Below the streets of Lower Manhattan, in the vault of the Federal Reserve Bank of New York, the world’s largest trove of gold — half a million bars — has lost about $75 billion of its value. In Fort Knox, Ky., at the United States Bullion Depository, the damage totals $50 billion.Read the rest here.
And in Pocatello, Idaho, the tiny golden treasure of Jon Norstog has dwindled, too. A $29,000 investment that Mr. Norstog made in 2011 is now worth about $17,000, a loss of 42 percent.
“I thought if worst came to worst and the government brought down the world economy, I would still have something that was worth something,” Mr. Norstog, 67, says of his foray into gold.
As longtime readers will already know I am a proponent of the Permanent Portfolio and as such, despite my occasional prognostications on future events, my only actual investment advice has been to maintain an agnostic approach towards the future and be prepared for any eventuality. To which end the PP's radical diversification is the best vehicle that I have so far found. If gold is indeed entering a secular bear market (of which I am far from convinced) that would be good news for the broader economy. And in a Permanent Portfolio one accepts that at any given time at least one of the asset classes you are holding will be a stinker. That's the price you pay for not trying to outsmart the markets with all of the attendant risks.