Ray Dalio says today is like the early 1970s and investors should hold more gold than usual

Even with the precious metal, investors should allocate up to 15% of their portfolios to gold, said Ray Dalio, founder of Bridgewater Associates. It rose to all-time highs More than $4,000 an ounce.

“Gold is a very excellent diversifier in a portfolio,” Dalio said Tuesday at the Greenwich Economic Forum in Greenwich, Connecticut. “If you look at it just from a strategic asset allocation perspective, you probably have something like 15% of your portfolio in gold… because it’s an asset that performs very well when typical parts of the portfolio are down.”

Gold futures were trading at $4,005.80 an ounce. Prices have risen by more than 50% this year amid a flight to safety due to the growing fiscal deficit and escalating global tensions.

The billionaire investor compared today’s environment to the early 1970s, when inflation, heavy government spending and high debt burdens eroded confidence in paper assets and fiat currencies.

“It’s a lot like the early 1970s… where do you put your money?” He said. “When you hold money and put it in a debt instrument, when there is such a supply of debt instruments and debt instruments, that is not an efficient store of wealth.”

Dalio’s recommendation contrasts with financial advisors’ typical portfolio guidelines that ask clients to hold mostly stocks and some bonds with a 60-40 split. Alternative assets such as gold Other commodities are typically suggested to make up a low single-digit percentage of any portfolio due to the lack of income they generate.

DoubleLine Capital CEO Jeffrey Gundlach It also recently recommended a heavy weighting in gold – Up to 25% in the portfolio – because he believes gold will continue to excel against the backdrop of inflationary pressures and a weak dollar.

Dalio said gold stands as a hedging tool in times of monetary decline and geopolitical uncertainty.

“Gold is the only asset that anyone can hold that you don’t have to depend on someone else to pay you for,” he said.

Correction: Ray Dalio said: “Gold is the only asset that anyone can hold that you don’t have to depend on someone else to pay you for.” An earlier version of this article misquoted.