Billionaire Investment Guru, Ray Dalio thinks the current era of low interest rates and QE may be coming to an end, and his answer to a new market paradigm that could see escalating conflict between capitalists and socialists is simple, Buy Gold.
“I believe that it would be both risk-reducing and return-enhancing to consider adding gold to one’s portfolio,” the billionaire founder of investment management firm Bridgewater Associates said in a 6,000-word essay posted on LinkedIn.
For Mr. Dalio, monetary policy swings between helping debtors or creditors at each other’s expense, and the next move of the pendulum could lead to a new era of debt monetization and currency depreciation.
“The big question worth pondering at this time is which investments will perform well in a reflationary environment accompanied by large liabilities coming due and with significant internal conflict between capitalists and socialists, as well as external conflicts,” Mr. Dalio wrote.
Some Key Quotes from the essay:
- “I think that the paradigm that we are in will most likely end when a) real interest rate returns are pushed so low that investors holding the debt will not want to hold it and will start to move to something they think is better and b) simultaneously, the large need for money to fund liabilities will contribute to the ‘big squeeze”’
- “There will have to be some combination of large deficits that are monetized, currency depreciation’s, and large tax increases, and these circumstances will likely increase the conflicts between the capitalist haves and the socialist have-nots”
- “In such a world, storing one’s money in cash and bonds will no longer be safe”
- “It is also a good time to ask what will be the next-best currency or store-hold of wealth to have when most reserve currency central bankers want to devalue their currencies in a fiat currency system.”
Wednesday, the major US stock market indexes finished at: DJIA -115.78 at 27219.85, NAS Comp -37.59 at 8185.20, S&P 500 -19.62 at 2984.42
Volume: Trade on the NYSE came in at 702-M/shares exchanged
NAS Comp +23.4% YTD
S&P 500 +19.1% YTD
DJIA +16.7% YTD
Russell 2000 +15.0% YTD
HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish with all Key indicators flashing Very Bullish.