Becoming a billionaire is an enviable achievement, but it doesn’t end there. The next phase involves finding ways to secure your wealth so that it can appreciate over time. Therefore, wealthy investors always boost their finances by investing in stable commodities such as Gold. And if you trust Gold, it can repay you in dividends.
For instance, if you peel back into history, you’ll realize that Gold has held a positive financial track record throughout. It’s always acted as a safe asset during an economic downturn and geopolitical uncertainty. As a result, it has earned the favor of several Billionaires who’ve used this commodity to diversify their portfolios.
After all, with the financial markets becoming unstable, securing all financial angles is important. That’s why many billionaires accumulate gold, but some are miles above the rest! These are the heavy hitters in the gold investment game:
It's hard to see past the founder of the world's largest hedge fund firm when discussing gold. Ray Dalio has a net worth of $19.1 billion, so his belief in gold has significant value.
His primary gold use is for diversification and to store up his considerable wealth. In 2016, he pushed for the idea of a diversified portfolio consisting of 5-10% gold. His firm, Bridgewater, also increased its gold holdings by 525% in 2017.
Ray Dalio also picks gold over any form of cryptocurrency. In a 2018 interview, the hedge fund manager said, "If you put a gun to my head, and you said, I can only have one, I would choose gold."
He added in 2019 that including gold in an investment portfolio can reduce risk. It also increases the returns after every investment. Bridgewater committed over $400 million to gold investments in 2020. in the second quarter. With that investment, the company holds a significant 20% in gold with 170,000 ounces.
The 4th baron of the Rothschild family is no stranger to gold transactions. His family’s ties to the asset can be traced back to 1919. This was the year when the daily gold fix started on the premises of Nathan Meyer Rothschild & sons.
The firm sold its position at the gold fix table to Barclays in 2014. That said, it still dealt in the commodity. In 2016, Rothschild made changes to the RIT Capital Partners Portfolio. It increased exposure to gold and precious metals by up to 8%. This is well detailed in the Real Assets section of the RIT report. In addition, it listed the following gold-related line items:
"Gold Futures' ' with a description "Long, 6.0% notional", valued at £7.6 million. This represents 0.3% of the NAV.
"BlackRock Gold and General Fund '', described as "Gold and precious metal equities', 'with a valuation of £22.9 million. This represents 0,9% of the NAV with a fund weight of 0.83%.
Silver Futures with a description "Long, 1.2% notional". The valuation is £7.6 million and represents 0.0% of the NAV.
Lord Rothschild has recently reduced the firm's percentage of stocks. Also, most of its paper assets have been switched to gold. The billionaire attributed his decision to the "greatest experiment in monetary policy in the history of the world. This reasoning became clearer when he noted concerns over low-interest rates. With 30% of government bonds already at negative yields, his gold investment is the perfect safety net.
The "Oracle of Omaha" is one of the most successful investors in history. With a net worth of $91.7 billion, its smart money moves are part of his daily routine. Buffet's gold involvement is linked to the fact that gold has improved its market performance with a 6 time boost since 2000!
'Gold has improved its market performance with a 6 time boost since 2000'
It also has a 3.5 times better performance than the shares of its company, Berkshire Hathaway. His gold investment has also been a bet against the US banking system. In 2020, Berkshire reduced its stake in JP Morgan by 62%, Wells Fargo by 62% and Goldman Sachs by 100%.
Buffet hasn't always held a positive gold position as he voiced concerns about the asset's viability. In 2011, he noted that "gold is a way of going long on fear ."He added the only way for gold to be beneficial is for people to be more afraid of losing money. But, he changed his reasoning and invested $564 million in Barrick Gold in August 2020.
Before foraging in the world of precious assets, Naguib made his money in the tech world. He built wealth when Russian telecom firm VimpelCom acquired his company in 2011. The company was reportedly sold for a multibillion-dollar transaction.
In 2018, the heir of Egypt's wealthiest family invested half of his net worth in gold. This figure at the time was $5.7 billion, and he believed that the gold price would rise. However, he also called the stock market overvalued with predictions of a market crash.
The gold price at the time of Sawiris' investment was $1,300/oz. Nevertheless, he held onto his investment, and the valuation was $1,905.61/oz in 2020. The original investment of $2.85 billion was worth $4.2 billion. This figure showed an investment growth of over $1.3 billion in more than 2 years.
The real estate mogul started his company, Equity Group Investments, in 1968. Since then, the organization has played a major role in various industries. These include logistics, energy and healthcare. Zell's gold buy decision was so the commodity could serve as an inflation hedge. In his words, "supply is shrinking, and that will positively impact the price ."He added that "the amount of capital being put into new gold mines is almost nonexistent."
The billionaire's first gold investment was in 2019, but his reasoning was accurate. After the government corrected the gold price in 2011, mining companies cut investments. This reduction was to redirect resources to locate new mines. However, with gold hitting record highs, it took an average of 10 years to find and mine a new gold deposit. The effect is investors will meet the eventual gold rush with little supply.
Analysts also report that the world has reached peak gold mining quantity. This indicates that we have extracted the most Gold in a year. Therefore, the supply decrease will lead to a rise in gold prices. Considering this, Zell stands to benefit from gold in his portfolio.
Paul Singer is one of the largest and toughest money managers in the hedge fund industry. He founded his firm, Elliot Management, with $1.3 million back in 1977. The firm currently manages $56 billion in assets, with Paul worth $5.5 billion.
The founder was quoted as saying gold is one of the best assets to buy. Moreover, he called it "one of the most undervalued assets available." Singer further added that its fair value is "multiples of its current price."
Paul also invested in gold because of the "fanatical devaluation of money brought to the fore by the world's central banks. This refers to the financial strategy of money printing. It was done by the Federal Reserve and other central banks and was implemented as a stop-gap for the effects of the pandemic.
The currency value drops when trillions of dollars are added to the economy. So eventually, the purchasing power gets reduced. Gold however, protects investment portfolios as it grows in value.
Gold is a credible investment to add to your portfolio. You can start with these options:
Spot gold trading allows an investor to diversify their portfolio and hedge against market volatility and inflation. The combination of liquid markets, strong fundamentals, and ease of entry help make this a popular method of investing for many people.
Spot gold markets are those where one can buy and sell in their local currency. For example, if you want to purchase gold bullion in Dubai, you can buy them by paying it off in AED. When an investor wants to trade in the spot market, he or she will be able to make profits if there is an increase in the gold rate in the UAE. And if there is a fall in the gold price in UAE, the investor can hold on to his receipt for longer to minimize his or her losses.
The investor does not have to pay the full amount to purchase a commodity in spot trading. In some cases, you can own the quantity by paying just an initial margin as good faith. This good faith deposit is generally a percentage of the overall contract value.
You can instantly start spot trading in Gold and Silver on the ISA Bullion app instantly after signing up and depositing an amount to purchase your amount of physical bullion. To learn more about how spot trading works in the ISA Bullion app, check out our Spot trading Guide here.
To start locking in Gold and Silver profits instantly, download the app for iOS and Android right now and gain access to your own personal trading dashboard available 24/5 on the go.
Futures contracts are agreements that trade on organized exchanges. They allow a holder to buy or sell an underlying at a specified time in the future. It is also based on the price already agreed on by the parties.
For instance, a gold futures contract at Chicago Mercantile Exchange covers 100 troy ounces. You have to trade it by depositing an initial margin. This is the minimal amount needed to open a position. The position will be marked-to-market, i.e., you profit if the price goes in your direction. You also lose money if the price goes the opposite way.
ETF shares are purchased like any other stock, i.e., through a fund manager or brokerage firm. Investing in gold ETFs allows your money to enter the gold market without owning the commodity. It's also a flexible means of gaining exposure to assets to diversify your portfolio.
That said, investors are exposed to liquidity-related risks. The SPDR Gold Trust prospectus reports possible liquidation when the trust balance falls below a certain level. Liquidation also happens when the net value drops. Shareholders holding 66% of outstanding shares can also push for liquidation.
Gold is an asset you won't regret adding to your portfolio. Given the current global economic situation, it's bound to keep increasing in value. With ISA Bullion, you can get credible trading and investment advice to keep your finances secure. You also have a platform to carry out secure transactions. So sign up today and begin your investment journey with ease.