I must admit that reader feedback is an important component in supporting my efforts of generating blog posts on a daily basis.
Sometimes, comments can be pretty funny, yet have serious undertones. This was the case when reader Robert questioned the U.S. dollar as a reserve currency, and he had this to add:
I’m not buying gold, can’t afford it. The bargains at Wally World will no longer be cheap for those of us on Social Security. What can a poor slob do?
Even with a limited portfolio, you can participate by having exposure to gold, silver and currencies, among other investments, by selecting one no-load fund that covers most of these areas.
While many investors try to diversify into gold and a variety of currencies in the hope of catching some of the gains as the dollar loses its value, some of these sector ETFs are highly volatile and can subject you to roller coaster rides.
I have discussed this area a year or so ago, but with many new readers, it’s worth repeating. Take a look at PRPFX, with the somewhat misleading name “Permanent Portfolio.” In the world of trend tracking, there is nothing permanent, no matter how solid an ETF/mutual fund appears.
Case in point is PRPFX, which shows a steady upward climb until last year’s crash. Take a look at this 5-year chart:
It’s obvious that buying and holding would have wiped out several years of gains, while trend tracking would have preserved your capital. What does PRPFX consist of?
Here’s the definition as found on Yahoo Finance:
The investment seeks to preserve and increase the purchasing power value of its shares over the long term. The fund invests a fixed target percentage of net assets in the following investment categories: gold, silver, Swiss franc assets such as Swiss franc denominated deposits and bonds of the federal government of Switzerland, stocks of U.S. and foreign real estate and natural resource companies, aggressive growth stocks and dollar assets such as U.S. Treasury securities and short-term corporate bonds.
There you have it. It would appear to be a fund to own in uncertain times. It is diversified, and all you have to do is follow its trend and apply my recommended sell stop discipline.
Again, as much promise as this fund has, emotionally, as trend trackers we do not fall in love with it nor do we get married to it. We merely date it until it no longer serves our purpose, and then we move on. It may seem cold and harsh, but so is the world of investing. If you don’t look out for yourself, nobody else will.
Disclosure: We currently have holdings in the fund discussed above.