The markets are volatile. There is unrest and political tensions spanning the entire globe. The enormous divide between the very rich and very poor is growing on what seems like a daily basis. The only thing we currently know about what the world will look like in a month, 6 months, or a year, is that we will have absolutely no idea.
This information comes as no surprise to most people. What is a little surprising though is that some of the heavy hitters in the financial industry are starting to publicly acknowledge these chaotic times, talking about what it might mean for the current state of investing.
Greg Jensen, the co-chief investment officer at Bridgewater Associates, the Connecticut-based investment management firm founded by billionaire Ray Dalio, told the Financial Times in a recent interview, “There is so much boiling conflict. People should be prepared for a much wider range of potentially more volatile set of circumstances than we are mostly accustomed to.”
Jensen, who is responsible for managing Bridgewater’s $160 billion-plus worth of assets, also told the publication that all the socioeconomic instability around the globe will continue to make investments in the markets in the near future a very difficult proposition.
For the Bridgewater bigwig, all these factors add up to the fact that not only is gold a solid investment right now, but it could be poised for an explosion. Jensen thinks that the upward trajectory for gold could be immense. He thinks that gold could be poised for a 30% or more rally and end up at over $2,000 an ounce.
In addition to what’s going on in the world, another reason Jensen believes so much in gold right now is because of what central banks such as the Federal Reserve are doing to deal with these issues. The Fed will allow inflation to take more of an upward course in the coming months. Jensen says that “there will no longer be an attempt by any of the developed world’s major central banks to normalize interest rates.” And, as Jensen correctly points out in the interview--and as every gold investor knows--this is a very big deal.
Bridgewater Advises Making Gold a Portfolio “Centerpiece”
So, what is Jensen’s advice to investors in this time of uncertainty? He is advising everyone to make gold a centerpiece in one’s portfolio. With gold currently trading around $1,500 an ounce and poised for a leap, Jensen tells investors that “most of the world is long equity markets in pretty extreme situations.”
In addition to touting gold in the article, Jensen also expresses concern about the U.S. dollar and its standing in the world. He says that if the central banks allow for more inflation, as predicted, and the U.S. continues to let its trade deficits and budget run wild, that could ultimately spell doom for the U.S. dollar as the world’s reserve currency.
While he is not sure of the timeline, he does believe things are headed that way. “That could happen quickly or it could happen a decade from now,” he theorized, “but it’s definitely in the range of possibilities.” He again suggested gold as an antidote to the fall of the dollar explaining that “when you look at the geopolitical strife, how many foreign entities really want to hold dollars? And what are they going to hold? Gold stands out.”