A.I.M. Users Bulletin Board

[ls7550]

Aiming gold with stock as reserves will likely produce better results in the long term than aiming stocks with gold as reserves, simply due to gold's higher volatility.

I remember doing some backtesting using CEF (gold+silver, data goes back to 1992) and VTSMX as reserves and the results were a lot more favourable than with the two assets reversed.

Hi Jaiml

Using S&P total return monthly values sourced from http://us.spindices.com/indices/equity/sp-500 and gold spot prices (US $) sourced from http://www.bankofengland.co.uk/boeapps/iadb/index.asp?Travel=NIxIRx&levels=1&XNotes=Y&A33901XNode4048.x=5&A33901XNode4048.y=9&Nodes=X3791X3873X33940X4048&SectionRequired=I&HideNums=-1&ExtraInfo=true#BM (that extends back to 1988) and AIM'ing both ways I'm seeing both tending to accumulate cash over time and progressions that at times had one leading the other and vice-versa. Running both AIM's initially weighted 50-50 each and left as-is thereafter produced a combined smoother (more central average) gain progression and more consistent 50/50 weightings of total gold and total stock exposure over time.

I suspect therefore that for your 1992 onwards data that stocks were more productive than gold and AIM'ing gold with 'cash' (stock) accumulating (broadly progressive increased weighting) over time resulted in the 'better' (more rewarding) outcome.

Regards. Clive.