Investors Need To Find The “Next-Best Currency Or Storehold Of Wealth” As The Paradigm Shifts: Hedge Fund Kingpin


  • Central banks lowering interest rates and quantitative easing are the force behind this Paradigm Shift
  • So, what’s the next-best storehold of wealth to have when central bankers want to devalue their currencies in a fiat currency system

Ray Dalio, the founder of the world’s largest hedge fund Bridgewater Associates, wrote in a LinkedIn post that investors have been pushed into assets like stocks that have equity-like returns and now there are too many people holding these types of securities, so they are likely to face decreasing returns.

In the post titled, “Paradigm Shifts,” Dalio urges investors to change their mindset about what will work after the longest bull run in Wall Street history.

Dalio’s call for the “next-best currency or storehold of wealth” comes two weeks before the Federal Reserve is expected to cut the interest rate. This move comes after a three-year cycle of increasing rate from the near-zero levels implemented during the financial crisis.

Since the crisis, the Fed and its global counterparts have been holding low-interest rates and using policies like quantitative easing that helped boost the financial markets.

The Coming Paradigm Shift

As for the forces that are behind this paradigm shift that he says we have been in since 2009 involves, Central banks lowering interest rates and doing quantitative easing that is printing money and buying financial assets that are unsustainable.

But now the easing is approaching its limits interest rates can’t be lowered much more and quantitative easing is having diminishing effects on the economy.

“Monetizations of debt and currency depreciations will eventually pick up, which will reduce the value of money and real returns for creditors,” the Bridgewater Associates leader said.

Moreover, about 13 trillion dollars’ worth of investors’ money is held in zero or below-zero interest-rate-earning debt. Dalio points out how these investments are worthless for producing income.

Though he is uncertain of the timing, it is “highly likely” that the shift will occur in the next few years that in his opinion will see central banks running out of stimulant to boost the markets when the economy is weak and there will be an enormous amount of debt.

“It is also a good time to ask what will be the next-best currency or storehold of wealth to have when most reserve currency central bankers want to devalue their currencies in a fiat currency system.”

Gold, according to him is one investment that most likely to do best when the value of money is being depreciated and domestic and international conflicts are significant.

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