A Safer, Saner Way to Acquire and Hold Gold

[Infinite Velocity]

Using Periodic Portfolio Rebalancing

by Robert B. Gordon, Sc. D.
January 11, 2004

This promising idea has been generated by building on our prior work on balanced asset portfolios using and benefiting from periodic or irregular rebalancing. It is just as applicable to a lump sum purchase or to one intended for periodic or irregular dollar cost averaging purposes. It should be of special interest to all investors who do not have the time or interest in becoming a gold trader.

There are many internet web sites devoted to all aspects of gold and silver trading which can be visited for further information. We are simply going to discuss how to design portfolios that will do a good job without requiring a lot of management attention by the investor. It will get its conservatism from following the principles of balancing the stable and volatile components and, further, by carefully selecting and diversifying both the stable and precious metal assets.

GOLD'S VOLATILITY CAN BE USED TO ADVANTAGE

Since 1970, pure gold and silver prices have soared as high as $800 and $50 dollars an ounce and are now somewhat over $400 and $6 per ounce. Prices of individual mining companies are extremely volatile and catch the attention of professional traders and rank amateurs. Prices of gold mutual funds occupy a price volatility range between the base metals and the stocks. We are not aware of any silver mutual fund since most silver is produced as a by-product of other metals such as copper.

So with three distinct forms of gold and silver, it is easy to design portfolios with a wide range of volatility. The biggest and hardest question for most individual investors is to choose a portfolio with a level of volatility they can sleep with. We have received letters from individuals who have sold their house and put all the proceeds into precious metals, a practice we could not recommend for anyone.

Fortunately, by using portfolios designed to be balanced between stable asset classes and precious metals, we can present portfolio ideas suitable for every investor except a wild speculator as mentioned above. We will now proceed to present a several portfolio examples which could be adopted either as shown or combined as investors may desire to match their desired risk level.

continues.......

http://www.financialsense.com/editorials/gordon/2004/0111.html

[junker]

1. Nope - elitist/bankster propaganda - this is paper NOT gold/silver

any paper claim on gold/silver or virtually any other financial asset is about to revert to its intrinsic worth, i.e. paper.

Heads up guys. If you don't have the gold/siver where you can physically lay your hands on it, then you got squat when TSHTF later this year.