Prominent investor Ray Dalio expressed strong support for gold as the premier asset for storing wealth during a recent interview. His remarks came as gold prices experienced a significant recovery after a brief decline triggered by market selloffs.
Gold as a Stable Investment
Speaking to CNBC at the World Governments Summit in Dubai, United Arab Emirates, Dalio emphasized the safety of gold investments. He noted that gold "does not change by the day", making it a reliable store of value. This perspective is particularly relevant given the recent historic selloff in gold, which led to widespread price reductions.
Market Performance Insights
Dalio highlighted the metal's performance, stating, "Gold is up about 65% from a year ago, and down about 16% from its high." He cautioned against the common mistake of focusing on short-term price fluctuations, advising instead on strategic portfolio allocation.
Strategic Allocation for Institutions
According to Dalio, central banks and sovereign wealth funds should prioritize determining the appropriate percentage of gold in their portfolios rather than timing purchases. He explained, "Because gold is a diversifier, when the bad times come along it does uniquely well, and when the good times are prosperous, less so, [but] it's an effective diversifier." This approach helps mitigate risks in other portfolio segments.
Importance of Diversification
The investor stressed that the most important thing is to have a well-diversified portfolio. This strategy is crucial in navigating uncertain economic landscapes and potential conflicts.
Warning of Capital War
Dalio issued a stark warning about escalating geopolitical tensions and volatile trade markets, suggesting the world is on the "brink of a capital war". He elaborated, "That means not in, but it means we are quite close to [capital war], and it would be very easy to go over the brink into a capital war, because there are mutual fears." This context underscores the value of gold as a hedge against such risks.
Gold Price Rebound Details
Gold prices rebounded strongly, increasing for the second consecutive day. The spot price regained the $5,000 per ounce mark, rising over 2% despite a strong US dollar. Specifically, spot gold rose 2.2% to $5,044.74 per ounce, following a 5.9% gain, marking its largest daily increase since November 2008.
Record Highs and Futures
Gold recently reached a record high of $5,594.82 per ounce last Thursday. US gold futures for April delivery surged 2.7% to $5,067.0 per ounce, reflecting robust market activity.
Indian Market Performance
In India, MCX gold prices also rallied. April futures contracts ended higher by ₹7,307, or 5.16%, at ₹1,53,650 per 10 grams. Similarly, MCX silver prices for March contracts jumped by ₹30,739, or 13.01%, closing at ₹2,67,000 per kg, indicating broad-based strength in precious metals.
