With debt and public spending crises flaring up worldwide, asset buyers should have gold as part of their investment portfolio, famed hedge fund guru Ray Dalio told CNBC on Friday.
Dalio is founder and co-chief investment officer Bridgewater Associates, and this year was named one of Time magazine’s most influential people in the world.
In an exclusive interview with CNBC’s “Squawk on the Street,” he said that the precious yellow metal “should be a part of everybody's portfolio to some degree, because it diversifies the portfolio. It is the alternative money.”
His comments come as interest in gold among investors has been on the upswing, with the metal flirting with new highs for the year above $1,700 per ounce. Since the Federal Reserve began usingmassive bond buying to stimulate U.S. job creation, many investors have flocked to gold as an alternative to printed money. (Read more: Are Fiat Currencies Headed for a Collapse?)
The rise of so-called “gold bugs” have sparked a debate about whether the Fed’s efforts — combined with runaway public spending and large government deficits — will eventually spark hyperinflationand wholesale devaluation of the U.S. dollar.
“We have a situation now where when you have too much debt. Too much debt leads to printing of money to make it easier to service,” Dalio said. “So all of those things mean that some portion [of an investment portfolio] should be in gold.”
Legendary investor Warren Buffett has publicly disdained gold, calling the metal unproductive as an asset that pales in comparison to stock returns. (Read more: Warren Who? Gold Bugs Still Think They Have Right Idea.)
Dalio, however, disagreed. “I think he’s making a big mistake,” the hedge fund titan said. “Over the long term, it's a little bit better than cash.”