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Beginning last month I expanded the performance information. I believe you will find it much more useful and practical. Each month you will see the performance for that month, the performance for the year-to date, and the performance for the entire period from January 1, 2000 to date. For simplicity, I have assigned a value of 100 to my portfolio on 1-1-00, hence the title Jay’s PF Index. Later dates show what $100 invested in my portfolio has grown to. In addition, for comparison purposes, you will see my portfolio compared to gold for all of these periods of time. I believe these additional performance figures will add valuable perspective to our investment analysis. Here are the performance figures in the new format.
.
|
| Date |
Jay PF
Index |
Gold
Price
in USD |
Oz. of
Gold
Per 1
USD |
JPF/Gold
Ratio |
| 01-01-2000 |
100.00 |
282 |
0.003546 |
0.3546 |
| 01-01-2009 |
352.28 |
881 |
0.001135 |
0.3999 |
| 10-31-2009 |
380.10 |
1,045 |
0.000957 |
0.3637 |
| 11-30-2009 |
412.83 |
1,177 |
0.000850 |
0.3507 |
| |
| Period |
Jay PF
% Change
in USD |
Gold %
Change
in USD |
USD/Gold
%
Change |
JPF/Gold
%
Change |
| 11-01-2009
to 11-30-2009 (Nov. 2009) |
8.61% |
12.63% |
-11.18% |
-3.57% |
| 01-01-2009
to 11-30-2009 (YTD 2009) |
17.19% |
33.60% |
-25.11% |
-12.30% |
| 01-01-2000
to 11-30-2009 (Decade) |
312.83% |
317.38% |
-76.03% |
-1.10% |
|
Interpretation: For the month of November, 2009, my portfolio gained 8.61%, and for the year-to-date, it is up 17.19%. For the entire period 1-1-00 to 11-30-09, my portfolio index increased from 100 to 412.83, a gain of 312.83%. Gold increased from 282 to 1177, a gain of 317.38%. Thus, I have
under-performed gold by 1.1% for the decade-to-date.
Note: "USD/Gold % Change" is simply the reciprocal of the gold price in dollars. You cannot precisely compare the dollar with gold without adjusting for interest. The dollar earns interest. Gold does not. With
interest rates near zero, this seems insignificant, but over time it is not. Interest rates must eventually rise.
On the other hand, GATA and other experts on gold claim that the price
of gold has been artificially manipulated downwards for many years by
concentrated short selling on the futures markets. Some experts also
believe that a significant percentage of physical gold supposedly held
by futures exchanges does not exist. Furthermore, central bankers
regularly talk down gold. After all, it competes with their fiat
currencies and threatens their job security.
There were no transactions in my portfolio in November. Here is my portfolio as of November 30, 2009:
|
| CASH |
23.9%
|
(MINIMUM
30%) (All US$) |
| GOLD
& SILVER |
45.4% |
(MINIMUM
30%) Gold –
15.4% (Swiss 1-oz bars 5.3%, 1-oz Kruggerands 10.1%)
Silver – 30.0% (90% coins 18.7%, 1-oz eagles 2.2%,
1000-oz bars 2.6%, SVRZF 6.5%;
note: silver was up 13.1% in November) |
| MINING
SHARES |
17.7% |
SSRI
6.4%; GDX 4.5%; SLW 3.3%;
SA 1.0%; VGZ 1.5%;
AUY 1.0% |
| NON-GOLD
& SILVER PHYSICALS |
13.0% |
Commodity ETFs –
3.7%
(RJI 1.8%; RJA 1.3%; RJN 0.6%)
Oil & Gas W/I – 9.3% (Non-publicly traded investment) |
| PUTS
& CALLS |
0.0% |
|
| TOTAL |
100.0% |
|
 Comments
by Major Allocation
CASH: Cash is currently 23.9% of my portfolio. Since my target allocation is 30%, a logical question is: Why not sell down some other
category(s) and raise cash to 30%? Answer: Since I consider both gold and silver as the premier form of cash, I am content to hold less in US dollars during this current strong move up in the secular gold bull market. However, at some point, I may bring the dollar cash up closer to 30% if I believe the risk of deflation has increased significantly. You may recall that my cash was as high as 44% in April 2008, and above 30% until the last few months. I have no idea when I might raise the dollar cash allocation.
GOLD AND SILVER: My allocation to this asset class is now up to 45.4%. For the month of November, Gold was up 12.6% and silver was up 13.1%! At the moment, this asset class is serving me very well. The question will continue to be: Is it time to do some selling? My answer today: I don’t expect to do any selling for the next three years at least. (Please see
last month’s comments). Will there be a significant correction in gold and silver? Of course, beyond any doubt, but the question is from what price level, 1200, 1400, 1600, or higher.
In an interview last week, Jim Rogers said he fully expects gold to reach 2000 within the next decade. But he also
pointed out that now everybody’s bullish on it, and he does not like to buy things when that’s happening. But
he says he is not selling under any circumstances. He went on to say, “If you want to buy precious metal, I’d rather buy silver or palladium. Both are very depressed. This is the strategy I am led to follow. If I were under allocated in gold and silver (under 30%), I would slowly dollar cost average purchases until I reached my allocation, giving the greater emphasis to silver. I love having twice as much silver as gold, because I believe its potential over the next few years is higher by a factor of up to 5 to 1, conceivably even 10 to 1.
After all, the historic rate of gold to silver is 15:1, but currently it's
around 63:1, and around 78% of annual supply is used up in industry! (For more
information see Kitco
charts.) Furthermore, a delivery default on Comex or a change in CFTC
regulations on short position limits or exposure of fraud in SLV could easily
cause the price of silver to explode. For more information on this, listen to
the Ted
Butler's weekly metals market wrap-up on King World News or read some of his
free articles.)
MINING SHARES: My mining shares gained 21% during November! This may be an indication that we are approaching the phase of the gold bull market during which the shares far out perform the metal, but it is way too early to conclude that. I believe
my comments last month are still applicable for the near future.
NON-GOLD AND SILVER PHYSICALS: Last month’s comments are still appropriate. I consider an allocation of 1/6 of the portfolio in RJA, RJI and RJN an ideal way to invest in this category.
CONCLUSION: With my current allocation, I am content to sit and watch. I haven’t made a purchase or sale for over two months. Since I am not a short term trader, I won’t try to catch the inevitable short term moves in all the markets. I will stay with the secular trends until I believe (based primarily on what I learn from my experts) an asset class I own is reaching the bubble stage. Currently that is not the case with anything I own.
The
silver is mine, and the gold is mine, saith the LORD of hosts.
(Haggai 2:8)
Bullion
Dealers and Bullion Info | Practical
Ideas on Buying Gold and Silver
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