Billionaire investor Ray Dalio recently gave an interview and posted a message on LinkedIn where he said the world has gone mad and the economic system is broken. Dalio is famous because he is one of the founders of Bridgewater Associates one of the largest and most successful hedge funds over the last 30 years.
The warning about a big global paradigm shift coming from such a successful large investor who manages hundreds of billions of dollars should not be taken lightly.
If the economic system is broken how can you protect yourself? Buy gold.
Dalio said the world has gone mad because
“Money is free for those who are creditworthy because the investors who are giving it to them are willing to get back less than they give”.
Gold offers you stability for your portfolio and when you buy physical gold you are doing the sensible thing, something to protect your assets that has in the past made sense and makes more sense now.
Federal Reserve Pouring Money into a broken system
Dalio makes a point that central banks including the Federal Reserve are flooding the economic system with more liquidity every year and that is driving up the price of some assets by giving money to people who don’t need it.
In turn, those investors who don’t need the money prefer to invest the money and not build real things or produce things, and those actions have failed to help real economies around the world. This means growth is subpar and requires more help and those investors expect that help and borrow more money. The result is that global debt levels have reached the point where an economic crisis has almost become inevitable.
Why this matters for You
You need to consider that private debt, government debt, derivatives, unfunded liabilities and banking loans that lurk in the shadows have risen dramatically, and Dalio is making a point that investors have placed themselves in harm’s way.
Like a deer in headlights and the headlights are getting closer.
Buying physical gold and other precious metals is your best bet to add stability to your portfolio. You have probably realized by now that printing more money is really all the Federal Reserve can do anymore, which means gold goes up, as it has since we left the Gold Standard in 1971.
Is your IRA or pension safe without the stability of gold?
We all know that large unfunded government deficits will likely increase each year. You know that congress spends well beyond its means.
Now pension and healthcare liabilities are facing problems that Dalio says Capitol Hill will have a big fight on how to fund them or they won’t get paid (which is fundamentally disturbing). You know our government tends to work around those bills at the edges to reduce their cost. That results in a reduced cost to the government and an increased cost to you. That is never a good thing for taxpayers or investors.
Pension funds are facing big problems considering the built-in returns for expected for pensions are something like twice the going rate of returns because global central banks have engineered zero interest rates or a near-zero rate for our Federal Reserve. These pensions will eventually have to be rescued or just become extinct.
Here is why this matters for you
If you are saving for retirement, you need to ask yourself, what happens if the money you counted on goes poof to the wind?
Unfortunately, if that occurs it will not matter for you, it will be too late.
Now is the time for you to make your plans.
Buy gold; investing in gold will offset the risk in case the financial engineering blows up the system.
Expected returns are left to investors’ imaginations
Dalio went on to say that investors have piles of cash given to them for nothing from the central banks and because of success stories of stocks over the past 10 to 12 years since the meltdown in 2008
more companies than at any time since the dot-com bubble don’t have to make profits instead they are selling dreams.
Just think about that for a minute;
What he is saying is everyone is having a party and dancing in the streets, what happens if the music stops? Are you prepared? When you buy gold and other precious metals you are giving stability to your portfolio, and that makes a lot of sense now.
When you buy physical gold and precious metals you to push away the risk posed to you and your family by central banks, corporations and a banking system that uses financial engineering. Gold can also provide your IRA with solid backing and you should consider diversifying into some portion for your portfolio to gold and avoid becoming the deer in headlights.