"Gold has become a meme asset": what Bill Gross, Ray Dalio and other gurus are saying

Legendary investor Bill Gross has urged caution about buying gold and called the rally memetic, that is, detached from fundamentals. Others - including Ray Dalio, founder of Bridgewater Associates, the largest hedge fund by assets, and Jamie Dimon, head of JPMorgan - believe gold is still a solid capital protection in the face of debt pressure and geopolitical instability. Whether the asset, which has become a reflection of all the anxieties of global markets, remains a "safe haven" or is another risky bet on rising prices, Barron's wonders.

"Gold has become an asset driven by hype and memes. If you want to buy it, wait a bit," Bill Gross, founder of the PIMCO investment fund known as the "bond king," wrote on social network X. In his view, the current price rise reflects not fundamental improvements but an excess of liquidity and a lack of confidence in debt instruments. Gross attributes the gold rally to widening budget deficits and the expectation of lower interest rates, which have made the metal a temporary haven for capital.

Gold is "the safest money, it can't be printed or devalued," said another investment guru, Ray Dalio. Last week, he invited X users to ask him questions about gold. Commenters asked whether it was more profitable to invest in the physical metal or ETFs, whether a "gold bubble" was forming, and how gold compared to bitcoin as a savings vehicle. In a response published afterward, Dalio made this comparison: fiat currencies, in his estimation, are debts created to prevent defaults, while gold remains an "anti-debt" - an asset independent of the decisions of states and central banks. He noted that the precious metal becomes indispensable in periods when "bubbles burst and countries cease to trust each other's loans". The optimal share of gold in an investment portfolio, according to Dalio, is 10-15% - it improves the ratio of risk and return and protects capital during market downturns.

JPMorgan Chase CEO Jamie Dimon, who does not usually buy gold and does not advise others to do so, admitted: "This is one of the few times in my life when having a little gold in your portfolio is practically reasonable". Dimon believes that in the current environment - weakening dollar, trade wars, geopolitical uncertainty - the precious metal may well rise to $10000.

Capital Economics analyst Hamad Hussein notes that the effect of FOMO - the fear of missing out on profits - is becoming more and more noticeable in the rise in the price of gold: with rising real yields, the asset looks overbought, and increased inflows into ETFs make the market vulnerable to correction. Bank of America analysts in October recorded this metal as "the most crowded position" among funds.

The Wall Street Journal's investment columnist Spencer Jacob thinks gold isn't the best way to protect yourself - it almost always loses out to other types of investments in the long run. "History and common sense say there are smarter ways to preserve capital," he writes.

The WSJ columnist supports his view with statistics: since 1928, $100 invested in gold has turned into less than $13,000. Over the same period, investments in the S&P 500 index with reinvested dividends have grown to nearly $1 million, and in small-cap stocks to nearly $5 million. Even corporate bonds have performed four times better than gold.

According to Jacob, "boring" businesses that own real assets are sustainable in an inflationary environment. "A company with oil reserves, land or factories whose debts will be devalued by inflation will be able to retain value. Unlike gold, it can also pay dividends while you wait for doomsday," Jacob writes.

Equally reliable, he believes, can be companies with intangible assets - patents, technology and brands - that maintain profits even in an unstable economy. Unlike gold, such businesses continue to create value when the economy recovers. "If hyperinflation drives the price of gold up to $400,000 an ounce, the Dow index will probably be at least four million points," Jacob ironizes.

Bank of America analyst Paul Chiana also calls for caution and also cites historical parallels. He reminds that the current rise is largely a repeat of past rallies, with subsequent corrections of 25-40%. After the rapid growth of the 1970s, gold lost about 60% of its value.

Canadian businessman and gold market veteran Pierre Lassonde, specifies that the current situation is closer to 1976, when gold began a four-year bull cycle. "We are just at the beginning of this movement, gold still has a few more years of upside ahead of it," he says.

There are investors in the market who have refrained from investing in gold for years. Warren Buffett, for example, is convinced that the metal only reflects investors' anxious expectations and therefore remains a "capitalization of fear." "[Gold] gets dug out of the ground, then we melt it down, dig another hole, bury it again, and pay people to stand around and guard it. It has no utility. Anyone watching this from Mars would shrug perplexed," he says. Buffett's Berkshire Hathaway fund briefly invested in Barrick Gold in 2020, but quickly exited the position.

Howard Marks, founder of Oaktree Capital, has a similar viewpoint. In an interview with Bloomberg, he said: "You can invest in cryptocurrency for fun, and in gold - out of superstition. People have been doing it for centuries." According to the billionaire, both assets have no intrinsic value because they don't create cash flow or generate income. "Gold may be more time-tested, but it has no rational basis for valuation," Marks noted. He believes that gold, like bitcoin, is only worth as much as others are willing to pay for it, and is therefore closer to an art object than an investment with a real return.

Over the past month, gold futures on the COMEX exchange rose in price by almost 20%, since the beginning of the year they have updated 48 records, calculated MarketWatch. Spot prices added about 16% over the month. After reaching an intraday high of $4378 per ounce, quotes have corrected, but continue to remain above $4300.

Against this background, bank analysts do not have time to revise their forecasts. HSBC and Bank of America do not exclude that by 2026 an ounce of precious metal will cost $5000. Yardeni Research also expects growth to $5000 next year, and by the end of the decade, according to its estimates, the cost of gold may reach $10,000.

An additional factor in the rally remains the purchases of central banks, which are building up reserves even at record prices. According to the World Gold Council, an international organization that analyzes the precious metals market, regulators added about 19 tons of gold in August alone. "For many, it's a matter of diversification, stability and long-term confidence in assets. We are seeing a structural rather than cyclical change: gold has become a key, liquid element of international reserves," notes Joe Cavatoni, senior market strategist at the World Gold Council. BullionVault Research Director Adrian Ash interprets this as "central banks are not immune to FOMO either".

This article was AI-translated and verified by a human editor