After a historic rally, the price of gold fell as much as 6.3 per cent at one point on Tuesday, marking its sharpest one-day slump in more than a decade.
Billionaire investor Ray Dalio, founder of hedge fund Bridgewater Associates, has long been a vocal advocate of holding gold in investment portfolios. Last week, Dalio fielded questions about the precious metal on his social media.
In this explainer, the Post draws on his responses to unpack Dalio’s logic and advice on gold – and how other analysts view it.
Why does Dalio favour gold?
In his social media response, Dalio described gold as “money like cash” – except that, unlike fiat currency, the asset cannot be printed or devalued.
He added that gold serves as a good diversifier from stocks and bonds “when bubbles pop and/or when people and countries don’t accept each other’s credit, like in wars”.
“In other words, to me gold is the most sound fundamental investment, rather than a metal,” he wrote, adding: “Gold is money like cash and short-term credit, but unlike cash and short-term credit which creates debt, it settles transactions.”
Why choose gold over other assets?
Dalio called gold a “uniquely good diversifier” for investment portfolios, adding that while silver and platinum share some traits with gold, they lack “the same level of historical and cultural significance as a store of value”.
