Replies to post #39720 on A.I.M. Users Bulletin Board (AIMUSERS)

[ls7550]

Hitorically gold is about the price of the S+P 500

Invest 50% in each and either rebalance yearly or when some % out of wack

60/40 with stocks being a equal split between US, UK and Australia (somewhat commodity like), and cash being a equal split between gold and 5 year treasury ladder, worked really well historically since 1900 for a UK investor. Near straight upward sloping real growth line with the exception of WW1 years, around 5.2% annualised real slope. Not one 20 year period of less than a 2x real double-up excepting WW1 years - and in which case extending out by a few years still saw a 2x+ real double up.

With both 'bonds' and gold as 'cash' you in effect get to chose whichever is the more appropriate to add/reduce when a rebalance occurs (that rebalancing does automatically) - via target weightings of 20% each in 5 different holdings. Australia (commodity heavy) provides exposure to Asia, UK provides exposure to Europe, US provides exposure to continental America via three relatively geopolitically safe markets.

UK Vanguards VDPX is close to 50% Australia, 25% in each of Hong Kong and Korea. UK FT250 is mid cap, but more like small cap in US scale and is broadly evenly weighted across sectors. S&P500 also strives to equal weight sectors. IVOO US Midcap (S&P400) expense 0.15% is a viable or perhaps even better choice for US exposure. http://vanguardadvisorsblog.com/2013/12/04/introducing-vanguards-new-alphabet-etfs/

A added benefit is that stock trading becomes near 24 hours when you hold some in each of Australia, UK and US. A bit extra protection/insurance if some otherwise out of hours declaration/event had you waiting to ditch stocks asap.

[jaiml]

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.

f anyone is interested I can do them again and post some results.

Cheers