Finally Doing Some Rebalancing

My wife and I have finally decided that the time has come to buy a house in the country.

We're going to sell some of our gold in exchange for a small house.

We expect to spend one third of our gold on the house, and one sixth on refurbishing. All together, we'll be spending half of our gold on the house.

The process of refurbishing is expected to take three years, and will happen in stages.

Our motivation for this rebalancing is driven mainly by a desire to "get on with it". We can't wait for ever for the perfect opportunity. So, we're taking advantage of the latest boost in gold prices to get a foot in the door.

We've seen the following changes in market conditions since my assessment at the start of this:

The Dow/Gold ratio has declined since January, which means that gold has outperformed the Dow:

• Jan 2017 = 16.4
• Jan 2019 = 18.2
• Jan 2021 = 16.2
• Jan 2023 = 18.8
• Jan 2025 = 16.3
• Sep 2025 = 13.5

The PSI20/Gold ratio is also down. But only slightly. It was at 79, and it's now hovering around 77.

Gold has also outperformed real-estate. Our apartment in Porto is up 50% since 2021, while gold is up 100%:

• Jan 2017: 10 part real-estate, 20 part gold, 5 part cash - for a total of 35
• Jan 2019: 15 part real-estate, 20 part gold, 5 part cash - for a total of 40
• Jan 2021: 20 part real-estate, 30 part gold, 3 part cash - for a total of 53
• Jan 2023: 24 part real-estate, 33 part gold, 3 part cash - for a total of 60
• Jan 2025: 24 part real-estate, 40 part gold, 6 part cash - for a total of 70
• Sep 2025: 30 part real-estate, 60 part gold, 5 part cash - for a total of 95

Looking forward in time, we'll see the following changes due to our rebalancing. However, only time will tell if we made a financially smart move.

• Oct 2025: 50 part real-estate, 40 part gold, 5 part cash - for a total of 95
• Jan 2027: 60 part real-estate, 30 part gold, 5 part cash - for a total of 95

Only when we check back in 2028 will we know exactly how smart or stupid this was. If real-estate outperforms gold, we've been "smart". But if gold outperforms real-estate, we've been "stupid".

British gold sovereign

By Benedetto Pistrucci - Own work, Public Domain, Link