Dalio On Gold: Buffett Is Making A Big Mistake

Tyler Durden's picture


We discussed Bridgewater's Ray Dalio in depth late last week and his historical perspective on the world we are living through. It appears CNBC has found this intriguing too and the largest hedge fund manager in the world has been espousing his views all morning. Most notably he very concerned at the possibility for social unrest (just as we have pointed out again and again) highlighting the rise of Hitler in 1933 and its parallels to the current social disruptions around the world as global economies sufffer painful deleveragings. His suggestion is that gold "should be part of everybody's portfolio" as he explains the reality of the endgame of fiat monetary systems. As far as Warren Buffett's distaste for the yellow metal, he opines "I think he is making a big mistake."


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Fri, 09/21/2012 - 09:27 | 2817446 Comay Mierda
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its been a while since the last PM slam down.  and its options expiry day.

Beware the Blythe

Fri, 09/21/2012 - 09:30 | 2817457 GetZeeGold
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Beware the Blythe


What is my bidding Mistress?


Fri, 09/21/2012 - 09:35 | 2817481 Pladizow
Pladizow's picture

Browns Bottom and Buffets Blunder!

Fri, 09/21/2012 - 09:40 | 2817493 BaBaBouy
BaBaBouy's picture

Notwithstanding Bufflet Or The Paper-Manip Gang...

GOLD $50K Bitchezzzzzzz ...

Fri, 09/21/2012 - 09:45 | 2817521 BaBaBouy
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"" Beware the Blythe ""


Beware the Good-Folks at AIG...

Fri, 09/21/2012 - 10:04 | 2817629 Thomas
Thomas's picture

I am 55% precious metals; the smack downs smart a little.

Fri, 09/21/2012 - 10:10 | 2817656 Au Member
Au Member's picture

I've been 90% AU/AG since 07, smack downs mean fuck all to me unless they go to $700/oz and $12/oz

Fri, 09/21/2012 - 11:00 | 2817917 Comay Mierda
Comay Mierda's picture

its been a while since the last PM slam down. and its options expiry day.

Beware the Blythe

hate to say it, but I told you so

Blythe's algo army will be blessing us with a nice dip soon


Fri, 09/21/2012 - 09:41 | 2817508 Pladizow
Pladizow's picture

Dalio is 10 years late, why listen to him now when he says, "...gold should be a part of everyones portfolio, BUT NOT IN A BIG WAY."

At least it only took him 10 years to be half right!

Fri, 09/21/2012 - 10:07 | 2817646 Thomas
Thomas's picture

Do you know that he had no gold? I am thrilled that we are past the "crazy bastard" phase of the bull market and into the "smart money" phase (Dalio, Einhorn, Paulsen, China, Russia, India, Vietnam,...). I am waiting for the gold detractors to go all in. Then I hope to quietly find a better alternative--exit the pool--because the market will then throw the toaster in.

Fri, 09/21/2012 - 10:43 | 2817833 Al Huxley
Al Huxley's picture

Wait for the majority of the general public to jump in - they'll get in after the 'smart money' and that will be when things really get crazy.  I think back to the Bre-ex days in '96 or '97, whenever it was - everybody I knew, people who'd never invested or speculated in their lives, could tell me what gold stock I needed to own.

Fri, 09/21/2012 - 10:54 | 2817875 BoNeSxxx
BoNeSxxx's picture

Buffet only says he isn't bullish on the barbarous relic...

I bet the wrinkled old cadaver is stacking like a mofo under the table.  It's never about what they 'say' they are doing... gotta watch what the hand under the table is doing.

Fri, 09/21/2012 - 12:22 | 2818292 franzpick
franzpick's picture

Hasn't The Oriface of Omaha already demonstrated his PM expertise with his 2005 sale of 37% of the available ag supply, which he accumulated at $6, to Barclay's, at $7.50, for the SLV etf start-up?:


Fri, 09/21/2012 - 14:47 | 2818911 Bananamerican
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"I am waiting for the gold detractors to go all in."

"The Day Of The Denninger"

Fri, 09/21/2012 - 09:36 | 2817486 BaBaBouy
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Fri, 09/21/2012 - 09:39 | 2817497 theMAXILOPEZpsycho
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Note goldbugs "not in a big way"

I took a 50% treasuries, 50% apple position 5 years ago. I saw what the smart money was doing and simply followed suit. A guy like Bernanke doesn't make mistakes with what he buys - thats where I got my guidence, and I've been richly rewarded. Gold simply relies on the greater fool theory, as it doesn't produce anything and isn't backed by a government. Sure markets could stay irrational and gold could go higher in the short term (thats why its ok to have a small position); but in the long term markets always find equilibrium. Thats why I'm getting ready for the biggest wealth transfer in history from unbacked sterile assets like gold to fully government backed assets like treasuries.

Fri, 09/21/2012 - 09:49 | 2817513 Mercury
Mercury's picture

Backed by what?

The full faith and credit of the United States government?
Have you even thought about what that means and what it doesn’t mean?


I’m sure you will get your principal back.

The question is, how many loaves of bread or gallons of gas will you be able to buy with it?


Fri, 09/21/2012 - 10:08 | 2817659 Thomas
Thomas's picture

There was a reporter who claimed that "gold isn't backed by anything but the dollar is backed by the full faith of the US Government." I kid you not. I blew a double-barrelled snot bubble.

Fri, 09/21/2012 - 10:53 | 2817870 Temporalist
Temporalist's picture
Gold not backed by anything!


*this is a special edition of this clip with the remastered soundtrack of Ben and Krug in the background

Tue, 09/25/2012 - 11:54 | 2828133 Precious
Precious's picture


Fri, 09/21/2012 - 09:48 | 2817539 Darth Sidious
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Fri, 09/21/2012 - 10:12 | 2817660 WhiteNight123129
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MDB stop that, you know as I do that the S&P and Treasuries are following exactly the pattern of 1932-1937, the rally is just the uncorking of the pressure inside the deflation scare bottle. Had the Fed not made the mistake of raising the rates in late 1938, the Treasuries would have entered its multi-decade bear market not in 1941 but in 1938. The Fed is not making the same mistake, the bond bubble has just popped, as for Stocks they will do what they did between 1937 and 1950, during the deleveraging phase. Go nowhere, stock will get exciting when we start a new leveraging phase. Everyone here was long equities expecting the uncorking of deflation pressure, but they you get smacked back when monied capital converted back into circulation. Inflation was picking up nicely between 1933 and 1937 until the Fed did its 1938 blunder. 


Fri, 09/21/2012 - 10:32 | 2817781 i love cholas
i love cholas's picture

You're assumption assumes full faith last forever. I recently took a trip to Mexico City and saw churches and cathedrals decorated with gold. The value of that gold that was put in place in the 1500's has only gone up, while the Spanish Armada is under the sea and modern Spain's end game is currently approaching. Gold.Gold.Gold

Fri, 09/21/2012 - 11:08 | 2817970 Biosci
Biosci's picture

I think his assumption is actually quite different.

Fri, 09/21/2012 - 09:30 | 2817464 tocointhephrase
tocointhephrase's picture

More like Blythe beware, your getting squeezed and no its not a hug

Fri, 09/21/2012 - 09:40 | 2817502 Long-John-Silver
Long-John-Silver's picture

The Chinese have programed their gold (and silver) buying computers to automatically BTFD with a vengeance. They are demanding physical delivery too. I personally think the days of massive take downs  have come to an end.

Fri, 09/21/2012 - 09:56 | 2817576 Comay Mierda
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I hope you're right.  I just keep thinking about what happened to oil on monday.  its an election year and the margin-hiker-in-chief would really appreciate it if tell-tale signs of inflation are suppressed

Fri, 09/21/2012 - 09:47 | 2817530 WhiteNight123129
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What really matters is the 30 years bonds, once it gets to 4 to 4.5 % lift a bit of your gold because a higher embedded inflation expectation relieves Bernanke from printing. As long as we at at 3% or close you are safe, Bernanke keeps printing. Soros Sold in 2011 because of that, he thought Bernanke had managed for force inflation expectations up and managed to force the dishoarding of cash from the Rich and the Corporations.



Fri, 09/21/2012 - 19:35 | 2819570 WhiteNight123129
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Exactly my point, the Fed can not afford Japan who lost control of yield curve. Banking School XIX century, if you start to have long bond moving upward you create a dishoarding and prices rise forcing spending.Today that would the rich and corporations forced to spend by manipulating inflation upwards.

Fri, 09/21/2012 - 09:28 | 2817449 Cognitive Dissonance
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"His suggestion is that gold 'should be part of everybody's portfolio'......"

The rush into Gold by the great unwashed will be breathtaking in its scope and ferocity. Buy early and often. And don't forget Silver, the junior Gold.

Fri, 09/21/2012 - 09:45 | 2817522 midtowng
midtowng's picture

The sheeple (at least those in America) are still unaware that gold is a good investment. By the time they figure it out it'll be during the parabolic blow-off when gold is no longer such a good investment.

Fri, 09/21/2012 - 10:30 | 2817596 WhiteNight123129
WhiteNight123129's picture

Gold is not an investment, it is a commodity form of money. Investment is monied capital (bonds and stocks) the stuff levered on top of the circulation, the cycle is the move from one to the other and back and forth. The cycle are very short under metallic standards, but very long under elastic money. Silver is money printing, it is hoarded when Gold is overvalued into jewelry and forks and stuff, and is printed, dishoarded and coined into money when there is a credit contraction so that people can helpf the shortfall of circulation in relation to credit, or used by shrewed investor in order to buy assets at a discount. A bimettalic standard is always more stable for this reason. A monomettalic standard does NOOOOOTT  allow you the extra tire in the back of your truck. A repressed bullion flow with artificially low price of Gold and on top of that a split between the bank issue and deposit bank is castrophic stuff. The Bank of England between 1829 had no issue acccomodate the flow of bullion out of England, it came right back by 1831-1832. Once conditions became better the Silver is hoarded back, or the Gold is hoarded back if there is a big Silver mine discovery in between. A bimettalic standard with free-flow of bullion, bank of issue and deposit bank under the same roof with large level of bullion in the bank is absolutely superb stuff (French monetary standard until 1873 was the most stable stuff out there.)



Fri, 09/21/2012 - 12:59 | 2818448 WhiteNight123129
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Circular argument, everything is circular in Finance.


Fri, 09/21/2012 - 09:53 | 2817558 Ricky Bobby
Ricky Bobby's picture

Ray Ray talks of beautiful deleveraging, well what is going to be beautiful will be driven by Extraordinary Popular Delusions and the Madness of Crowds. When the shiny explodes into the consciousness of the masses it will make iMania and Black Friday look tepid.

Fri, 09/21/2012 - 09:28 | 2817453 edb5s
edb5s's picture

What happened with gold this morning?  Up to 1785.

Fri, 09/21/2012 - 09:30 | 2817462 Cognitive Dissonance
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"You hear that Mr. Anderson? That is the sound of inevitability."


Fri, 09/21/2012 - 09:41 | 2817509 Freebird
Freebird's picture

More of the masses waking up

Fri, 09/21/2012 - 09:29 | 2817458 EnglishAustrian
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Buffet may well be right for him. He can see ways that his wealth can be invested for a better return than a short term improvement in gold price.

Personally, I am not so confident in my abilities so for safety have bought silver and held onto what gold I have.

Fri, 09/21/2012 - 09:36 | 2817485 LawsofPhysics
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My guess is that Buffet does not give a shit.  He has more than enough for his remaining days.

Fri, 09/21/2012 - 10:12 | 2817684 MachoMan
MachoMan's picture

Realistically, what more do you need than a bathtub, rubber ducky, Mr. Bubble, and a CNBC anchor to rub and tug?

Fri, 09/21/2012 - 10:35 | 2817802 WhiteNight123129
WhiteNight123129's picture

BUffet knows only the leveraging cycle assets (bonds and stocks).

Fri, 09/21/2012 - 09:29 | 2817459 tocointhephrase
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There you have it Warren is a BIG mistake!

Fri, 09/21/2012 - 09:30 | 2817461 Dr. Engali
Dr. Engali's picture

So is everybody waiting in line for your new iPhone 7?

Fri, 09/21/2012 - 09:36 | 2817469 Cognitive Dissonance
Cognitive Dissonance's picture

I don't know about you, but I'm waiting for QE7.

<Am I in the wrong line? Cus I can move if I am.>

Fri, 09/21/2012 - 09:38 | 2817495 Dr. Engali
Dr. Engali's picture

Let's see we are technically at Qe5 when you ...it seems like we get a new qe around each new iPhone release. But since we now have qe to infinity I don't know how we are going to keep track.

Fri, 09/21/2012 - 09:54 | 2817570 Cognitive Dissonance
Cognitive Dissonance's picture

I proposed numbering it like the early Windows OS versions.





Each time they increase the monthly amount of the never ending purchases (or they change the purchases to stocks, ETF's etc) we can change the number to the right of the decimal.

The Fed's last bullet to the head (large checks in the mail to each household/person, most likely through its proxy the US government) will be the official QE 4.0

Fri, 09/21/2012 - 10:00 | 2817602 fuu
fuu's picture

Did you include cash for clunkers in your count?

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