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Where BlackRock, Dalio, and Gundlach Stand on Gold Holdings

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Dalio increased his stake in gold

In 4Q17, billionaire hedge fund manager Ray Dalio, who runs Bridgewater Associates, increased his stake in the world’s two largest gold-backed funds—the SPDR Gold Shares ETF (GLD) and the iShares Gold Trust ETF (IAU).

Gold generally performs well when economic uncertainty rises. Dalio’s increased position in GLD reflects his views that the risks of a recession in the next 18–24 months are rising.

In 2017, Dalio recommended that investors keep 5%–10% of their portfolios in gold. Billionaire fund manager Paul Johnson also maintained his holdings in GLD in 4Q17.

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Gundlach’s views

Jeffrey Gundlach, DoubleLine Capital’s CEO and chief investment officer, shared his views on the current market environment. While discussing its commodity fund’s strategy in January 2018, he noted that commodities are currently among the best buys. He also believes that the weaker US dollar should boost commodities such as gold.

BlackRock: Gold as a volatility hedge

Russ Koesterich, the head of asset allocation for BlackRock (BLK), noted that the fund increased its holdings in gold in the last few weeks as volatility has picked up. He said that the fund’s gold position is ~5.0%, which he views as being right for the fund.

Koesterich believes that volatility is on the rise due to a more aggressive Federal Reserve policy tightening and rising inflation. He considers gold to be a good hedge against volatility risk.

A positive sentiment toward gold would also boost miners such as Royal Gold (RGLD), Goldcorp (GG), Kinross Gold (KGC), and Coeur Mining (CDE), which are leveraged plays on gold (JNUG).

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