“You should think of gold as being a fundamental money that you should own at least some of. Most investors don’t own any.”

Says Ray Dalio, the billionaire founder of Bridgewater Associates. Ray earned a living seeking an uncorrelated return across different asset classes and it led to his hedge fund being one of the biggest in the world with some of his clients being sovereign wealth funds, pension funds, foundations and even central banks. 

He specialises in limiting downside risk and ensuring that his managed portfolio generates returns when other markets are not. (This is called generating alpha for anyone who cares) 

For a long time now, he has been advocating for ownership of gold. I have broken down his articles, reports and interviews and focussed on the 3 key reasons Ray Dalio thinks you should own gold. 

Let’s get into it:

1.Gold is money

“It seems to me that gold is money and it is the money that is least at risk of being devalued and/or confiscated”

Ray Dalio notes that money has always been one of two things: 1) hard-asset backed and 2) “Fiat” meaning the currency is not backed by anything. 

We currently live in a world where governments can run large deficits, have high levels of debt and print money because fiat currencies are not limited to supply. When something is not limited to supply, it devalues the currency. 

Under the gold standard, countries would not be able to run fiscally irresponsible deficits. The monetary system would break down because there just simply wouldn’t be enough gold in the world. 

He notes that since the inception of central banks, they have always created money and credit, especially in times of crisis and this results in high inflation. This is when gold does well as people lose faith in fiat currencies and see that their purchasing power has diminished in the face of ever-increasing prices. 

It comes as no surprise that gold is therefore the second largest reserve held by central banks. They know what they are doing to paper money and no central bank wants to have the least gold in their vault should there be a return to the gold standard.

2. Gold is the safest form of money

How many times have you tried to make a payment with your card just for the bank to ask you a million questions and transfer you from department to department? 

Probably too many times to count. 

The thing is with gold, once you own it, it’s yours. 

That is exactly why central banks have been ramping up purchases of gold. Whenever alliances and relationships between countries become strained, they fall back on the money of last resort: gold. 

“Gold has the best track record of having its value keep pace with the cost of living over very long periods of time”

3. Investing in gold

“Thinking about gold as a fundamental money has helped me a lot”

Ray Dalio, who has earned a living from making strategic investments in uncertain times, says that gold is a “good diversifier to stocks and bonds when bubbles pop and/or when people and countries don’t accept each other’s credit like in wars”. 

Newsflash! Analysts and AI founders themselves think AI is in bubble territory and the Russia-Ukraine war wages on. The ongoing cold-war between China and the US has resulted in a lack of trust between each other. Lack of trust and high tariffs means China has no reason to hold dollars but more of an incentive to hold gold. 

In fact, China now wants to rival the Bank of England as a store of sovereign gold and the Shanghai Futures Exchange noticed a 28-fold increase in demand for physical gold compared to 2024. 

“To me, the most simple and fundamental question that everyone should ask themselves and answer is what percentage of my portfolio should I have in gold” The former hedge fund founder also agrees with the Bullion Brief as he notices “gold has begun to replace some US Treasury holdings as the riskless asset in many portfolios, most importantly in central banks and large institutional portfolios”.