You might call this "Second Thoughts". For a lot of reasons, including especially my reservations about Canadian closed end gold bullion funds (See "Sprott Goes Splat" in last month's archive), I have sold out of PHYS, GTU, and CEF last Friday and today. I still have a position in ASA, now my only "paper gold" position. The bullion position will NOT be sold and will be added onto if gold falls.
As readers know I have been absorbed by the inflation/deflation outcome for quite some time. As a Long Wave believer for decades I was inclined to see the asset inflation since 1999 continue another decade or more. But the reality is that the US FED and Government are seemingly committed to creating another Japan-like deflationary era. It's not enough to have 0-90 day paper at zero percent. They are now targeting Tbonds for much lower rates. Much of this is by encouraging bank speculators to buy them. Do see Antal Fekete (Blogs I Like) and others on how this works.
There area lot of economic analyses which also support this conclusion, but the purpose of this blog is to discuss how to make money IN retirement, and certainly not to lose money. (By the way, including all investment accounts and money market funds and bullion, I was up 4.56% for the first half. Bill Gross's Total Return Bond Fund was up a bit over 5%.) See John Hussman's recent reports on the Blogs I Like list for the economics of it all.
On the recent bond futures pullback I have bought more EDV which is Vanguard's zero coupon long T Bond ETF. It was paying about 4.25%, but some think the long bond could fall to 2%! That would make a large gain for the zeros. Another way to play this would be WHOSX which does much the same things. See Hoisington and Lacy's reasoning on John Mauldin's site. They are the owner and advisor to WHOSX. There are other more conservative ways to lengthen the maturities of Treasury's, but I have chosen EDV to use in smaller quantity.
I don't really like being so changeable in the portfolio, but in fact all this only affects 15-20% of the total portfolio which is heavily in cash and near cash via short term taxable and municipal funds including taxable and municipal money market funds. I am trying, by necessity, to run a very conservative personal hedge fund, and on balance it's working. In 2008 I was basically break even. In 2009 it was +14.3%, and for the first half of 2010 +4.6%. Not great but safely done. So far.
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