Gold is not a word frequently utilized by hedge fund managers and when it is, it typically is in reference to an ETF or mining stock. However, Ray Dalio, the founder and Chief Investment Officer of a very large and successful hedge fund management group called Bridgewater Associates, which manages in excess of $160 billion, for about 350 of the largest and most sophisticated institutional clients on the planet, published an open letter on LinkedIn earlier this week. The company’s extensive research confirmed the Fed’s dwindling ability to affect monetary policy, due mainly to an absence of economic instruments and Ray concludes that investors should buy gold in order to survive a ‘paradigm shift’ in global markets. With quantitative easing out of gas and tools, the shift he’s referring to is the growing conflict between socialists and capitalists.
Dalio believes that Fed monetary policy has vacillated between helping debtors and creditors, but at each other’s expense and the next swing could lead to a new era of currency depreciation and debt monetization. “The big question worth pondering at this time,” said Dalio, “is which investments will perform well in a reflationary environment accompanied by large liabilities coming due and with significant internal conflict between capitalists and socialists, as well as external conflicts.” No one will be happy with required changes, but he sees the way out happening when interest rates are pushed so low that investors holding debt will sell out and simultaneously, the large need for money to fund liabilities will contribute to the ‘big squeeze.’”
He points out that, “There will have to be some combination of large deficits that are monetized, currency depreciations, and large tax increases, and these circumstances will likely increase the conflicts between the capitalist haves and the socialist have-nots.” He goes on to say that, “In such a world, storing one’s money in cash and bonds will no longer be safe.” He suggests that, “It’s a good time to ask what will be the next-best currency or storehold of wealth to have when most reserve currency central bankers want to devalue their currencies in a fiat currency system.” The most immediate, proven, and obvious answer is GOLD!!!
American Bullion has been helping investors understand and utilize the benefits of physical gold for more than a decade. In addition, they pioneered the Gold IRA Industry. So if you have an old 401(k), 403(b), TSP, SEP, Traditional IRA, Roth IRA, SIMPLE IRA, or any other qualified retirement plan, call American Bullion at (800) 653-GOLD (4653) to learn how quick, simple and beneficial a rollover or transfer to a self-directed Gold IRA can be.
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.