People add gold to their investment portfolio for all kinds of reasons… it’s pretty, they accidentally read Zero Hedge, their Mom suggested it, or they plan on trading it for food after the apocalypse.
Those are all obviously terrible reasons.
This is true in part because there is really only one good reason to own any gold at all. Dentistry.
Adding Gold to the Portfolio
Recently Winnie and I had the pleasure of adding His & Her crowns to our molars. (Better than wedding bands!)
Alas, post root-canal my tooth broke while nomming on some yummy bacon in Vietnam… so my tooth was no longer a good candidate for a gold crown. However, thanks to the wonders of community property, we now have some gold in our portfolio.
Winnie’s new tooth
Taiwan Dentistry
Taiwan Dentistry is great.
My root canal was done by a PhD graduate from the University of Minnesota (go Big Ten!) for a total cost of about $25. This occurred over 4 separate visits, each with a copay of ~$6 as I am now covered by the national health system. (Dentists receive about $100 USD reimbursement for the procedure, per Dr.) (Even when I didn’t have insurance, the costs were very reasonable.)
To support the crown a post was required. This wasn’t covered by insurance and had a total cost of 6,000 TWD ($200 USD.)
Nice post!
When my tooth broke (mmm, bacon) it was recommended that I have crown lengthening surgery to expose more tooth. This had a cost of 12,000 TWD ($400.) Instead, I sought a 2nd opinion which said no surgery was necessary.
Ultimately I got a Zirconia crown for a total cost of 25,000 TWD ($833 USD.) Winnie’s post and gold crown had a total cost of 27,000 TWD ($900.)
Nice view, but I only saw the ceiling
How much gold?
Naturally I was curious about the dental benefits of gold vs other materials, but not nearly as curious as I was about the financial aspects.
As I understand it, a typical gold crown uses 16 carat gold which is ~60% pure. Total gold weight is about 1/10 oz. At today’s prices, total gold value is ~$75 USD.
This means about 0.0000001% of our total investment portfolio is now precious metals. (See full portfolio details here.) This will definitely help if inflation rears its ugly head. Or the apocalypse, whichever comes first. It’s not as much (nor as transactional) as a gold coin, but it’s better than nothing… and if not, at least it’s pretty.
Do you have Gold in your portfolio?
How about some Platinum? bling bling
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For reference, I think we paid close to $2000 for a very ordinary run of the mill root canal and crown here in the US with no dental insurance. And that’s with our very moderately priced dentist! So far I’m gold-free (in my mouth and my investment portfolio). :)
You should just go for the full gold grill. Very chic. Google images for “gold teeth” has some inspiring options.
Oh wow, I didn’t know you guys lived in Taipei. The national health insurance here is ridiculous here and I read was #1 in the world.
It is top notch.
Ha, awesome! I never had the desire to buy gold (or to get any in my mouth either). But growing up in Baltimore city I was definitely in the minority on the latter…
What an amazing price on a root canal. I thin you owe that dentist a beer!
Loved to the crack about Zero Hedge. Read those guys at your own peril.
The pit of despair
Most of it is fear based reporting
Absolutely agree
I’ll second that. Gold is useless as an investment as it’s basically just speculation due to its arbitary value assignment.
Yeah zero intrinsic value beyond dentistry, electronics, etc… I’m looking forward to the day when Elon Musk brings an asteroid back to earth loaded with gold / platinum / etc… and they all become as valuable as aluminum.
Haha I was hoping you didn’t actually add a bunch of gold to your portfolio. My first thought was April fool’s but it’s obviously not the right month (fool who?).
Great prices for sure!
https://portfoliocharts.com/portfolio/golden-butterfly/
I can be interesting how different mixes of assets preform. Including gold.
If only it were also useful.
Amen corner on gold as part of an asset class diversified portfolio. Portfoliocharts.com has several portfolio examples that illustrate the importance of gold.
Nice post GCC! No joke, I just broke my crown eating some “youtiao” in Taipei. Any good dentist you recommend? lol
If you want to send me an email I can share the dentist we used.
My mom is getting a new crown now. The old one broke. It will cost about $1,000. The cheap dental insurance will help pay for the root canal, but nothing for the crown. This is a bit cheaper than normal because she is having this done at a university. I’m surprised that it cost almost the same as Taiwan. I thought it’d be cheaper there.
Maybe we should look into the local dental school if we need another in the future.
Many US dental school are even more affordable. My school I graduated from two years ago charged my patients less than $800 combined for root canal and a crown.
My wife and I live in Los Angeles, CA. My wife is Taiwanese and has the national health insurance. On a recent trip to Taipei, she developed a urinary tract infection. We contacted the hotels’ front desk for help and they directed us to the closest general hospital. We arrived at the hospital at 7am. The whole process of taxi ride, checking in, seeing the doctor, lab test, post test consult, getting medication at the hospitals’ pharmacy counter and taxi ride back to the hotel took 45 mins!?! (I had assumed our whole day would be spent at the hospital, and we had a flight to catch that afternoon). Out of pocket medical cost: a little shy of US$10
In the US you would have received bills over $10,000 even months later… one from the hospital, one from the Dr, another from the lab… In Taiwan: $10, and you get the full bill when you leave. The US medical system is seriously broken.
I think this post is your crowning achievement.
At least when compared to my post on child birth.
About 5-10 years back I foolishly started buying silver, mostly in blocks of one oz coins, 20 to a block. Built up a small collection of those bricks that are sitting in my safe. Just checked silver prices; they are worth less than what I paid for them. Buffett was spot on.
At one time I guess I was thinking about their suitability during the upcoming zombie apocalypse, to exchange for food and water. But since I have a reasonable collection of arms I guess I’ll just take what I need from all the hoarders and survivalists who love to talk about where as well as how much of a stash they have laid up.
Arms, ammunition, and gasoline are the currency of the future… as best I can tell from Fury Road.
Loved the humor. I also have a bit of gold in my mouth. Suffice it to say that it was much more expensive than what you all paid. :-[
Gold can be a part of a well balanced portfolio. It’s simply insurance and can add returns to your portfolio during various periods. After a lot of research, I’ve added some to my portfolio even while being FIRE. It’s certainly the target of lots of ridicule but various folks and including you. People much smarter than I believe it should be part of ones portfolio and I tend to agree. Always enjoy your posts even if I don’t agree :-)
People less smart than you also believe it should be part of ones portfolio.
We just added $75 worth to our portfolio :)
Wow! Congrats on passing Mark Zuckerberg!! ;)
HAHA – I was really expecting to be surprised here with some recommendation to beef up my portfolio with gold + Bitcoin. This is more reasonable. I’m also so tempted to read Zero Hedge now for context…
HAHA – I was really expecting to be surprised here with some recommendation to beef up my portfolio with gold + Bitcoin. This is more reasonable. I’m also so tempted to read Zero Hedge now for context…
Hard to store bitcoin in your teeth though
Absolutely agree about great dental and medical care in Taiwan for amazing prices. I lived there for a few years and plan on returning this winter to go full freelance. I had to take a trip the ER room once and get stitches and was shocked that the total cost for anesthesia, stitches, band aids and pain meds was less then $30 US.
It is incredible. The emergency room prices in Taiwan are so reasonable, and you can even ask in advance how much something is going to cost and they’ll give you a quote.
From 1971-1980, gold outperformed the Dow +1873% to -2%. From 1980-1999, Dow outperformed gold +1184% to -70%. From 1999-2011, gold outperformed the Dow +596% to +2%. From 2011-now, the Dow has outperformed gold +118% to -27%. Everything goes through cycles. When the Dow/gold ratio gets historically high, I buy gold (and silver), knowing that the ratio must come down. When the ratio gets low, I shift back to mutual funds. The long-term trends are rather obvious, so I don’t know why you would ignore it. I’m not claiming to know exactly where/when the ratio will turn ahead of time, but it seems to take 10-20 years in each direction. Plot Dow/gold over time, and a year or two after the ratio has turned it will be obvious. Then you know what to switch your investments to in order to have ridiculously larger gains over the next decade. The crazy gold bugs think the world monetary system is going to collapse and only gold will be money soon. That’s an overreaction, but then again, so is ignoring the historical performance of gold entirely…
We just added $75 worth. What does the current Dow/gold ratio say about that?
The current ratio is about 19. It’s only ever been higher between 1997-2006. The all time high was 44 in 1999. The all time low was 1 in 1980. The average value since gold became freely traded in 1971 is about 13. So… it’s above the historical average and has only been this high during a 9 year period that included the stock market bubble of the late 90’s (which was followed by a 40% Dow crash). The current trend is upward since the 2011 low of about 6, but it also appears to be flattening and may begin to lower soon, which would favor gold. I’m buying more gold than mutual funds here (I’m at 22% gold and actively buying). The downside is 57% less value if the ratio returns to 44 but 1800% more value if the ratio returns to 1. The latter result will be true even if the ratio continues up to 44 and then drops to 1, so this is definitely a safe buying place for gold. By the way, it helps to plot ratios on a log scale since the actual value is deceptive. For instance, a change from 40 to 35 is a 14% relative gain for the denominator (40/35) but a change from 5 to 1 is a 400% relative gain for the denominator (5/1).
The crown and post prices about 40-60% less than a typical US dentist would charge. The root canal ($124) was more like 90% less. Overall, it’s not a huge savings relative to the medical care side. That’s the truly broken system in the US.
I’m saddened that the gold was no longer an option after your tooth fractured. You would have doubled your hedge against the Apocalypse and dental caries. Ain’t nothing better than gold when it comes to dentistry.
Yeah, I really wanted to go for the gold. I argued with the dentist about it a bit, but she was clear that the weight and size would be excessive and would place undue stress on the remaining tooth structure. So sad.
Glad to hear everything worked out. Great post(no pun intended) as usual.
I’ve seen some interesting results of dental work done around the world. My advice for having dental work done in other countries is to not look for the cheapest of the cheap. Also be very afraid if you see too much technology(I know that sounds strange but some of the new tech is awful and even worse in the heads of a bad dentist) it’s used for marketing and results in a poor product. Don’t do crowns in a day because if they were good every dentist would be making them(again questionable tech that can be terrible in the wrong hands). Don’t do fast anything implants, braces, dentures because again if good dentists could do that and get a good result they would. If they are pushing a 100 people through the office an hour chances are it’s probably not going to be a quality focused office.
All that said their are definitely exceptions to the rules. The field changes so fast and there are many good new products. Oddly enough almost all dentist will agree that a gold crown is a good treatment and dentists have been placing them for probably 90 years. Final words of wisdom is that not all gold has value—gold foil fillings didn’t work worth a crap🤔.
$750 and 1 hour for a lithium di-silicate crown photo-tomographed, milled, fired and fitted in Aus. Cheaper in Dubai, Delhi, … Still good after 3 years.
Having a few gold coins when travelling is good insurance against credit / debit cards not working.
First thing I thought of when I saw the title of your post was that it seemed kind of soon to already be April 1st, again. After reading it, I’m grateful you haven’t gone off the deep end. It’s surprising there hasn’t been more backlash in the comments…
As with housing, I only consider my portfolio to include that which I’d be willing to sell if need be. Something that close to the lingual nerve doesn’t qualify in my book.
(That said, I love the title.)
I agree that gold alone is a terrible investment choice, but it can actually be a great investment choice as part of a broader portfolio. It tends to go up in value during a downturn, making it particularly valuable. Portfolios with gold typically have higher withdrawal rates than those without. So consider a roughly 10% portfolio allocation to gold!
of course…who doesn’t have gold in their portfolios ?
Thanks for a great blog, but this is one topic I don’t agree on. I wrote a post which highlights that a relatively small allocation to gold has improved the performance over just stock investments during the last five decades.
(link removed)
We probably disagree on a few things. For example, making spammy comments on random blogs.
I’ve been studying Risk Parity portfolios. Gold is not correlated with the stock market so it help stabilize a portfolio which mean (that plus other uncle related assets)it allows for a HIGHER safe withdrawl rate. Once in retirement or nearing you want to maximize the safe withdraw rate not the returns which believe it or not are different asset allocations.
>Once in retirement or nearing you want to maximize the safe withdraw rate not the returns
Maybe. It is really sequence of returns that matter. Gold might help in the bad situations… but 20 years from now the gold heavy portfolio will most likely be worth (substantially) less.
I only bring it up to help you and your readers. I did not understand this either until studying Risk Parity. The Gold could go down at exactly the 20 year mark, as could markets. The point is that by avoiding large draw downs the retiree comes out ahead. There are tools like Portfolio Visulaizer and PortFolio Charts that can help you determine the safe withdrawl rate with different asset allocations. If you stay in the mind set of what gives the biggest returns, you miss the point. Yes equities don’t well over the long term. But 100% allocation doesn’t give the best safe withdrawl rate over a long time period l, which is what you are after in retirement. Once in retirement it’s time to take some cards off the table and stop gambling on the 100% market (focusing on the biggest returns). I am talking about diversification in uncorrelated and negatively correlated assets so you always pulling money out of an asset that is currently doing well and rebalancing into assets that aren’t doing well (buying low) using assets that are currently outperforming. As I alluded to the big idea is that the. max return allocation when drawing down on a portfolio is NOT THE SAME as max safe withdrawl rate allocation.
Maybe. Depends on how much gold you are talking about. Anything more than 1% or so and this is bad advice wrapped in modern portfolio theory verbiage.
Safe withdrawal rate is defined by the worst possible historical data point. Optimizing your portfolio around the very worst that has ever happened guarantees poor future results.
There are better ways to hedge against the worst case. For most people the simplest way is social security.
PV and PC are nice tools. cFIREsim is also good.
It’s not about building a portfolio around the very worst, nor should someone build a portfolio around the very best time period. You don’t need PV or PC to be 100% stocks. They help understand averages and asset correlation performance over multiple economic cycles/conditions: high growth high inflation, deflationary periods, and retraction with inflation. You mentioned sequence of returns. Diversification helps with sequence of returns risk. We have the tools now that diy investors in the 90s didn’t have when to 100% sp500 was good advice , let’s use them and improve our Safe withdrawl rates
Good luck