Why Ray Dalio Recommends Holding 5%–10% in Gold



Ray Dalio’s investment in gold

Ray Dalio, chair and chief investment officer of Bridgewater Associates, has maintained the fund’s stake in the SPDR Gold Shares ETF (GLD) and the second-largest physical gold-backed ETF, the iShares Gold Trust ETF (IAU). Bridgewater Associates kept its holdings at 3.91 million shares in GLD and 11.31 million shares in IAU in the third quarter, according to Fintel.

Due to weaker gold prices in the third quarter, the value of the fund’s holdings in GLD fell from $463.8 million to $440.8 million. GLD and IAU formed 4.57% and 1.3%, respectively, of Bridgewater Associates’ holdings at the end of the third quarter.

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Dalio’s conviction in gold

Dalio’s Bridgewater Associates built its position in gold ETFs mainly after the second quarter of 2017. During the third quarter of 2017, the fund increased its holdings in GLD by a whopping 595% sequentially. Dalio suggested in August that investors buy gold because if things were to go badly in the market, gold would benefit more than other safe-haven assets such as the US dollar, the Japanese yen, and Treasuries.

Dalio recommends that investors hold 5%–10% of their portfolios in gold. In a LinkedIn post in August last year, he wrote, “If you don’t have 5-10% of your assets in gold as a hedge, we’d suggest that you relook at this. Don’t let traditional biases, rather than an excellent analysis, stand in the way of you doing this.”

Gold stock bets

As reported by Fintel, Bridgewater Associates has increased its exposure to precious metals mining stocks (GDX), including Barrick Gold (ABX), Goldcorp (GG), Kinross Gold (KGC), Franco-Nevada (FNV), and Newmont Mining (NEM). Bridgewater has decreased its stakes in Randgold Resources (GOLD), Royal Gold (RGLD), AngloGold Ashanti (AU), Yamana Gold (AUY), and Eldorado Gold (EGO), among others.

Read As Positive Catalysts Emerge, Which Miners May Benefit? for more on potential upsides and downsides for precious metals miners.


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