XCH Miner

03, Dec

Billionaire investor Ray Dalio called gold a "unique and excellent diversification tool" and urged investors to ride the wave.

Ray Dalio's View on Gold: A Unique Diversification Tool for Portfolios

Facts:

Billionaire hedge fund investor Ray Dalio commented on the importance of gold in today's economic context and offered advice to investors interested in the precious metal.

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On social media, Dalio pointed out that gold has a unique and resilient diversification role in investor portfolios due to its historical status as a non-legalized cash medium of exchange.

“For me, gold is a fundamental investment, not a metal,” Dalio emphasized, explaining that unlike cash and short-term credit, it is used for settling transactions that do not incur debt.

Compared to other instruments, such as artificial intelligence (AI) stocks like NVIDIA, Dalio assessed that they rely heavily on their pricing-future cash flow relationship, which could change in the short term in the event of a bubble burst.

In contrast, he believes gold is “a very effective diversification tool against other investments,” and that if investors and banks turn to gold for diversification purposes, its price will have to reach higher levels due to its scarcity.

Finally, Dalio stated that as a portfolio diversification tool, due to its negative correlation with stocks and bonds, he recommends a 15% allocation "because this provides the optimal portfolio return-risk ratio."

Why it matters:

Dalio predicted the 2008 subprime mortgage crisis and, with over 47 years of experience managing at Bridgewater Associates, is considered a highly respected voice in financial analysis.

His analysis can be seen as providing wise advice to investors, helping them navigate the current gold craze, which has led many to bet on the commodity's upward trend as it has reached record price levels.

Even the retail sector has joined the gold rush, with queues forming in several countries, leading some experts to suggest that these signs indicate the gold frenzy has reached a tipping point.

Looking ahead:

Gold's status as a safe haven seems unquestionable. Current geopolitical uncertainty, along with the possibility of a debt crisis and stock market correction, is working together to maintain high demand for this asset, which can serve as a portfolio diversification tool during turbulent times.