Secondly, it is very difficult to determine when Gold is relatively "rich" or "cheap", because, unlike all other non-commodity investments that we all invest in

Secondly, it is very difficult to determine when Gold is relatively "rich" or "cheap", because, unlike all other non-commodity investments that we all invest in, we cannot apply simple discounting math to either Gold is a natural currency. Going long on gold is a bet on the collapse of the U.S. dollar as reserve currency and a fall back to some sort of international gold standard. In such a case, it's price will go up by 10-100X. If the U.S. tightens the money supply and returns to more responsible fiscal and monetary management, the price will drop dramatically. The 25% in cash seems really high, especially for someone trying to live off $5 million. Such a person might want $50K in a savings account, but no need to have much more. What has been a better risk-adjusted hedge against inflation, Gold or 3-Month US Treasury Bills? Check it out. When inflation actually happens (not just inflation expectations), interest-rates rise -- that is not spurious correlation, that is just rational market behavior. In many cases (not always) inflation happens because of government subsidized credit expansion. Because loans are subsidized, you can get high inflation but low interest rates. This was the case from 2003-2008.