Billionaire Ray Dalio said that gold is “certainly” more of a safe haven than the US dollar and the metal’s record-setting rally echoes the 1970s, when it surged during a time of high inflation and economic instability.
The remarks from Dalio – who founded the hedge fund firm Bridgewater Associates – came during an appearance at a conference on Tuesday, when he was asked whether he agreed with the view of Citadel’s Ken Griffin that gold’s rise reflected anxiety about the US currency.
“Gold is a very excellent diversifier of the portfolio,” Dalio said during a panel discussion with Bloomberg’s Lisa Abramowicz at the Greenwich Economic Forum in Connecticut. “So if you were to look at just from the strategic asset allocation mix perspective, you would probably have as the optimal mix something like 15 per cent of your portfolio in gold.”
The federal government shutdown and speculation that the Federal Reserve will keep cutting interest rates even as inflation remains elevated has pushed the price of gold up by more than 20 per cent since the end of July to roughly US$4,000 an ounce. Meanwhile, the dollar has weakened against every major currency this year after the uncertainty unleashed by President Donald Trump sent it into the biggest slide since the 1970s, not long after the US abandoned the gold standard.
Dalio said he sees gold as a strong store of value at a time of rising government debt burdens, geopolitical tensions and the erosion of confidence in the stability of national currencies.
He noted that gold’s resurgence mirrors the early 1970s, when it also rose in tandem with stocks.
