For centuries, gold has been a valuable asset, and it remains an attractive investment option for many people, including some of the world’s most successful billionaires. In this article, we will take a closer look at why Sam Zell, Naguib Sawiris, David Einhorn, John Paulson, and Ray Dalio all express their beliefs in investing in gold, including their views on inflation, economic risks, and diversification.
As a real estate titan with an estimated net worth of $5.5 billion, Zell believes in buying gold as a hedge against inflation and other risks. He bought gold for the first time in January 2019, stating that it was a good hedge. Prior to the first purchase, Sam Zell has been a vocal critic of buying gold as a hedge against inflation.
He has said that he never saw the appeal of gold as it doesn’t generate any income and requires storage expenses, but the current debasement of currency due to rising inflation has made him reconsider. He expressed concerns about the global governments resorting to “printing money” to mitigate the economic impact of the COVID-19 pandemic, and compared the current economic situation to that of the 1970s.
Sam Zell also told Bloomberg “Supply is shrinking, and that is going to have a positive impact on the price. The amount of capital being put into new gold mines is almost nonexistent. All the money is being used to buy up rivals.”
One of Egypt’s wealthiest men, Sawiris famously bet big on gold in 2018, putting half of his net worth into the precious metal. He still holds about a quarter of his wealth in gold and recommends holding 20-30% of your portfolio in gold. He even launched a $1.4 billion gold mining fund and sees gold as a buffer against market risks.
A billionaire investor, Einhorn has expressed his belief in gold as a safe investment, especially given the current monetary policies of the US government. In 2020, Einhorn listed gold as one of his top ten positions. He believes that monetary policy is becoming increasingly adventurous, and that this makes gold a valuable asset. He has spoken about gold at the Sohn Investment Conference, warning that the Federal Reserve will not be able to control inflation and recommending gold as an investment option. In June 2022, Einhorn told investors that gold is a critically important asset in portfolios, and that its price will likely continue to rise. He believes that the Federal Reserve is bluffing as it tightens monetary policy to control inflation.
A hedge fund manager, Paulson made a fortune during the 2008 financial crisis by betting against the subprime mortgage market. He has also invested heavily in gold and is considered one of the most successful investors in the precious metal. John A. Paulson, founder of Paulson & Co., is a strong proponent of investing in gold. He believes that gold will increase in value while the US dollar drops, and that this will be the case not only this year, but also for the next three to five years. Paulson’s views on gold have earned him a reputation as a “gold guru”. He notes that there is a very limited amount of investable gold compared to an ever-expanding money supply, which primes the monetary metal for appreciation.
Paulson believes that gold prices will be squeezed to the upside as investors exit low-yielding cash and fixed-income instruments in search of inflation protection. He recommends playing the long game with gold, seeing potential for significant appreciation and highlighting the de-dollarization trend. Central banks are increasingly replacing dollars with gold, a trend that Paulson believes is only just beginning, and he advises that investors would be better off keeping their investment reserves in gold. 18 months ago, Paulson laid out his thesis for why he sees potential to leverage up bullish gold derivative bets with the potential to pay off 25-50 fold at some point in this decade, the 2020s.
The founder of Bridgewater Associates, one of the world’s largest hedge funds, Ray Dalio is a strong advocate of diversification and believes that gold is an important part of any balanced investment portfolio. He has called gold a “timeless and universal currency” that can protect against inflation and other economic risks.
According to Dalio, gold is also a good hedge against inflation and should be a part of a diversified portfolio. In fact, in 2020, Bridgewater Associates said in its September report that it is wise to hold some gold as central banks cannot create more of it. Dalio has also said that in the current environment, investors should hold a global diversified portfolio that includes some gold. In a 2020 interview with CNBC’s Squawk Box, Dalio declared that “cash is trash” and that investors should hold some gold as a hedge against inflation.
However, while Bridgewater has a very small percentage of its portfolio in cryptocurrencies, Dalio has said that the hedge fund sees more value in gold than in crypto. In a 2021 interview, Dalio compared bitcoin to a digital version of gold, but he clearly valued gold more, saying that if he had to choose between the two, he would choose gold. In a 2022 13F filing, Bridgewater Associates’ holdings showed that the hedge fund remains focused on gold.
While these billionaires may have differing reasons for investing in gold, they all recognize the value of diversification and the potential benefits of including gold in their portfolios. As the saying goes, “All that glitters is not gold, but all that is gold glitters.” Gold can be a valuable asset for investors seeking to balance their portfolios, hedge against inflation, and protect against economic risks. As the world of finance and investment grows ever more complex, the value of diversification and the potential benefits of including gold in their portfolios.