With interest rates stalling or possibly coming down next year in the US as well as Eurozone, earning interest on cash is not the best option for me. Also remember that by doing so, you are just keeping up with inflation and not making any real money and we invest to make money not to keep it. You seem to be concerned about preservation of capital but the other side is to make money out of it as well.
With 100% cash, there are lot of ways you can go wrong. In case of soft landing where economy slows causing inflation to come down and so interest rates will come down too. Gold will decline as inflation goes down so your precious metal positions and cash positions will both get a beating.
Now to gold and precious metals. It may have been a good argument to buy precious metals 4 years back because of price stability of gold back then. Now the volatility there is worse than S&P500. Let me ask you, gold today hit the lows of $575. Did you buy some gold via ETFs or bullion? What percentage of your portfoli is in gold right now? Most people I know didn’t buy gold today because they are just scared of volatility. All money is going from high volatility commodities to low volatility blue chip equities.
I think this is not a matter of knowledge or intelligence. This is a matter of perspective and personal risk tolerance that varies from person to person. I try to be balanced in my investment strategies and that is what this thread is all about.
