The Enduring Value of Gold over Bitcoin: Insights from Ray Dalio
According to reports, billionaire investor and founder of Bridgewater Fund, Ray Dalio, stated in a program on Wednesday that the trend of Bitcoin is not reliable. Compared to Bitco
According to reports, billionaire investor and founder of Bridgewater Fund, Ray Dalio, stated in a program on Wednesday that the trend of Bitcoin is not reliable. Compared to Bitcoin, gold is more favored. I don’t understand why people prefer Bitcoin over gold. If you look globally, for central banks around the world, gold is the third largest reserve asset, second only to the US dollar and the euro. Central banks around the world are rushing to buy gold instead of bonds because it is timeless and universal.
Ray Dalio: Bitcoin’s high volatility and risk limit the amount of money investors can hold
Introduction
With the exponential growth of cryptocurrencies, it is natural to question whether Bitcoin or gold holds better investment possibilities. Billionaire investor Ray Dalio recently shared his thoughts on this subject matter, emphasizing his strong support for gold over Bitcoin. In this article, we explore Ray Dalio’s views on the topic and examine why central banks around the world are opting for gold as their preferred reserve asset.
Understanding Ray Dalio’s stance on Bitcoin vs. Gold
Ray Dalio, founder of hedge fund Bridgewater Associates, has recently expressed his skepticism about Bitcoin. He believes that the trend of Bitcoin is unpredictable, particularly in comparison to gold, that remains a favorite for many investors. “I don’t understand why people prefer Bitcoin over gold. If you look globally, for central banks around the world, gold is the third largest reserve asset, second only to the US dollar and the euro”, said Ray Dalio. Dalio added that central banks worldwide are increasingly buying gold instead of bonds because it is timeless and universal.
Why gold is preferred by central banks
Gold remains a preferred asset class due to its unique properties. It is durable, consistent, and divisible, making it a timeless and universally recognized store of value. It has a low correlation with other asset classes, such as stocks and real estate, making it an excellent diversification tool. It has been a reliable measure of wealth for centuries and has consistently provided returns over the long term. In addition, gold has no associated political risk, as it is not subject to any country’s monetary or fiscal policies.
Why Bitcoin is not reliable
Bitcoin is a relatively new form of currency and has yet to gain widespread acceptance. As a result, its value is highly volatile and prone to fluctuations. It is unpredictable and remains a risky investment due to its lack of regulation and the lack of clarity on its underlying valuation. Concerns also remain around the security and stability of Bitcoin and the associated blockchain technology, with cybersecurity threats being a constant menace.
Conclusion
In summary, Ray Dalio’s recent remarks highlight that central banks around the world continue to hold gold in high esteem. It remains a reliable and consistent store of value, with a wealth of historical evidence indicating its usefulness as an investment asset. The considerable value of gold can be put down to its utility, industrial uses, and above all, its durability. Until Bitcoin is widely accepted and stable, investors and central banks will continue to seek refuge in gold.
FAQs
Q1. What is Ray Dalio’s stance on investing in Bitcoin?
Ans. Ray Dalio is of the opinion that gold is a far better investment asset than Bitcoin due to the latter’s lack of regulation and predictability.
Q2. Why do central banks worldwide prefer holding gold?
Ans. Central banks worldwide consider gold to be a safe asset class due to its durability, consistent long-term returns, and low correlation with other asset classes.
Q3. Is Bitcoin a reliable investment asset?
Ans. Bitcoin’s value is highly volatile, making it a risky investment asset. Its lack of regulation and underlying valuation make it unpredictable and prone to fluctuations.
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