I have received concerns about the recent drop in gold price from a few readers who had implemented the Permanent Portfolio. This is what fear can do to an investor. If they had the right perspective, the drop in gold price would have a lesser impact on their psychology. What is the right perspective? It is to look at how did the overall portfolio perform, and not how gold performed. The answer is all in this chart:

The simulated Permanent Portfolio was started in Jan 12 and despite the drop in gold price during the course of the year, the Permanent Portfolio had held up its value. Most importantly, while Gold price tanked in Apr 13, the impact was a slight dent to the overall portfolio even though it held 25% in gold. If a Permanent Portfolio investor looks at the gold price, he or she will definitely be ...