Bridgewater’s Dalio Looking to Golden Lifeboat

January 30, 2020 James Heinsman Hedge Fund News

A pile of stacked gold bars

Traditionally gold is where investors park their money in troubled times, such as inflation or a rocky stock market. But with inflation low and the market reaching historic highs, why would Ray Dalio, the superstar hedge fund manager of the world’s largest hedge fund, Bridgewater Associates, recommend a move to gold.

Dalio is predicting that gold will surge by 30%, hitting even higher than $2,000 for one ounce. He sees three reasons why this startling growth is a strong possibility for the near future:

A change in direction of the Federal Reserve: Despite lowering interest rates three times in 2019, co-CIO Greg Jensen says the Fed and other central banks will keep interest rates down, even if inflation goes past the stated target values. Others have different worries about the Federal Reserve. They fear the Feds are intervening in a dangerous way with the repo market. Bridgewater recommends gold to protect their investments in case the US dollar becomes the world’s reserve currency.

Brewing turmoil in China and Iran could lead to unstable economic conditions worldwide. When markets are risky, gold rallies as investors bale from risky assets and put on their golden life preservers.

Political turmoil is not just something that happens far, far away. With a contentious US election rearing its head just beyond the horizon, the USA might be in for some bumpy rides. There could be a strong reaction to a Bernie Sanders nomination in the stock market as investors worry about how Sanders’ policies could affect the economy and business world. Once again, gold acts like an oasis in a desert of uncertainty.

Bridgewater sees trouble a foot just below the surface of the country’s longest expansion in its history. The political climate could easily interfere with the economic climate, making gold a safe bet in troubled times.

Bridgewater Associates, Gold, Ray Dalio,

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