For Bridgewater’s Dalio, gold rush is on after August warning
Published 2:41 pm, Tuesday, November 14, 2017
In what has become a familiar refrain the past few decades, the economic cycle has arrived at the point when pawn shops, websites and others are urging people to sell off their gold heirlooms, ostensibly on the bet they will make money as prices rise.
Now, the Greenwich billionaire who runs the world’s largest hedge fund in Westport is making the same wager — on a massive scale and reportedly for the first time.
On Monday, the website Zero Hedge reported that Bridgewater Associates has quietly amassed the world’s eighth largest portfolio of investments in exchange-traded funds pegged to gold — all in the span of a few months, with the fund having not reported previously any significant holdings in prior filings with the U.S. Securities and Exchange Commission tracked by Zero Hedge.
Exchange-traded funds are indexed to other securities like stocks, bonds or commodities, with investors able to buy and sell their holdings in the same way they would stocks as values rise or fall.
The website noted Bridgewater founder Ray Dalio had warned investors in August to accumulate gold investments versus other perceived safe havens like currencies or treasuries as a hedge “in case things go badly” in the economy.
“If you don’t have (5 to 10 percent) of your assets in gold as a hedge, we’d suggest you relook at this,” Dalio stated in mid-August on his LinkedIn page. “If you ... have an excellent analysis of why you shouldn’t have such an allocation to gold, we’d appreciate you sharing it with us.”
Bridgewater’s rush into gold between July and September eclipsed the accumulation over that three months of Black Rock, the New York City-based giant whose total holdings are more than the next two gold ETF investors in Bank of America and the parent company of Fidelity Investments.
Over the past 10 years, the Comex gold commodities futures index hit bottom in September 2008 in the collapse of the housing and stock markets. In 2009, investments in gold ETFs surged to record highs in the United States and globally, according to the World Gold Council, with financiers redirecting their focus back to stocks in 2013 to capitalize on a sustained surge in the markets.
Today, the Comex gold index is down sharply from its own high mark five years ago, and according to the World Gold Council global demand for gold is at its lowest level since the fall of 2009, with the group tracking everything from jewelry sales to bars of bullion produced for central banks.
In the gold ETF market, the third quarter of 2017 was relatively quiet, as well, the council noted — even if that was not the case in a Westport office where “paper gold” became all the rage for three months, and Bridgewater to update investors on its holdings in early 2018.
“Investors continued to favour gold’s risk-hedging properties, but the greater focus was on rampaging stock markets,” the World Gold Council analysts stated in last week’s report.
Alex.Soule@scni.com; 203-842-2545; @casoulman