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These days, the global economy is in a mess, and investors' emotions are more exciting than a roller coaster.
As problems such as debt crisis, inflation expectations, and interest rate fluctuations emerge one after another, protecting one's wallet has become a top priority.
Ray Dalio, head of Bridgewater Associates, one of the world's largest hedge funds, made a strong suggestion at a financial conference in Abu Dhabi: Don't always focus on debt assets. Hard currencies such as gold and Bitcoin are the real safe havens.
He believes that in this economic environment where "uncertainty is rife", these assets have their own "risk-protection halo".
When it comes to gold, which investor wouldn't give a thumbs up? It stands tall as the 'ballast' in the financial market.
Dalio openly states that the allure of gold is mainly reflected in the following aspects:
Store of Value: Gold has been regarded as a symbol of wealth throughout history, and its value remains stable amidst the ups and downs of the market.
Hedging Against Inflation: When inflation surges, gold behaves like a top student, helping you firmly lock in purchasing power.
Globally Recognized: Whether in the East or West, gold is a hard currency with high market liquidity, allowing for buying and selling at any time.
Dalio suggests that investors should not put all their eggs in one basket; gold can be an important tool for diversifying risk within an investment portfolio, especially during times of economic uncertainty.
If gold is the 'old master' of traditional safe-haven assets, then Bitcoin is the 'rising star' of the emerging investment market.
Dalio believes that Bitcoin not only has momentum but also possesses the following unique advantages:
Decentralization: Bitcoin is not subject to central authority's intervention and is entirely driven by market supply and demand.
Limited Supply: With a total of 21 million, it may not seem like a small number, but in the global market, it is undoubtedly a 'scarce resource.'
Technological Innovation: Based on blockchain technology, Bitcoin transactions are secure and transparent, firmly positioned at the forefront of technological trends.
In Dalio's view, Bitcoin is not just an investment tool but may also become a crucial part of future payment systems. Especially amidst increasing global economic uncertainty, it has shown unique hedging potential.
Dalio specifically reminds that government bonds, corporate bonds, and other debt assets seem stable, but in reality, they carry significant risks. These primarily manifest in the following aspects:
Interest Rate Risk: When interest rates rise, bond prices fall; when interest rates fall, bond prices rise—bonds’ fate is like a pendulum.
Inflation Risk: When inflation strikes, the actual value of fixed income from bonds is diminished, and investors' wallets shrink accordingly.
Credit Risk: In times of economic downturn, the repayment ability of enterprises and governments declines, and the risk of default rises sharply.
Liquidity Risk: During market downturns, bonds can be hard to liquidate, which could lead to awkward situations when cash is urgently needed.
Market Risk: In an unstable economy, market sentiment fluctuates, and bond prices can swing wildly like a roller coaster.
Exchange Rate Risk: Investors in foreign currency bonds must also guard against changes in returns caused by exchange rate fluctuations, which is like adding insult to injury.
Dalio's advice is clear: reduce the allocation of debt assets and focus on hard currencies like gold and Bitcoin. After all, diversifying risks is the fundamental rule of investing.
In today's globally uncertain economic environment, investing in hard currencies like gold and Bitcoin is undoubtedly a wise choice to mitigate risks.
Bridgewater's Dalio provides investors with a new perspective—both the historically stable gold and the rapidly rising Bitcoin from emerging markets. Either can safeguard your wealth and is worth careful consideration in investment decisions.
