The world's largesthedge fundhas spoken for the second time in two weeks about gold as an important diversifier for investment portfolios, writes Kitco News.
At the World Economic Forum meeting in Davos, Switzerland, Bridgewater Associates' founder Ray Dalio recommends that investors have a global, diversified portfolio that includes gold in the current situation. “Cash is worthless,” he declared in an interview and warned that investors should get rid of cash as central banks continue to print money. At the same time, he stated that gold serves as a diversifier for the portfolio. He does not consider bitcoin to be a worthy store of value like gold due to its volatility, but reminds that central banks also favor gold as a store of value. He says:
“What do central banks hold as reserves? What is tested and works? They have gold. Gold is a reserve currency and has been for a thousand years.”
Although Dalio sees the possibility of a recession as low in 2020, he urges investors to stay alert. He views the current monetary policy as a risk due to its weaker effectiveness when a downturn comes. According to him, during periods of negative interest rates, it becomes relevant to consider preserving the value of one's wealth.
Dalio has also been favorable towards gold. He has recommended that investors allocate 5-10% of their portfolio to gold for nearly three years.
Dalio's latest comments came less than a week after comments from Bridgewater Associates' Chief Investment Officer Greg Jensen. Jensen said in an interview with the Financial Times that he sees the price of gold rising to $2000 an ounce.
Jensen said that he sees the price of gold rising throughout 2020, as inflation increases, but central banks – particularly the Federal Reserve – will stay out of the game. According to him, the Fed is not trying to preemptively prevent inflation.
Jensen also says he is optimistic about gold, as geopolitical uncertainty dominates financial markets and investor sentiment:
“Considering geopolitical conflicts, how many foreign entities really want to acquire dollars? What will they then acquire? The importance of gold is increasing,” he said.
