Billionaire Asset Manager Recommends Putting 15% of a Portfolio in BTC, Gold

Veteran hedge-fund manager Ray Dalio recently advised investors to apportion at least 15% of their portfolios to Bitcoin and gold. Dalio, who was recently hosted by The Master Investor Podcast, explained that macroeconomic risks, particularly those tied to ballooning government debt, hadn’t yet fully reflected in market prices. 

He explained that the U.S. government was spending over 40% more than it earned and since cutting spending is unlikely, it must rely on the Federal Reserve to print more money in order to issue additional debt. 

Currently, America’s debt is 6 times the amount of money it rakes in as revenue. 

Dalio warned that rising debt levels were destabilizing financial markets and that a major trigger like renewed quantitative easing or government interference in the Fed could spark a severe downturn. 

By allocating at least 15% to Bitcoin or gold, Dalio believes investors may be able to hedge against cash equivalents or fiat currencies. While advocating for both assets, he made it clear he leaned more heavily toward gold, citing doubts about Bitcoin’s long-term stability and acceptance as a reserve asset by central banks. 

He added that there were doubts whether this cryptocurrency’s protocol could ever be altered to diminish its effectiveness as a store of value. Such skepticism towards Bitcoin is common among more traditional financial advisors and investors. 

Laith Khalaf, the Head of Investment Analysis at AJ Bell, stated recently that putting money into Bitcoin during times of economic uncertainty was like leaping from the frying pan into a blazing inferno. While Khalaf asserted that investing in the cryptocurrency was fine if investors were only apportioning amounts of money that they were fine losing, he noted that gold was a stronger buffer during times of uncertainty. 

He explained that when risk aversion was high, the precious metal tended to increase its price. This, he continued, made it a helpful safety net for an investment portfolio though it needed to be combined with bonds and stocks to keep risks and returns in balance. 

Not everyone agrees with this opinion though. 

Some experts like cryptocurrency analyst Glen Goodman argue that gold hasn’t always been reliable, citing historical periods where it significantly underperformed. He notes that while we can’t deny Bitcoin is highly volatile, it’s important to remember that investors who purchased gold during the inflationary peak of 1980 and retained it for two decades suffered an 85% loss in real value. 

He adds that the precious metal only began to recover at the start of the new millennium. 

These debates focusing on the safe haven value of gold in comparison to cryptos like Bitcoin, with many analysts favoring gold since it has proved itself over decades, all point to a growing interest in mechanisms of hedging against market risks. Gold-linked stocks like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) could leverage this growing interest in gold to attract additional investment. 

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