Why The World's Billionaire Investors Buy Precious Metals

There are always lessons that can be learned from the “smart money”. Unlike regular investors, Visual Capitalist's Jeff Desjardins notes that billionaire money managers like Ray Dalio and Stan Druckenmiller are professional investors. They have entire institutional teams at their disposal, dive deep into the nuances and complexities of the market, and spend every waking moment of their lives thinking about how to get more from their investments.

They want to make money – but they also want to execute on strategies that will protect their wealth and build robust portfolios that can withstand any type of macro event.

TURNING TO GOLD

In recent months, some of these elite investors have turned to precious metals like gold as a part of their overall investment strategies.

In the following infographic from Sprott Physical Bullion Trusts, we explain why these investors are adding precious metals to their portfolios, the underlying tactics, and the best quotes each investor has on assessing today’s market.

Courtesy of: Visual Capitalist

 

Why are these billionaires buying precious metals?

Their cited reasons can basically be summed up with six categories: wealth preservation, store of value, inflation hedge, portfolio diversification, future upside, and investment fundamentals.

WHAT BILLIONAIRE INVESTORS ARE DOING

1. Lord Jacob Rothschild

In late summer 2016, Rothschild announced changes to the RIT Partners portfolio because he was worried about very low interest rates, negative yields, and quantitative easing, saying they are part of the “greatest monetary experiment in monetary policy in the history of the world”.

His solution? Buy gold to help preserve wealth, and as a store of value for the future.

2. David Einhorn

Einhorn has a similar assessment. He believes that monetary policy is becoming increasingly adventurous, and that this – along with the policies of the Trump administration – will eventually lead to large amounts of inflation.

In February 2017, he shorted sovereigns, and bought gold.

3. Ray Dalio

Ray Dalio is the founder of the world’s top hedge fund, Bridgewater Associates, but he’s also no stranger to gold.

If you don’t own gold, you know neither history nor economics.

– Ray Dalio, Bridgewater Associates

More recently, in 2016, Dalio is quoted as telling investors to own a well-diversified portfolio that is 5-10% gold.

4. Stanley Druckenmiller

Druckenmiller, some people argue, is the best money manager of all time.

Lately, he’s placed his bets on gold as well, but for different reasons than the above managers. Druckenmiller has always placed big trades with lots of conviction, and in February 2017 he put his money in gold because “no country wants its currency to strengthen”.

Comments

TimeIsTheFire Mon, 06/12/2017 - 02:55 Permalink

Why are these billionaires buying precious metals?

Because they can afford it. Now, please stop peddling gold so aggressively. Or go back 8-9 years or so and delete all evidence of doing that on a near daily basis, the performance so far is awful, and a nine year wait is a bit too much of an ask.

el buitre stacking12321 Mon, 06/12/2017 - 09:38 Permalink

I read that a lot of these hedge fund managers are investing in paper gold instead of phyz.  This article doesn't detail their actual investments but rather their public mouthings.  If paper gold goes to zero when the Comex scam goes tits up, and phyz is a moonshot, they will be yuuugely embarrassed.  Some of these guys are one trick pony's from their 2008 shorts.  Jacob "Satan's little helper" Rothschild's wealth at $5B?  ROTFL.  He's long on short hot dogs.

In reply to by stacking12321

alphasammae Mon, 06/12/2017 - 03:26 Permalink

Mr. Durden stop pumping gold! Gold and Silver are not going anywhere as it is manipulated through digital paper trading and now Bitcoin is the new bubble digital currency to compensate for the extra helicopter paper not able to land without further inflating other financial instruments.

saldulilem Mon, 06/12/2017 - 03:32 Permalink

Are they buying real metal and taking delivery to own vault, or GLD, or futures contracts? Cause if these guys are plopping hundreds of millions and taking delivery, methinks this whole thing is going down already.

Gordon_Gekko Mon, 06/12/2017 - 03:58 Permalink

I, for one, am grateful for the opportunity provided by the Cartel to increase my PM holdings at extremely discounted prices for a lot longer than I thought possible. Longer PM suppression means proportinaly greater upside when the the thing finally blows. So, once again, THANK YOU CENTRAL BANKING CARTEL ASSHOLES.

chubbar Debugas Mon, 06/12/2017 - 08:24 Permalink

They buy physical, at least one billionaire that I personally know of does. This was back in 99', I saw the vault. He was listed on forbes top 10 list that year. These guys are rich enough to hire the very best money managers and it was his money manager that moved him into a decent sized gold position at what was clearly the multi generational low in the gold price. 

In reply to by Debugas

bjax Mon, 06/12/2017 - 04:56 Permalink

Yea .. seeing more and more of these as people turn to cryptos as something that is decentralised, not manipulated and actually going up, rather that stagnating. I wonder why?

bshirley1968 bjax Mon, 06/12/2017 - 08:20 Permalink

Cryptos,  not manipulated?  Waaaahahahahahaha!  That's some funny stuff right there.Tiny market, thinly traded, less than 1% of the population knows about it, and it goes up and down in 20% moves on a regular basis.  Such security.  What confidence and consistency.  Sure to be what everyone will flock to.........so they can make MORE DOLLARS. You guys just can't get it, can you?  You just can't get that as long as something is viewed as an investment with the hopes of making more dollars,  then the dollar is in control and EVERYTHING it touches is then manipulated.That is why this article is bs, and why I don't own gold so I can get more of their shitty paper.  Gold stores my value, and if I need some of their shitty paper, I am confident there will be plenty lying around. 

In reply to by bjax

ludwigvmises Mon, 06/12/2017 - 05:55 Permalink

Presented by "Sprott". Gold peddlers, trying to scam people to buy their ETFs and gold products. Buy physical, don't listen to peddlers of investment products!

peterk Mon, 06/12/2017 - 06:02 Permalink

too many bull  bugs in goldgold only will resume  an advance after china crashes. you cant have  china long gold and down in equitiesand expect a  gold bull run.china represents weak hands in gold. whe some pressure  turn up on chiin they will liquidate  and gold will crash

Der Libertäre Mon, 06/12/2017 - 06:28 Permalink

JPM said: "Gold is money, the rest is credit".I have a silver ounce for every day of my retirement.I have a gold ounce for every 6 month of my retirement.I have a platin ounce for every year of my retirement.I have a house with a vege and fruit garden, not too much, doable.And all the rest is of no interest to me anymore.My country (Germany) is now a caliphate. If this happens to your country, the meaning of "getting out of the system" grows to a totally different dimensiion.I am out of everythiing. I reduced. I went basic.I am simply to poor to risk anything in this rigged ex-market. I will not short this crap, nor buy stocks after a crash. I am done. Out forever.I do not envy the Bitcoiners, nor anyone who is "richer" than me. I do not know anymore what rich means.My country is gone. My home is lost. I was so sad for so long.Today I live in a cristian comunity (in this moment I hear the church bells), it is peaceful. I hear birds and bees and a dog.I am out. After years of making myself mad with thoughts "what to do?" - I am calm and at peace. Finally!Hopefully I do not sound like Chris Martenson. ;-)"If a country goes broke - of course not the country goes broke, but the citizens!" Carl Fürstenberg.This is the sentence, which made me leave. I am not smart enough to survive in rigged lawless markets. I am not smart enough to survive in rigged lawless countries.I am out.Sorry for getting off topic.