If you've read my previous article on
401K fund selection, you may have noticed I had
American Century Global Gold as one of our options. I personally overweight my 401K to tax-inefficient holdings to keep low tax-drag equity investments in taxable. Hence, my 401K asset allocation is the following:
- 20% Vanguard Inflation-Protected Securities
- 20% Vanguard Intermediate Treasuries
- 20% American Century Global Gold
- 20% PIMCO Commodities Return
- 20% various equity funds
In the last few days, gold has hit $1000/oz so I'm feeling a bit anxious about my gold fund selection. But then a look back at the past 2 years and I see a big rollercoaster ride:
- Mar 2008 -17%
- Apr 2008 -12%
- May 2008 +10%
- Jul 2008 -11%
- Aug 2008 -13%
- Sep 2008 -8%
- Oct 2008 -38%
- Nov 2008 +25%
- Dec 2008 +30%
- Mar 2009 +13%
- Apr 2009 -11%
- May 2009 +34%
- Jun 2009 -14%
- Sep 2009 +15%
Luckily, I have auto-rebalancing triggered for the end of each calendar quarter (March, June, September, December). Quarterly rebalancing seems to have done a decent job in buying more at troughs and selling at peaks but monthly may even be better with extremely volatile asset classes (e.g. quarterly missed the -38% during Oct'08). I originally setup just quarterly because the gold & commodity funds have early redemption fees so I need to build up enough "old" shares available for rebalancing before I can switch to a monthly schedule. I may need to run the math on this to see if I'm at that threshold.
Moral of story -- uncorrelated asset classes are good. Uncorrelated with automatic rebalancing is even better. Now if I could only do some rebalancing on the gold wedding jewelry my wife has an emotional attachment to.
(Filed in investing, retirement plans)
The Price of Gold
Posted by Mossy
September 14, 2009 7:59 PM
In the last few days, gold has hit $1000/oz so I'm feeling a bit anxious about my gold fund selection. But then a look back at the past 2 years and I see a big rollercoaster ride:
Luckily, I have auto-rebalancing triggered for the end of each calendar quarter (March, June, September, December). Quarterly rebalancing seems to have done a decent job in buying more at troughs and selling at peaks but monthly may even be better with extremely volatile asset classes (e.g. quarterly missed the -38% during Oct'08). I originally setup just quarterly because the gold & commodity funds have early redemption fees so I need to build up enough "old" shares available for rebalancing before I can switch to a monthly schedule. I may need to run the math on this to see if I'm at that threshold.
Moral of story -- uncorrelated asset classes are good. Uncorrelated with automatic rebalancing is even better. Now if I could only do some rebalancing on the gold wedding jewelry my wife has an emotional attachment to.
(Filed in investing, retirement plans)
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