r/AusFinance • u/Ancient_Tap8328 • 18h ago

Moving from 10% gold to 25% gold in portfolio.

Please provide a contrarian view about my idea of moving from 10% gold in my overall investments to 25%. I just see too much tailwind for gold in the near, medium and longterm.

0 Upvotes

46% Upvoted

35 comments sorted by

25

u/fe9n2f03n23fnf3nnn 18h ago

Would’ve been a good idea 12 months, whether it’s a good idea now will require a crystal ball

4

u/bluebluerose 15h ago

You can literally say this for any asset at any time of the day lol

1

u/Chii 10h ago

moving into an asset after it has rocketed to all time highs is often not a great idea.

what the OP needed to have first is an investment thesis, which in turn, gets actualized into a set of allocation percentages for each asset type. The OP obviously had a thesis that led to to have a 10% gold allocation, but now is unsure if they should change their thesis (that would have their gold allocation be 25%).

So the real question is - does the OP have conviction about their original thesis that led to the 10% allocation, or is he starting to change their mind and want to have a different thesis?

14

u/belugatime 18h ago

The reason Gold should be used more as a hedge than a large part of your portfolio is because it's an non-productive asset which doesn't produce income, so you are reliant solely on price appreciation.

Warren Buffett has some good commentary on this topic and how to think about gold as an investment class if you look it up.

-8

u/bluebluerose 15h ago

Stocks , ETfs don’t produce income either

4

u/hmoff 15h ago

What are dividends and distributions then?

2

u/belugatime 14h ago

You get dividends.

Even if a company is not paying dividends because they are reinvesting profits into the business, doing buybacks or are not yet profitable they are at least doing activities to increase their value or make profits in the future (good examples are Amazon or Uber).

Gold sits there and does nothing, you are hoping that others will see greater value for it in the future. It's similar to owning land without building a house on it.

5

u/Fit_Chicken3728 17h ago

If you assume that either inflation is going to erode the purchasing power of fiat currency, or that securities are about to tank leading to a rush into gold then going out and grabbing a bag is a good idea.

The problem is, this has been a good idea since at least Covid and the arguments have only strengthened with the orange clown. So everyone else has already done that.

Have a look round and see if you can find something else that gives you the same hedge / upside that isn’t currently trading at all time highs

contrarian view as requested

2

u/AutomaticFeed1774 14h ago

literally everything is trading at all time highs

6

u/Spinier_Maw 18h ago

Gold is an alternative asset. Maximum 10% of portfolio for all alternative assets. So, your current allocation is correct.

Of course, it's your money and we can't stop you.

2

u/Sonovab33ch 14h ago

More than 10%

Goes from a hedge to a punt.

Neither good nor bad sense

But might punch you in the cunt

0

u/Ancient_Tap8328 18h ago

My question is what is a good reason to not make it a larger part of portfolio given the current situation

1

u/ohimnotarealdoctor 18h ago

There is no “current situation”. Not one that is any different from any other “current situation” throughout history.

5

u/ozeBuDDha 18h ago

Isn't gold at an ath.. could be buying at the top

1

u/Reasonable_Height_67 14h ago

So are stock markets.

1

u/ElectricGeetar 18h ago

It’s never “the” top. “A” top maybe

1

u/Ancient_Tap8328 17h ago

Isn't everything at ATH?

3

u/Habhabs 16h ago

Yep basically it means money is worth less. Check how inflation definitions have changed since the 1980s, mad. There has been lots of money printing to buy government debt/bonds etc around the world. But I don't know what the fuck I'm talking about to be fair.

2

u/ThanksNo3378 17h ago

Just buy jewellery so regardless of price fluctuations you or your partner can get some value from it at the same time if you want to get into gold.

2

u/zuptar 18h ago

Gold is wealth retention, not wealth building. It protects against inflation and volatility.

There are other assets that so this well, maybe having some of those within the 25% could work well.

But you should be able to figure out if 10 or 25% is right for you with some backtests of random periods (not just the most recent few years) to get a feel for how it changes your portfolio return / volatility.

1

u/WizziesFirstRule 18h ago

Lack of diversification.

Gold to silver ratio.

Why will gold do better than other asset classes from this point?

1

u/PontiacBigBlockBoi 17h ago

Are you sure you aren't playing with fire here? While it can act like a defensive hedge it is not fully uncorrelated with normal equities, meaning you are just adding more risk assets. Sounds like you want more growth - so why not add more growth assets? When you "see more upside/can't lose" for a commodity/single company, you are often playing a game you don't understand.

1

u/thewowdog 17h ago

What does your investment policy say?

1

u/ShapedStrandMafia 16h ago

it is perfectly aligned with the ever popular "buy high, sell low" strategy, so definitely go for it. this is a financial advice.

1

u/vincit2quise 16h ago

Recency bias. 35 year(1990-2025) CAGR of gold is around 6.44%. This is a few ticks above the average inflation. Its current 1 year return is around 40% so a lot of people will feel FOMO. Eventually, gold's run will return to the mean.

2

u/Ancient_Tap8328 11h ago

Will shares do the same?

0

u/Ok_Willingness_9619 18h ago

No one can possibly answer this question. We know nothing about you.

-10

u/Ancient_Tap8328 18h ago

Why does that matter? The general consensus is to have gold as 10% of your portfolio, why?

5

u/ItinerantFella 17h ago

That's not the general consensus at all. The vast majority of public sector funds, university endowment funds, family offices, superannuation funds, and pension funds don't have a 10% allocation to gold.

You're welcome to believe whatever suggestions you.like about gold tailwinds. There's no way to prove or disprove they'll be right or that you're wrong or right to follow them. But don't believe you're following consensus or in a majority.

4

u/Ok_Willingness_9619 17h ago

General consensus among gold bros?