I think you are right that if something very extraordinary were happening like hyper-inflation it would be a good time to assess the situation before diving in blindly into bonds and cash.

But the good thing about the portfolio is you at least have this option with the gold portion.

Nice subject.

I think hyperinflation has not been included. Equally so hyperDEflation.

The PP will not work during hyperinflation like it happened in Germany 1920′s, as you are forced to sell your gold for cash and bonds that continue to fall.

To avoid this one could just stop rebalancing once he sold 80% of his gold due to rebalancing. This way the pp is also hyperinflation proof.

The same for hyperDEflation. All cash is lend out to the government but it is possible that, even in a fiat currency world, the government would default. In the end it remains a political decission to default or print.

In that case, not gold but physical cash would become very valuable but the pp would have lost all your cash and bonds. Thus, I think it is wise to also have part of the 25% cash, in physical cash, say 5% from the 25%.

This way you are always protected with your pp against a hyperdeflation as well.

Other then that I cannot imagine any scenario where the pp would not succeed in preserving your purchasing power.