Just for the fun of it, I'm going to propose a fictitious endowment for a fictitious school, and we'll keep track of the school's endowment value on a quarterly basis of a typical fiscal year.
Some basic parameters of this endowment:
(1) gold = gold bullion, not shares in GLD or similar gold ETF
(2) no dividends or interest
(3) annual draw will be 4.5% of US Dollar value of corpus, taken on 6/30 of the first full fiscal year (in this case, 6/30/2010). X ounces of gold will be sold at spot on that date, corresponding to 4.5% of the value in US Dollars.
(4) school has an annual fund of $500,000, 15% of which will be directed to endowment as of 6/30 (end of fiscal). The 15% will buy x ounces of gold at spot.
(5) this portfolio challenge is not meant to be overly-technical, just fun, and perhaps we'll all learn something in the process (in regards to using gold as an endowment barometer).
Independent Academy
Endowment: 2,500 troy ounces of gold
Starting Dollar Value as of 6/30/2009: $2,321,250 (New York close of $928.50/oz.)
Dollar Value as of 9/30/2009: $2,515,000 (New York close of $1,006) +8.3% from 6/30
Dollar Value as of 12/31/2009: $2,741,250 (New York close of $1,096.50) +18.1% from 6/30
Dollar Value as of 3/31/2010: $2,781,500 (New York close of $1,112.60) +19.8% from 6/30
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