Ray Dalio of Bridgewater Associates on stage at CNBC's CONVERGE LIVE in March.
Courtesy of CNBC
Ray Dalio, founder of Bridgewater Associates, said investors should invest up to 15% of their portfolio in gold, even as the precious metal rose to an all-time high of over $4,000 an ounce.
“Gold is a great portfolio diversifier,” Dalio said Tuesday at the Greenwich Economic Forum in Greenwich, Connecticut. “If you look at it just from a strategic asset allocation perspective, you would probably have about 15% of your portfolio in gold… because it's an asset that does very well when the typical parts of the portfolio go down.”
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Gold futures since the beginning of the year
Gold futures last traded at $4,005.80 an ounce. Prices have soared more than 50% this year amid a flight to safety due to widening budget deficits and rising global tensions.
The billionaire investor compared today's environment to the early 1970s, when inflation, high government spending and heavy debt burdens undermined confidence in paper assets and fiat currencies.
“It's very similar to the early '70s…where do you put your money?” he said. “If you hold money and put it in a debt instrument, and when there is such a supply of debt and debt instruments, it is not an effective store of wealth.”
Dalio's recommendation contrasts with typical portfolio recommendations from financial advisors, which encourage clients to hold mostly stocks and some bonds in a 60:40 ratio. Alternative assets like Gold Because of the lack of income they generate, securities and other commodities are typically considered to make up a low single-digit percentage of a portfolio.
Jeffrey Gundlach, CEO of DoubleLine Capital, also recently recommended a high weighting of gold – up to 25% in the portfolio – as he believes gold will continue to excel due to inflationary pressures and a weaker dollar.
Dalio said gold provides a special hedge in times of currency devaluation and geopolitical uncertainty.
“Gold is the only asset that someone can own and you don’t have to rely on someone else paying money for it,” he said.
Correction: Ray Dalio said, “Gold is the only asset anyone can own, and you don’t have to depend on someone else to pay you money.” An earlier version of this article misrepresented the quote.