Ray Dalio, the founder of Bridgewater Associates, says that investors should consider putting up to 15% of their portfolios in gold as the metal hits a record high of more than $4,000 an ounce. Speaking at the Greenwich Economic Forum in Connecticut, Dalio called gold “a very excellent diversifier” because it tends to perform well when other parts of a portfolio lose value. Indeed, gold futures are up more than 50% this year as investors search for safety amid growing government deficits and global tensions.
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Interestingly, Dalio compared the current financial climate to the early 1970s, which was a period of high inflation, significant government spending, and heavy debt that reduced confidence in paper assets and currencies. He warned that traditional debt investments are not reliable stores of wealth when governments are issuing so much debt. “It’s very much like the early ’70s,” he said, questioning where investors should put their money in this environment. His comments highlight why gold is becoming a more attractive choice during uncertain economic times.
Notably, his 15% recommendation is a far larger gold allocation than the typical advice from financial planners, who usually recommend a 60% stock and 40% bond portfolio with only a small portion in commodities. In addition, Dalio’s view is shared by DoubleLine Capital CEO Jeffrey Gundlach, who recently suggested that investors hold up to 25% of their portfolios in gold. Nevertheless, Dalio explained that gold stands out as a hedge in times of monetary debasement and global instability, saying, “Gold is the only asset that somebody can hold and you don’t have to depend on somebody else to pay your money for.”
Is GLD Stock a Good Buy?
Using TipRanks’ technical analysis tool, the indicators appear to suggest a positive outlook for the SPDR Gold Shares ETF (GLD). Indeed, the summary section pictured below shows that 15 indicators are Bullish, compared to one Neutral and six Bearish indicators.
