The Bridgewater Associates Fund considers investments in gold to be promising
Hedge fund Bridgewater Associates, which is owned by billionaire Ray Dalio, decided to focus on investing in gold. The company invested $0.4 billion in precious metal, which was purchased through ETFs. This option of buying gold is preferred by many investors, as it eliminates the need to keep the asset.
Bridgewater has purchased the assets of the SPDR fund, which is fully secured with gold. Dalio now owns the 914.3 million dollars fund, increasing its share from 600 million dollars. SPDR is not the only investment in precious metal. Bridgewater also acquired assets in the fund iShares, increasing its capital there from 176 million dollars to 268 million dollars.
The company resorted to increasing assets in gold after the trend of increasing demand for the metal on stock exchanges.
According to statistics from Business Insider, last year the world’s ETFs owned the total amount of gold, which exceeded the assets of the German Central Bank, which is the second place among the holders of precious metal. The largest one is the USA.
Last year, gold rose in price significantly, caused by the pandemic, global economic slowdown and strained trade relations between the U.S. and China. In July, the market observed a historical maximum – the cost of an ounce has crossed the threshold of 2 thousand dollars. After a while, gold still fell slightly below this level.
The Bridgewater Investment Fund is one of the largest in the world. In 2019, it predicted the collapse of markets, investing 1.5 billion dollars in put options. Now his analysts say that investing in stocks is not appropriate because many companies show declining profitability. Therefore, after years of positive dynamics, the stock market is showing a serious decline.
The pandemic has shown the weaknesses of international delivery chains, bringing anxiety and tension between the U.S. and China. As a result, many U.S. companies are thinking about moving their production facilities to their home country with a focus on reliability, even at the expense of cost optimization. A vivid example is Intel and Taiwan Semiconductor Manufacturing corporations, which are planning to build production facilities in the U.S., realizing that these are large costs.
The decline in demand, which was observed last spring, has led to a decrease in profitability of companies. After the quarantine restrictions were lifted, business activity began to recover, but their shares still lost value. That is why Bridgewater believes that investing in securities will not bring the expected income yet, and it is necessary to revise the investment portfolio.
