June 12, 2023

Billionaire Investor Ray Dalio says Gold is a Good way to hedge inflation and offset the devaluation of the U.S. Dollar

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As a retiree how do you hedge the current economic climate? When you are looking at the higher interest rates and economic uncertainty we have been experiencing in the United States it is hard for the individual investor to determine which direction their portfolio should turn.

Brokers and investment advisors help retirees keep their safety net of investment in their 401(k) or IRA secured by providing a balanced portfolio. But how much of that portfolio is in physical precious metals?

Billionaire Investors like Ray Dalio invest in precious metals like physical gold. Investing in gold is a "...timeless and universal..." investment that stabilizes a portfolio.

Ray Dalio says buy gold. Banking sector questionable and hedge portolios with precious metals

Squawk on the Street - Ray Dalio 6/12/23

On the question: "Do you see the U.S. Treasury Bond as a risky investment?"

Mr. Dalio response is unwavering; he says "yes, it is a very risky investment" and continues saying "Risk is not measured in whether you pay back, their only obligation is to give you money they can print". In a nutshell, what he's saying is governments will print the money they are obligated to pay back. 

Devaluation of the U.S. Dollar

A longstanding dominance in the world currency, the U.S. Dollar is seeing a shrinkage of its once dominance in the internal and external world markets.

While the economic and political turmoil in the US has an impact on the USD, the trade currency is seeing an increase since the interest rates have risen. 

A local concern for blue-collar workers is their concern that their dollar doesn't purchase as much today as it has in the past, and in addition, their incomes have not increased at the same rate as products.  

The bottom line is today investors have seen over 10 years of strength in the dollar and the stock market. Many Americans have seen a significant boost in their portfolios since Covid in 2020. But, with the escalating prices of general goods and services, how does the retiree investor hedge price inflations and find a comfortable spot for retirement? 

Proof There is Demand For Gold in the US: The Perth Mint

In a June 7, 2023 article titled: "Gold sales remain steady with strong demand from the USA" The Perth Mint of Australia says their gold and silver depository reserve has decreased and sales are holding strong. 

As the market for precious metals like gold increases, the expected counter to that would be an increased price in gold and a decrease in reserves from mints across the globe. The Perth Mint is no exception. One of the most prestigious mints in the world, The Perth Mint produces gold and silver for investors around the world. They also have their own secured vault depository and sell both precious metals and jewelry. 

Perth Mint Gold is also an exchange-traded product (ETP) and investors can purchase stock in their brokerage accounts.

Who is Ray Dalio?

Mr. Ray Dalio is the founder of Bridgewater Associates Founder. "Bridgewater Associates is a premier asset management firm, focused on delivering unique insight and partnership for the most sophisticated global institutional investors."

  • Ray Dalio founded Bridgewater Associates in 1975, starting from his two-bedroom apartment. Over 47 years, he played various roles including CEO, CIO, and Chairman.
  • Under Ray's leadership, Bridgewater became the world's largest hedge fund, known for its innovative investment strategies and unique culture.
  • Ray stepped down as CEO in 2017 and as Chairman at the end of 2021. He transitioned to a mentoring role, focusing on the Investment Committee's oversight and evolution of Bridgewater's investment strategies.
  • Ray's journey began as an ordinary kid from Long Island. He developed an early interest in investing and went on to graduate from Harvard Business School.
  • Bridgewater's research commentary, "Bridgewater Daily Observations," gained global recognition and attracted institutional investors.
  • Ray has been influential in sharing his principles for success through books, videos, and digital apps, reaching millions of people worldwide.
  • His approach emphasizes understanding cause-effect relationships, stress-testing principles, fostering successful cultures, and embracing meaningful work and relationships.
  • Ray continues to serve as a mentor, a member of the Operating Board, and a senior investor at Bridgewater, passing on his principles and insights.

Ray Dalio is a conservative who is interested in sharing his ideas and information on the market and the concerns over the devaluation of the dollar and economic and political turmoil in the country at this time. He is a very vigilant proponent of purchasing Gold as a hedge against inflation. So much so that he invested $400 million in gold in Q2 of 2020 through his hedge fund. 

Now he didn't buy physical gold, Mr. Dalio invested in two ETFs. A Gold ETF is a type of exchange-traded fund that tracks the price movements of gold. It is designed to provide investors with exposure to the price of gold without requiring them to physically own and store the metal. According to Businessinsider.com Ray purchased gold in two ETFs through Bridgewater's holdings, iShares Gold Trust and SPDR Gold Trust. These are both gold-backed ETFs and two of the largest in the world. 

Goldco Protect and Secure Your Retirment

Why Billionaires Invest in Gold?

Five billionaires that invest in gold include Sam Zell, Naguib Sawiris, David Einhorn, John Paulson, and Ray Dalio. Their belief in gold investment revolves around inflation, the economy, and plain old diversification of an investment portfolio.

The bottom line for all five investors is they see gold as a value of wealth and that cash currency is a bad investment. 

Five Reasons Retirees Should Invest in Gold and Silver Through a Gold IRA

As an investor retiree or one looking to retire in a few short years, you need to understand what is going on in the market and find ways to hedge against another market collapse. Can your retirement portfolio handle another Great Recession of 2008 or the housing bubble collapse of 2007? Here are five good reasons commonly cited as to why gold diversification is a good option for your investment portfolio:

  1. Portfolio Diversification: Physical gold is often considered a way to diversify investment portfolios. Adding gold to a portfolio that includes traditional assets like stocks and bonds can potentially help reduce overall risk and provide a hedge against market volatility.
  2. Potential Hedge against Inflation: Gold is often seen as a potential hedge against inflation. In times of rising inflation, the value of fiat currencies may decline, but gold has historically retained its purchasing power and acted as a store of value.
  3. Safe Haven Asset: Gold is often perceived as a safe haven asset during times of economic and geopolitical uncertainty. Investors may turn to gold as a perceived store of value and a form of financial insurance when they anticipate market turbulence or instability.
  4. Long-Term Value Preservation: Physical gold is considered by some as a long-term asset that can preserve value over time. It's scarcity and historical significance have contributed to its enduring desirability, making it attractive to those seeking to preserve wealth over the long term.
  5. Tangible Asset Ownership: Investing in physical gold allows individuals to own a tangible asset that they can physically hold and store. Some investors appreciate the tangibility and ownership aspect of physical gold, as it provides a sense of security and control over their investment.

It's important to note that investing in physical gold comes with its considerations, such as storage and security costs, liquidity, and potential price volatility. Before making any investment decisions, it's advisable to conduct thorough research, consider your individual financial goals and risk tolerance, and consult with a qualified financial advisor or IRA company to determine if investing in physical gold aligns with your investment strategy and retirement plans.

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