Don’t Hate the Asset, Hate the Price!

The idea of owning gold miners last year had become laughable by the time the final bell had rung. The sector was down more than 50% versus the S&P 500′s total return of 30%. This disparity in performance was incredibly extreme, it’s highly irregular to see any one industry group within the stock market behave in a way so contrary to the prevailing trend. 

But that was last year, and this year something new is already underway: Ladies and gentlemen, the gold miners are on fire.

DYI Comments: For those of you who need to rebalance or purchase gold mining companies for the first time prices are reasonable.  The secular bull market is still intact for gold and its mining stocks despite the Dow/Gold ratio being pricey.  At 13.12 to 1 gold has not made its ultimate top with the ratio below 5 or less to 1.  Since it is pricey my model portfolio is at 25% for the miners as opposed to the days of shooting fish of 10 years ago when I was at my maximum of 60%.

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 01/1/14

Active Allocation Bands 10% to 60%

45% - Cash -Short Term Bond Index - VGPMX

25% -Gold- Precious Metals & Mining - VBIRX

20% -Lt. Bonds- Long Term Bond Index - VBLTX

10% -Stocks- Equity Income Fund - VEIPX

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