① Dario said that part of the reason he holds gold is to hedge against debt and inflation risks; ② he once again warned about rising global debt balances; ③ he warned investors to pay attention to the US debt crisis, which could plunge the economy into balance sheet recession.
Financial Services Association, April 22 (Editor Huang Junzhi) Last week, billionaire investor Ray Dalio (Ray Dalio), founder of the world's largest hedge fund Qiaoshui Fund, once again warned of rising inflation and a potential debt crisis, and said he was hedging risks by holding gold.
He pointed out that debt balances around the world continue to rise, and the US debt reached 34 trillion US dollars for the first time this year. In his latest article, he wrote that debt problems are also plaguing countries such as Japan and Europe, which poses a huge risk to these countries' currencies.
He wrote, “History and logic show that when debt is at great risk, it either becomes impossible to repay, or the country uses depreciated currency to pay, and debt and money become unattractive.”
In fact, he has warned about US debt before: the impending debt crisis could eventually trigger a balance-sheet recession — a recession that occurs when individuals and companies spend money to repay debts rather than stimulate the economy.
Dario pointed out that when the national debt is high, the central bank may print more cash to repay the debt, which in itself is a problem.
He warned: “This could prevent large-scale debt contraction through currency depreciation (i.e. inflation). Gold, on the other hand, is a form of money without debt support. It's like cash; the difference is that cash and bonds depreciate due to default or the risk of inflation, while gold is supported by debt defaults and the risk of inflation.”
This is the main reason Dario says he has gold in his portfolio, adding that in the context of high debt levels, gold is a “great diversification tool.”
Gold prices have been at record highs in recent weeks. Investors have always been keen to buy gold because the risk of a recession is imminent, inflation is still high, and they are concerned that geopolitical turmoil in the Middle East will expand. Wall Street also “has high hopes” for the gold trend.
David Rosenberg (David Rosenberg), a top economist in the US and president of Rosenberg Research (Rosenberg Research), believes that the rise in gold is not over yet. He expects that as central banks begin to cut interest rates, the price of gold will rise by another 15%, and the maximum increase may reach 30%.
Ed Yardeni (Ed Yardeni), a long-time Wall Street bully and president of investment consulting firm Yardeni Research, also believes this rise will continue, especially if inflation makes a comeback.
He anticipates that by the end of next year, the price of gold may rise to a high of 3,500 US dollars. He believes that inflation may repeat the mistakes of the 70s of the last century, when prices began to spiral, and the price of gold soared from $35 per ounce to a peak of $665 per ounce.
However, Bob Parker, a senior advisor to the International Capital Markets Association (ICMA), warned that it is unlikely that the price of gold will rise further. Because he believes that “there are no fundamental factors to support higher gold prices.”