A couple of weeks ago, my asset allocation methodology substantially reduced our allocation to gold (for our conservative and moderate clients) and I wrote about it on this blog. I was reluctant to do so, because I felt sure that gold was about to take off. However, I’ve learned to trust my process, and I reduced gold and added to small cap US stocks.
Well Small cap US stocks have increased 2.6% percent since the change, and gold has dropped. Thank goodness I stuck to my discipline!
And Friday, gold dropped another $23/ounce, ending the day at around $1278. / oz. Ouch. Thankfully, our portfolios benefitted both ways.
Given the last 10 years of US monetary policy and our debt, gold will rise again. . . But we’ll wait until our methodology calls for a larger gold allocation to do more than re-balance portfolios at the current allocation targets.