If You Don't Own Gold, You Know Neither History Nor Economics - Ray Dalio
In a recent series of interviews, billionaire investor Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund, has sounded the alarm on an impending economic paradigm shift that could dramatically reshape the financial landscape. Dalio, known for his deep understanding of economic history and market cycles, is urging investors to reconsider their portfolio strategies, with a particular emphasis on gold allocation.
"If you don't own gold, you know neither history nor economics," Dalio emphatically stated, underscoring the precious metal's crucial role in navigating the turbulent economic waters ahead.
Dalio's concerns stem from what he perceives as unsustainable levels of government and corporate debt, coupled with aggressive central bank policies that are devaluing currencies. He predicts that within the next 18 months, we may witness a significant economic contraction and a restructuring of debt and finance that will catch many unprepared.
"We are currently in the late and perilous phase of the long-term debt cycle," Dalio explained. "The levels of debt assets and liabilities have soared to such heights that it has become challenging to offer lender-creditors a sufficiently high interest rate in relation to inflation."
The investment guru foresees a challenging scenario where the U.S. Treasury will be forced to issue substantial amounts of debt, potentially surpassing available demand. This could lead to either significantly higher interest rates or extensive money printing by the Federal Reserve, further devaluing the currency.
In light of these projections, Dalio is advocating for a minimum 10-15% allocation to gold in investment portfolios. He views gold as a crucial diversifier and a hedge against currency devaluation and geopolitical uncertainties.
"Gold serves a purpose. It is first of all, a diversifier against other assets," Dalio elaborated. "We have this risk on, risk off thing. We also have a monetary system... There's a risk there."
Dalio's recommendation comes at a time when global central banks are acquiring record amounts of gold, with 2024 seeing the highest levels of acquisition since 1967. This trend, coupled with gold's historical performance during times of economic turmoil, adds weight to Dalio's advice.
Source: https://www.jpost.com/