Middle of the year re-allocation?

[LargoWinch]

Is it just me but with the biggest commodities bull market in 35+ years since the beginning of the year, asset allocation is now so much harder?

Here is my case:

a) Stocks: Markets kinda stink, along with the global economy

b) Crude Oil/Natural Gas: Both appear overbought in the short-term, LT looks good however

c) Real Estate: A falling electric knife

d) Industrial commodities: Likely to decline - see a)

e) Agriculture commodities: Not sure here. Still cheap after corn's big run?

f) Fiat currency: Certain to lose, but not too much in the short-term

g) Precious Metals (PM): see b)


So this begs the question: with everything expansive currently, is cash the best option for the next six months?

My allocation is roughly 20% Gold, 10% Silver, 15% Platinum (all physical bullion/coins), 15% Agriculture ETF (Wheat/Corn/Rice) and 40% Cash @ 3.4% with ICICI Bank.

In summary: I am uneasy with my 40% cash position, but it seems to me that everything is overbought. Any suggestions? What is your allocation starting 3Q?

Thank you for sharing your insight!

[jtabeb]

Re: Middle of the year re-allocation?

Is it just me but with the biggest commodities bull market in 35+ years since the beginning of the year, asset allocation is now so much harder?

Here is my case:

a) Stocks: Markets kinda stink, along with the global economy

b) Crude Oil/Natural Gas: Both appear overbought in the short-term, LT looks good however

c) Real Estate: A falling electric knife

d) Industrial commodities: Likely to decline - see a)

e) Agriculture commodities: Not sure here. Still cheap after corn's big run?

f) Fiat currency: Certain to lose, but not too much in the short-term

g) Precious Metals (PM): see b)


So this begs the question: with everything expansive currently, is cash the best option for the next six months?

My allocation is roughly 20% Gold, 10% Silver, 15% Platinum (all physical bullion/coins), 15% Agriculture ETF (Wheat/Corn/Rice) and 40% Cash @ 3.4% with ICICI Bank.

In summary: I am uneasy with my 40% cash position, but it seems to me that everything is overbought. Any suggestions? What is your allocation starting 3Q?

Thank you for sharing your insight!

Survival cash is good, but not much more beyond that. If I had 40% portfolio cash sitting around (and no debt and no other liabilities that could bite me in the A$$) I WOULD NOT let it sit there. I would double-up on your physical PM's. If you are worried about getting bit, go in at 25% of your cash at a time.

PM's are getting ready (already in the process of) a BIG BIG move UP, (remember that big move up last year?) I think it's going to come unseasonably earlier).

I could be wrong of course, but as I say, I always put my money where my mouth is. I had some cash come in and burned it about 2-3 weeks ago at $920ish gold and $18ish silver. Would do the same at current price level.

Looking for clear sailing with $965 Gold cleared and $19 Silver cleared. Doesn't mean there won't be better buying opportunities, BUT also doesn't mean there will be better.

I always seem to time it wrong when I buy physical anyway. I buy, get pissed that it got cheaper, and then am absolutely thrilled in six months with price starts rocking again.

If you buy now, I don't think you will be disappointed looking back at it in six months.

Make your call based on what YOU think, it is always the best call you can make! (and NOBODY can do better than that);)

Hope this helps.

[LargoWinch]

Re: Middle of the year re-allocation?

Thank you jtabeb, much appreciated!

I think I will move 50% of my cash (20% total) in gold/siver in July/Aug.

BTW: I have no debt whatsoever (I rent). I turned 31 recently and I am much more risk tolerant than the average joe i.e. I can ride a 50% decline in anything.

My only concern is that I have no energy exposure at this time for the reasons I outlined above.

[jtabeb]

Re: Middle of the year re-allocation?

My only concern is that I have no energy exposure at this time for the reasons I outlined above.

Don't worry about that, I would LOVE to buy some PHYSICAL energy, but storage is a bitch (think $1000 in oil vs $1000 in PMs). Plus, lucky for you, there is a nice correlation between energy prices and PMs anyway, so who cares?

One word of caution, I would absolutely runway from any "paper" commodities "investments". In a crisis of trust, "TRUST NO ONE" is a good mantra to follow.
(No one can mess with, manipulate, or otherwise screw with a tangible investment that you are in physical control of.)

If they try, start packing some heat;)

[c1ue]

Re: Middle of the year re-allocation?

If you're looking for a core holding - keep an eye on BRK.A

If they go substantially lower, I'm going to go in.

I have not stopped kicking myself for failing to pull the trigger in 2000 when they were at 40K... Probably would have sold early at 130K, but then again...

[LargoWinch]

Re: Middle of the year re-allocation?

c1ue; thanks for the insight.

Won't BRK.A drop once Buffett retires?

[LargoWinch]

Re: Middle of the year re-allocation?

What about propane tanks? (joking)

Well, it seems that gold and oil have "decoupled" this year. That was my concern with no investment in energy.

How far do you think gold must go before the outlaw it? (My stash is all at the bank in a safety deposit box).

[c1ue]

Re: Middle of the year re-allocation?

Won't BRK.A drop once Buffett retires?

You means takes a dirt nap? Sir Warren ain't retiring until they retire him out the front door, feet first.

Yes, probably.

But the reason BRK.A is a great company is not just Sir Warren's investment skills - even Anheuser, his biggest dog of the last few years, has netted out nicely for him - but because the conglomeration of businesses BRK.A has bought and continues to operate generates monstrous cash.

Sir Warren doesn't run the insurance business, nor does he run these other businesses.

Are you going to get 30%/year for 30 years starting now with BRK.A? probably not - actually almost certainly not.

But consider the alternative: Any financial stock now. Any retailing stock now. Any homebuilder/construction stock now.

I hold exactly one stock right now after dumping JPM, C, and a raft of other stocks in the past 2 years: IBM.

That I'm considering BRK.A means something.

[Munger]

Re: Middle of the year re-allocation?

Any recommendations on here of where to get physical PMs? It's tough to objectively evaluate these places...

[LargoWinch]

Re: Middle of the year re-allocation?

Charles, if I may, I would suggest the following if you live in Canada:
https://online.kitco.com/

Or these very honest fellas if you are in the US:
http://www.allamericangold.com/

I highly recommend the guys' at PTG podcast (see link above), each day funnier than the previous one!

Disclaimer: I am not related to any of the businesses above. If I were, then my picture would look different than a French cartoon (think me and my Ferrari).

[jtabeb]

Re: Middle of the year re-allocation?

Any recommendations on here of where to get physical PMs? It's tough to objectively evaluate these places...

I have done all my buisness with

www.bulliondirect.com

In 6 years of buying from them, no issues.

V/R

P.S. Tell warren I said hi!

[EricPhan]

Re: Middle of the year re-allocation?

coloradogold and tulving both offer great service and prices. I've ordered from both and had no complaints.

[Jim Nickerson]

Re: Middle of the year re-allocation?

jtabeb and ericphan,

What sort of spread do you pay over spot and what does shipping cost on deals with the companies?

For silver and gold if you care to put it up?

[ASH]

Re: Middle of the year re-allocation?

jtabeb and ericphan,

What sort of spread do you pay over spot and what does shipping cost on deals with the companies?

For silver and gold if you care to put it up?

I also did some business with Bullion Direct. Shipping costs seemed to be in line with the weight, if you figure on ground transport by a service such as UPS. I infer that the insurance must not have been too bad. For a decent-sized order, the shipping and handling is negligible. It amounted to less than 0.5% of the cost of my transaction.

My order was split between silver bullion and coin. The bullion was sold very close to the spot price. The coins were about 8.5% over spot.

[GRG55]

Re: Middle of the year re-allocation?

If you're looking for a core holding - keep an eye on BRK.A

If they go substantially lower, I'm going to go in.

I have not stopped kicking myself for failing to pull the trigger in 2000 when they were at 40K... Probably would have sold early at 130K, but then again...

I bought a lot of beaten up "old economy" non-technology industrial and commodity producer stuff back then. I too thought Berkshire looked interesting at $40. And, like you, I too failed to pull the trigger on it [for reasons I still cannot explain to myself ]. Glad to see I was not alone...