Ray Dalio: Gold Will Be a Top Investment during Upcoming ‘Paradigm Shift’ for Global Markets

The comments below are an edited and abridged synopsis of an article by Jeff Cox

Ray Dalio, founder of the world’s largest hedge fund, sees a case for gold as central banks get more aggressive with policies that devalue currencies and are about to cause a paradigm shift in investing.

Ray Dalio: Gold Will Be a Top Investment during Upcoming ‘Paradigm Shift’ for Global Markets | BullionBuzz
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Dalio wrote in a LinkedIn post that investors have been pushed into stocks and other assets that have equity-like returns. As a result, too many people are holding these types of securities and are likely to face diminishing returns.

Dalio’s call comes days before the Federal Reserve is expected to cut its benchmark interest rate by at least a quarter point. That move comes after a 3-year cycle of raising rates from the historically accommodative near-zero levels implemented during the financial crisis.

These trends are part of what Dalio labeled a new paradigm shift that comes after the financial crisis. Investors, he said, need to change their mindset about what will work after the longest bull market run in Wall Street history.

Since the crisis, the Fed and other central banks have been holding interest rates low and using policies like QE, or the purchase of bonds and other financial assets, to boost risk-taking, which has helped holders of financial assets.

During that time, the amount of corporate and government debt has surged, and central banks have needed to keep interest rates low. The Fed embarked on a program where it tried to normalize policy, but now is expected to shift back into easing mode as it cuts rates and halts the reduction of the bond holdings on its balance sheet.

Dalio added that he is uncertain of the timing for the shift, but he thinks “it is approaching and will have a big effect on what the next paradigm will look like.”

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