buying. Here is one statistical analysis of how much gold is appropriate in an allocation: https://www.incrementum.li/en/journal/the-optimal-gold-allocation-how-much-gold-does-your-portfolio-need/ I’m sure that’s too much for this readership but something folks might consider.
Post: What About Gold?
Link to comment from June 9, 2025
Reading a lot of knee-jerk reactions and not much thought in the responses to Adam's article. It's clear by their thumbs up/down reactions that a majority of HD readers won't consider gold. It seems there are generally two trains of thought when it comes to gold. First, those who believe in the USD (or other fiat currencies) and that generating income on that is the source of wealth and income. Second, those who don't trust fiat currencies and wish to hold other stores of value such as gold. Over history, the value of fiat currencies trends toward zero in all cases. So that implies an investor must keep the currency working to offset inflation (or currency valuation loss). There's no doubt that most times stocks do a good job of that. But there are times such as the Great Depression and 1970s when they don't do well, and real assets have their day. That said, I have come to the conclusion (beginning in 2006) that an allocation to gold (and other real assets) is preferable. I'm a hedger by nature and I can see the scenarios (such as this year) when gold has its day while equities may struggle. Building that allocation when gold is relatively high is difficult and probably not advisable. But when gold is relatively low is when many dis it and wouldn't consider buying. Here is one statistical analysis of how much gold is appropriate in an allocation: https://www.incrementum.li/en/journal/the-optimal-gold-allocation-how-much-gold-does-your-portfolio-need/ I'm sure that's too much for this readership but something folks might consider.
Post: Go for the Gold?
Link to comment from May 13, 2025
This has been an enjoyable forum to read with a number of different perspectives. I'm approaching 56 and have wanted to retire early but didn't know how to get there and am cautious about making a mistake in this decision. HD has been very informative in the thought process. Philip Stein's HD article (https://humbledollar.com/2023/10/a-profitable-read/) and its citation of Bernstein's Four Pillars of Investing unlocked a retirement income path I've become inclined to trust. The part that helped the most is having as much 'safe assets' as possible to pay for a number of years of living expenses. From this I created a spreadsheet that focuses on annual income from 2028 to 2070 to see what I could reasonably expect. I broke our assets into risk assets (all but safe and nonliquid), safe assets (as defined by Bernstein), and nonliquid assets (mostly our home). I transfer 6% of safe assets per year into withdrawal for income and replenish that amount annually from the risk assets. I assume no growth on the safe assets, providing a semblance of accounting for inflation. The risk assets grow at 6% per year. The annual withdrawals amount to about 2% of total assets. The nonliquid assets grow at 2% per year and aren't reduced along the way, thinking this may account for wherever we live, including long term care. To this I add expected income from annuity-like (though with more uncertain upside and downside) investments in first 10 years of retirement and then SS starting at age 70. The pretax retirement income is roughly 70% of present pretax income. I'd like to work on rough budget for this income, as well as which accounts withdrawals should come from, but it looks like retiring at 59 is reasonable. Using conservative assumptions adds to the likelihood of success. So I offer this as an income-focused approach to the retirement date decision. I tried editing this spreadsheet to what I think most folks might have to work with and it seems like one would need a fairly large net worth, annuity-like income, or SS to make retirement sustainable. Going back to saving and investing for many years is again a take-home lesson.
Post: RDQ says ignore those big scary numbers
Link to comment from August 23, 2024
Wow, Jonathan. That is heavy news and it stunned me. I've been following you since the mid 90s on the WSJ Sunday column. You've shaped my financial habits and approach to life. Whenever someone is looking to get on the right track financially, I offer a bit of input but mostly refer them to Humble Dollar. And I've learned that experiences and people are much more fulfilling than stuff. The grace and equanimity in how you're dealing with this unfortunate health outcome are true to the person I've come to know these past decades. It doesn't surprise me but it is nonetheless remarkable. You should feel good about the life you've lead and will lead in your remaining time. Go forth as you've described and know that you have affected many lives in tremendously positive fashion. With the utmost gratitude and respect, Chris
Post: The C Word
Link to comment from June 15, 2024
Understand, Joe. Driving is fun and very effective if they don't handle it well. Drop is great though if it's working and you can keep them from driving it back at you. I'm more of a finesse player so inclined to drop but I find mixing it up keeps other side off balance. Like throwing in an occasional topspin lob to their backhand, too. Guess it depends on the situation, what's working, and who I'm playing. Lived in Missoula for one winter in '96-97. Had a great time teaching skiing at Snowbowl. Guess you have to play pball indoors this time of year.
Post: My Five Lessons
Link to comment from January 19, 2024
Glad you made it to retirement and are enjoying it, Joe. I've been interested in early retirement for many years. Thanks to this site, I'm getting a lot of input on how to do that. Super helpful. Target is 4 years away at 59. Question for you - third shot drive or drop;? Love pickleball and tennis, as well.
Post: My Five Lessons
Link to comment from January 18, 2024