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.
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”.