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Ray Dalio: "If You Don't Own Gold, You Know Neither History Nor Economics"
Bridgewater's Ray Dalio explains in under 120 seconds why everyone should allocate some of their portfolio to gold:
"If you dont own gold...there is no sensible reason other than you dont know history or you dont know the economics of it..."
Of course, few 'status quo' believers will pay heed to the $150 billion AUM fund manager, despite his imploring everyone that to be successful, one must "Think Independently, Stay Humble"
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There will be a place for PM's
OK, let's say there is a melt down or collapse of some degree. If there are people trading and bartering it won't be long at all before there is a real need for a medium of exchange that is uniform, understood, not easily counterfited, and most of all, accepted as an agreed to medium of excahnge by reasonably large percentage of buyers and sellers of goods and services.
"Oh, but your loaf of bread cost me a one ounce au coin." Horse shit. PM's are divisible (ever hear of "pieces of eight"?)
Think of it this way; You have a good or service to trade. The buyer wants your item but has nothing on hand that you desire or need bu, he has a warehouse reciept for a "promise" to deliver on demand 10 bushels of winter wheat (it's supposedly located four counties west of you, he promises it is), and he also has some 1/4 ounce gold coins and various forms of silver bullion. What are you gloing to take in trade for your goods or service?
Ever hear of pre 1965 coins? Or baking your own bread?
We are fucked.
Junk silver, yes, and it's sometimes more expensive than some bullion coins or bars.
The point is, no matter what happens at some point the survivors of a collapse, no matter how great, will be trading for things and the more that haoppens, the more there will be a desire for a common medium of exchange. If your chosen medium of exchange happens to double as a resonable store of wealth, then, all the better.
You want pucca shells for that loaf of bread, or my 1961 US quarter?
Back to killin' snakes...
Ridiculous, a gold coin for a loaf of bread, just because some guy said he had a gold coin and he wanted a loaf of bread? Do grocers ask you how much you have before charging you?
What if your imaginary character wanted to buy 100 loaves and only had half a coin? According to your story's line of reasoning, bread would be worth 200 loaves a coin.
The point is to have stable assets. Gold is one of many. Tools and the knowledge required to operate them are another store of value (specialized knowledge costs money). Then theres cases of vodka..
http://www.marketwatch.com/story/draghi-hits-back-at-argument-qe-fuels-inequality-2015-05-14?link=MW_home_latest_news
WASHINGTON (MarketWatch) — In a major speech delivered in Washington, European Central Bank President Mario Draghi hit back at a popular argument that low interest rates, and quantitative easing in particular, not only hurt savers but also benefit the wealthy disproportionately and fuel inequality.
The remarks are notable as the criticism of the ECB’s action is similar to that faced by the Federal Reserve and other central banks for similar policies. The ECB‘s main interest rate is just above zero, and it announced it would start buying bonds in September.
Draghi said that there’s distributional effects from monetary policy inaction -- younger households in particular would be most affected and they tend to be net debtors.
“They tend to be net debtors, with debt denominated in nominal terms, and are therefore most exposed to rising real debt burdens. In contrast, older households tend to have positive net wealth, some of it held in nominal assets. Inflation undershooting therefore results in redistribution from younger to older households,” he said.
While acknowledging “there are always distributional consequences to monetary policy decisions,” Draghi says it’s necessary to raise aggregate demand by encouraging firms and households to bring forward spending decisions.
He didn’t deny that quantitative easing boosts asset prices.
“It is true that our low policy rates, forward guidance and asset purchases raise the current market value of financial assets and thereby benefit the holders of those assets,” he said. “But what matters more is the exact mirror effect of this rise in asset prices, which is a lower cost of equity for entrepreneurs, a lower cost of finance for investors in real projects, and a lower cost of borrowing for consumers.”
“Financial assets are always, in the final analysis, a claim on the wealth generated by the productive part of the economy,” he added. “So it is in their interest that output growth remains on a robust path as this maximizes the likelihood that their claims are honored in full.”
He also said there’s little sign of financial instability — defending central bankers from another oft-heard criticism.
“At the moment there is little indication that generalized financial imbalances are emerging. As a matter of fact, the two most important indicators of growing financial imbalances — real estate prices and credit growth — show only tentative signs of turning upwards,” he said.
Ray:
How of that Book is Long, Plus Leverage ?
How Much of Your Book is in US Bills ?
How Much is Short ?
= 100 % NET LONG.
As I've said, TRILLIONS, NOT BILLIONS, will be Permanently Lost By Current Rentiers.
For those that do know their history.
Even gold and silver have their mad "money printing" moments.
The discoveries of huge gold and silver reserves in South America by the Spanish was the precious metal backed equivalent of today's QE.
"Money printing" in the trillions caused by a random find of precious metals.
The digital currencies have it, with an open sourced program that all can verify, that limits currency creation.
Gold and silver discoveries are just random events and not the sort of thing you should pin currencies to.
Just imagine a massive find in the Antartic (Amazon. sea-bed, Siberia, etc ......) and the precious metals aren't so precious anymore.
You honestly want to compare this hypothetical case to the real world N-tupling of the balance sheets of the SNB, FED, BoJ, BoE, ECB et al. during the last few years ?
there is nothing special in gold except that it is yet another asset class which is easy to hide from the government that is constantly trying to rob you
When paper currencies lose their value ("purchasing power" for REAL goods and services), people will accept:
1.) REAL ITEMS they actually need for barter (food, tools, firearms, ammunition, etc. - even such everyday items as LIGHTBULBS)
2.) SILVER (as COINS 99.99% - whose value they can easily look up on the internet)
3.) GOLD (as COINS 99.99% - whose value they can easily look up on the internet)
The SILVER COINS can be used for smaller purchases; the GOLD COINS for larger purchases and/or simply holding on to them to preserve your wealth.
All paper financial instruments (stocks, bonds, ALL currencies, etc.) will LOSE value compared to items 1-3 above.
NOTE: Keep items 1-3 in YOUR POSSESSION (gold and silver whould be hidden in a place only YOU can find - which means NOT inside your house). Gold and silver stored in bank "safety deposit boxes" and/or "private vaults" (regardless of country where located) will be seized OR the "private vault" will simply NOT give ou our gold/silver, but rather paper currency instead.
If your physical GOLD and SILVER are NOT in your possession, then you do NOT own it. You own only the paper PROMISE that it will be returned to you.
Only gold I own are 3 rings one with jade inset and a 18k gold necklace.
The rest is silver but sold a lot of that when it was 40 a few years ago.
Ray, sign up a account with Market ticker. Drop the G word and get banned for life. I agree with your diversity.
Karl, you know I still admire you. Just stop running your site as a nazi concentration camp.
Hogans Heroes Themehttp://m.youtube.com/watch?v=2UnB-9tIZAo
Au + Ag + Pb = P P = Plenty, just like explosives.
Tthe forumula does not change. Proportions may vary.
Comex is a paper whore using a pet rock for leverage. Buy physical.
Anyone who is afraid of confiscation is either a shameful coward or possesses a very limited intellect...in the face of government, be an inglorious bastard rather than a humble servant...
I'm a single father with two young daughters. I WILL NOT risk their lives on a matter of principle. My plan is to hide, not to fight.
Bottom line: we won't win a revolution. Not unless the military stands down, which won't fucking happen.
No one really knows what the collapse scenario will be. There are many combinations possible and under some of them gold is 'life' and under others gold is just a worthless rock. You don't know.
If you have a gold coin and the government comes to round you up to take you to the FEMA death camps, you might bribe your way to freedom. Same thing if you are trying to get through a checkpoint.
Want to flee to another country and start over? Don't expect to ever see your electronic money. But a stack of gold coins can travel with you and get your new life started.
During any post-collapse recovery, gold can be traded for the new currency (probably lots of it).
In a non-collapse but weaker currency world, gold will increase in value (see the price in Euros today - or in US dollars over the last 15 years).
A stack of gold is 'safe'. It can be hidden so that it cannot be taken away. No other actions or events in the country can take it, no electronic thieves can access it, and no bank failures will take it away.
But there are scenarios where other things become more valuable than gold. If you have a gold coin and want a loaf of bread, the guy selling the bread could charge you one ounce of gold -- but if I own an AR15 and neither of you do, then I will own both the gold coin and the bread.
And of course, if you own a stack of gold, but don't have some beans and bullets, you better guess right and get out early to a safe and stable place somewhere in the world - because there are too many scenarios where your gold may survive - but you won't.
or; you know poverty.
Bitcoin last price $238
Ray sure does suck as a speaker. Needs to re-visit high school english and grammar and get a haircut.
Did you notice that he cites the traditional 10% allocation? But that is actually the traditional PM holding percentage, not just gold alone.
Some maths:
Assets: 223 Trillion
10%: 22 trillion
5%: 11 trillion
11 trillion dollars in silver is 647 billion ounces or a thousand years of mining supply.
Houston, we have a problem.
Silver For The People
Social and economic justice dictates that gold and silver should be non-existent . . . because victims of progressive government policies have nothing of value to buy or trade for the gold and silver.
Ray - No lecture needed on the merits of gold. 10,000 years of humanity speak for themselves, however gold being more expensive than silver makes it less lucrative to sink cash in, unless you have big bundles of round numbers to do so...not impossible, but out of touch for most of us currently under banker gangster siege in so many ways.
I've never understood the hissyfits about not being able to afford bread, etc. Canned food, ammo, SMALL VALUE COINS. It's all good. And no, I wouldn't be buying 10k of gold all in one big bar. (Whoever had the jewelry suggestion above -- that was good to know about india). Silver still rules in my book even if was back at 40ish prices.
And people need to get real with all of the imagined diarrhea-hit-the-fan scenario. NO ONE knows the details. If we did, we'd all write crappy Apocalyptic movie screenplays like Bok of Eli or whatever. World War What the Fuck. The best defense is a good offense (lead). After that, a looseley connected network of like-minded people is immeasurably valuable.
Deviantinvestor has some interesting thoughts a litle more imaginable than Walking Dead/pitchfork scenarios...
http://deviantinvestor.com/7019/silver-projections-2020/comment-page-1/#comment-399260