“Do You Own Gold?” Ray Dalio at CFR: “Oh Yeah, I Do”

Ray Dalio, founder and co-chief investment officer of Bridgewater Associates, L.P. and one of the most successful hedge fund managers of all time told Maria Bartiromo last week that he owns gold and that he sees no “sensible reason not to own gold”. The interview was part of the Council on Foreign Relations (CFR) Corporate Program’s CEO Speaker Series, which provides a forum for leading global CEOs to share their priorities and insights before a high-level audience of wealthy and influential CFR members.  The respected hedge fund manager suggested that a depression and not a recession was likely and warned of social unrest and the risk of radical politics as was seen with Hitler and the Nazis in the Depression of the 1930’s. Dalio spoke about how gold is a currencyand when asked by Bartiromo “do you own gold?”, he smiled and said Oh yeah, I do.The admission elicited a laugh from the CFR audience. Dalio’s interview is important as it again indicates how slowly but surely gold is moving from a fringe asset of a few hard money advocates and risk averse individuals to a mainstream asset. Wealthier people and some of the wealthiest and most influential people in the world are slowly realizing the importance of gold as financial insurance in an investment portfolio and as money. This will result in sizable flows into the gold market in the coming months which should push prices above the inflation adjusted high of 1980 – $2,500/oz.

 

From Goldcore:

Today’s AM fix was USD 1,758.50, EUR 1,361.91, GBP 1,084.96 per ounce.
Friday’s AM fix was USD 1,773.75, EUR 1,361.28and GBP 1,089.19 per ounce.

Silver is trading at $33.87/oz, €26.31/oz and £20.98/oz. Platinum is trading at $1,614.00/oz, palladium at $641.80/oz and rhodium at $1,150/oz.

Gold climbed $4.70 or 0.27% in New York on Friday and closed at $1,773.10. Silver hit a high of $35.16 in New York on Friday, but it still finished with a loss of 0.29%. On the week, gold was up 0.08% while silver fell 0.3%.


Ray Dalio, founder and co-chief investment officer of Bridgewater Associates, L.P. 

Gold was off its 7 month high on Monday but the recent wave of central banks (ECB, US & BOJ) who started printing money and bond buying again is very supportive for the yellow metal and euro gold remains close to record highs (see chart).


XAU/EUR Exchange Rate Daily, Sept. 2010-2012 – (Bloomberg)

Gold has run up gains of 10% in the past 5 weeks, the biggest since September 2011, after the ECB and Federal Reserve announced new ‘stimulus’ measures to bolster up their economies.

Gold is slightly over bought in the short term and the recent spec activity on the COMEX suggests there may again be short term weakness.

Ultra loose monetary policies will soon send investors to gold like swarming bees to honey in the hive.

Currency debasement and the very slow dawning of what competitive currency devaluations and currency wars will do to paper currencies  is leading to wealthier people who had previously ignored gold looking to diversify into the precious metal.

In South Africa, authorities have issued an arrest warrant for ANC militant Julius Malema, a key supporter of wildcat strikes that have spread from platinum to gold producers and caused violence and deaths in the past few weeks.

The situation in South Africa remains very unstable and will be supportive of both platinum and gold prices.

This week US economic data to be released follows:  Tuesday – The Case-Shiller 20-city Index, Consumer Confidence, and the FHFA Housing Price Index .  Wednesday – New Home Sales. Thursday -Initial Jobless Claims, Durable Goods Orders, GDP, and Pending Home Sales. Friday –  Personal Income and Spending, Core PCE Prices, Chicago PMI, and Michigan Sentiment.


XAU/GBP Exchange Rate Daily, Sept. 2010-2012 – (Bloomberg)

Ray Dalio, founder and co-chief investment officer of Bridgewater Associates, L.P. and one of the most successful hedge fund managers of all time told Maria Bartiromo last week that he owns gold and that he sees no “sensible reason not to own gold”.

The interview was part of the Council on Foreign Relations (CFR) Corporate Program’s CEO Speaker Series, which provides a forum for leading global CEOs to share their priorities and insights before a high-level audience of wealthy and influential CFR members.

The respected hedge fund manager suggested that a depression and not a recession was likely and warned of social unrest and the risk of radical politics as was seen with Hitler and the Nazis in the Depression of the 1930’s.

Dalio spoke about how “gold is a currency” and when asked by Bartiromo “do you own gold?”, he smiled and said “Oh yeah, I do.” The admission elicited a laugh from the CFR audience.

He continued:

“Oh yeah.  I do.  I think anybody, look let’s be clear, that I think anybody who doesn’t have…There’s no sensible reason not to have some.  If you’re going to own a currency, it’s not sensible not to own gold.  

Now it depends on the amount of gold.  But if you don’t own, I don’t know 10%, if you don’t have that and that depends on the world, then there’s no sensible reason other than you don’t know history and you don’t know the economics of it. 

But, I. Well, I mean cash.  So cash…view it in terms as an alternative form of cash and also view it as a hedge against what other parts of your portfolio are. Because as traditional financial assets, and so and in that context as a diversifier, as a source of that, there should be a piece of that in gold is all I’m saying.”

With regard to gold being a currency he said that:

“Gold is a currency.  Throughout the history, I won’t tell you in length, money was like a check in a checkbook and what you would do was get your gold and gold was like a medium.  So gold is one of the currencies– We have dollars, we have euros, we have yen and we have gold.

And if you get into a situation where there’s an alternative in this world, where we’re looking at ‘What are the alternatives?’ and the best alternative becomes clearly one thing, something like gold. 

There becomes a risk in that. Now it doesn’t have the capacity.  The capacity of moving money into gold in a large number is extremely limited.  So the players in this world that I have contact with that move that money really don’t view gold as an effective alternative, but it could be a barometer and it is an alternative for smaller amounts of money.”


Gold Spot $/oz Daily, Sept. 2010-2012 – (Bloomberg)

Dalio is alluding to the very small size of the global supply of gold or investment grade gold (refined, investment grade coins and bars) vis-à-vis stock, bond and currency markets and the shadow banking system.

Dalio’s interview is important as it again indicates how slowly but surely gold is moving from a fringe asset of a few hard money advocates and risk averse individuals to a mainstream asset.

Wealthier people and some of the wealthiest and most influential people in the world are slowly realising the importance of gold as financial insurance in an investment portfolio and as money.

This will result in sizeable flows into the gold market in the coming months which should push prices above the inflation adjusted high of 1980 – $2,500/oz.

The interview section where Dalio is asked about gold by an audience member begins in the 43rd minute and can be seen below:

 

 

 

NEWSWIRE
(Bloomberg) — Silver Seen by Morgan Stanley Outperforming Gold in Few Quarters
Silver will outperform gold over the next few quarters with the gold to silver ratio averaging 54 in the fourth quarter and 53 for 2013, Morgan Stanley said.

(Bloomberg) — Gold’s Rally Is Intact on Global Stimulus, HSBC’s Steel Says
Gold’s rally is intact as increased accommodative monetary policy around the world has contributed to a bull market, according to James Steel, chief commodity analyst at HSBC Securities (USA) Inc.

(Bloomberg) — U.S. Mint Gold-Coin Sales in September Exceed August Total
The U.S. Mint’s sales of American Eagle gold coins this month have climbed to 45,000 ounces, according to figures from the Mint’s website.

The total for all of August was 39,000 ounces.

(Bloomberg) — Gold Traders Increase Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week ended Sept. 18, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 191,115 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 9,099 contracts, or 5 percent, from a week earlier.

Gold futures rose this week, gaining 0.3 percent to $1,778.00 a troy ounce at today’s close.

Miners, producers, jewelers and other commercial users were net-short 249,633 contracts, an increase of 12,542 contracts, or 5 percent, from the previous week.

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices.

(Bloomberg) — Silver Traders Increase Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators increased their net-long position in New York silver futures in the week ended Sept. 18, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 32,555 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 1,073 contracts, or 3 percent, from a week earlier.

Silver futures fell this week, dropping 0.1 percent to $34.64 a troy ounce at today’s close.

Miners, producers, jewelers and other commercial users were net-short 50,474 contracts, an increase of 3,202 contracts, or 7 percent, from the previous week.

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices.

(Bloomberg) — GFMS Sees Gold Hedge Book Falling by 188,000 Ounces in Quarter
The global gold hedge book declined by 188,000 ounces in the second quarter, according to Thomson Reuters GFMS and Societe Generale SA.

The hedge book fell to 4.89 million ounces by the end of June, the companies said in a report e-mailed today by GFMS.

Bloomberg competes with Thomson Reuters in selling financial and legal information and trading systems.

(Bloomberg) — LBMA Says Gold Trading Fell 0.9% in August as Silver Declined
Gold trading fell 0.9 percent to an average of 17.8 million ounces a day in August compared with a month earlier, the London Bullion Market Association said today in an e-mailed report.

Silver trading declined 15.5 percent to a daily average of 119.5 million ounces, the LBMA said.

For breaking news and commentary on financial markets and gold, follow us on Twitter.


Cross Currency Table – (Bloomberg)

NEWS
Gold dips from near 7-month high; stimulus support stays – Reuters

Gold begins the week on a softer note – Market Watch

CFTC’S Chilton: Silver Investigation Continues, Expects Something Public ‘In Near Future’ – Forbes

Bridgewater’s Dalio Favors Gold As ‘Monetary Stimulus’ Hedge – Reuters

COMMENTARY
CFR Interview with Dalio – Diversification and Gold – You Tube

Gold: Adjusting For Zero – Deutsche Bank – Gata

Germany Eyes Gold Standard – NY Sun

CITI: When Gold Hits $1790, Silver Will Surge – Business Insider

Keiser Interviews Rickards about Currency Wars – Max Keiser

Comments

  1. yes a sizable flow of money into paper gold and solid tungsten …. all the real gold sits in asia now many have missed the boat
    max

  2. Ray Dalio On Gold: Buffett Is Making A Big Mistake
     


  3. I rather choose silver over gold because silver has more uses, has more liquidity, has less chances of being a counterfeit, is cheap and is the most undervalued asset in the world. Although, I would choose gold if I want to store a lot of my wealth in a small space.

  4. All good reasons, Kid, but for guys with BIG bucks to invest, gold is where it is at.  When you invest $500k in metals for your personal portfolio, you can buy about 270 ozs. of gold or about 14,700 ozs. of silver.  Got a fork-lift?  ;-)

  5. Good stuff.  Ray Dalio is one of the big boys and his endorsement of gold will bring a lot of investors into the fold.  I think we are beginning to see a cascade of mainstream investors finally getting into the gold market.  :D

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