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For centuries, gold has held a unique place as a symbol of wealth and security. Its allure as an investment has only grown stronger in recent decades, especially among some of the world’s most prominent billionaires. Sam Zell, Naguib Sawiris, David Einhorn, John Paulson, and Ray Dalio, among others, have turned to gold as a safeguard against inflation, economic turbulence, and as a tool for portfolio diversification. Let’s explore why these financial titans have chosen gold, despite its lack of income generation, and what factors drive their commitment to this age-old asset.
Article highlights:
Sam Zell’s Shift to Gold: Despite being a former critic of gold, real estate mogul Sam Zell bought gold for the first time in 2019, citing inflation and currency debasement as key concerns. He also pointed out the shrinking supply of gold due to minimal investment in new mines.
Naguib Sawiris’ Bold Investment: Egyptian billionaire Naguib Sawiris invested half of his net worth in gold in 2018 and still holds around 25% in the metal. He launched a $1.4 billion gold mining fund and advocates for holding 20-30% of a portfolio in gold to buffer against market risks.
David Einhorn’s Critique of Monetary Policy: Hedge fund manager David Einhorn views gold as a critical asset, arguing that the Federal Reserve’s policies will fail to control inflation. He ranked gold as one of his top ten positions in 2020 and sees it as a long-term safeguard against economic instability.
John Paulson’s “Gold Guru” Status: John Paulson, famous for his bet against the housing market in 2008, is a long-term proponent of gold. He believes the devaluation of the U.S. dollar will drive up gold prices and that central banks’ increasing gold reserves signal a trend toward de-dollarization.
Ray Dalio’s Diversification Strategy: Bridgewater Associates founder Ray Dalio stresses gold’s role in a diversified portfolio, calling it a “timeless and universal currency.” He sees gold as a hedge against inflation and monetary policy risks, maintaining that gold is a better investment than cryptocurrencies for long-term stability.
Sam Zell, the real estate mogul with an estimated net worth of $5.5 billion, made headlines in 2019 when he purchased gold for the first time. Until then, Zell had been vocal in his scepticism of gold as an investment. He often criticised gold because, unlike real estate or stocks, it doesn’t generate any income and incurs costs for storage. However, Zell’s stance shifted as global financial instability increased and inflation became a growing concern. He saw gold as a practical hedge against inflation, a defence mechanism in an uncertain economic environment.
One of the main reasons behind Zell’s change of heart is his concern over currency debasement. In response to the economic downturn caused by the COVID-19 pandemic, governments worldwide injected unprecedented amounts of capital into their economies, essentially “printing money” to keep the economic engine running. Zell saw this policy as eerily reminiscent of the 1970s, a time marked by stagflation, and believed it would inevitably lead to the devaluation of major currencies.
Moreover, Zell pointed to dwindling supply as a bullish factor for gold. According to him, the amount of capital being funnelled into new gold mines is virtually non-existent, with mining companies preferring instead to consolidate by acquiring competitors. This shrinking supply, combined with increased demand, creates the perfect scenario for a price increase in gold, bolstering Zell’s confidence in his new position.
Naguib Sawiris, one of Egypt’s richest men, has long been a vocal advocate for gold. In 2018, Sawiris made waves by placing half of his net worth into the precious metal, a move that few investors would dare replicate. To this day, Sawiris maintains about a quarter of his wealth in gold and strongly recommends that investors hold between 20-30% of their portfolios in gold as a buffer against market risks.
Sawiris has gone beyond simply holding gold; he has actively invested in the gold mining industry. He launched a $1.4 billion gold mining fund, signalling his belief in the long-term profitability of gold mining ventures. For him, gold serves as a safety net against political and economic instability, particularly in regions like the Middle East and Africa, where his business interests are heavily concentrated. By putting his money where his mouth is, Sawiris continues to advocate for gold as a means of securing wealth amidst global uncertainty.
Hedge fund manager David Einhorn is another billionaire investor who has consistently championed gold, particularly in light of what he sees as reckless monetary policy in the United States. Einhorn has long warned that the Federal Reserve’s attempts to control inflation through aggressive monetary expansion will ultimately fail, leaving investors vulnerable to currency devaluation. As such, he views gold as a safe haven in an increasingly unstable economic landscape.
In 2020, Einhorn ranked gold among his top ten investment positions, a clear indication of his commitment to the precious metal. At the Sohn Investment Conference, Einhorn expanded on his views, noting that central banks have pushed monetary policies into uncharted waters, which will likely fuel inflation over the long term. In his view, gold’s value will continue to rise as a result of these policies, and he has recommended that investors allocate a significant portion of their portfolios to the metal.
Einhorn’s stance on gold is rooted in his broader distrust of conventional economic policy. He has repeatedly stated that the Federal Reserve is “bluffing” in its attempts to control inflation through interest rate hikes, and believes that gold remains the best hedge against the economic fallout of these policies. For Einhorn, the long-term prospects for gold remain bullish, driven by both monetary mismanagement and the growing demand for alternatives to fiat currency.
John Paulson, founder of Paulson & Co, is best known for his legendary bet against the U.S. housing market during the 2008 financial crisis, which earned him billions. However, Paulson has also carved out a reputation as one of the most successful investors in gold. Often referred to as a “gold guru,” Paulson has consistently championed the metal as an asset that can outpace inflation and protect against currency devaluation.
Paulson’s views on gold are deeply tied to his outlook on the U.S. dollar. He believes that as the dollar weakens over time due to inflation and rising government debt, gold will appreciate in value. This conviction has led Paulson to recommend holding gold for the long term, particularly as an alternative to cash and fixed-income instruments that offer low returns. In his view, the shift away from the dollar as a global reserve currency is already underway, with central banks worldwide increasing their gold holdings.
Paulson has also highlighted gold’s limited supply relative to the rapidly expanding money supply as a key driver of future price increases. As more investors flock to gold to hedge against inflation, the precious metal’s scarcity will only amplify its value, making it one of the best long-term bets in the market. Paulson has even gone as far as to suggest that gold derivative bets could pay off handsomely in the coming decade, with potential returns as high as 25 to 50 times the initial investment.
Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, has long been a proponent of diversification in investing. Dalio believes that gold should be a core component of any well-balanced investment portfolio. His endorsement of gold stems from his belief that it serves as a “timeless and universal currency” capable of withstanding economic volatility, inflation, and geopolitical instability.
Dalio’s stance on gold is largely driven by his concerns over the current state of the global financial system. He has frequently warned that central banks, particularly in developed countries, are depleting their toolkit for managing economic crises by relying too heavily on measures like quantitative easing and low-interest rates. In such an environment, Dalio argues, gold offers a form of protection that few other assets can provide.
In 2020, Bridgewater Associates released a report emphasizing that it is wise for investors to hold some gold because central banks cannot print more of it, unlike paper currencies. Dalio echoed this sentiment in a 2020 CNBC interview where he famously stated that “cash is trash,” urging investors to consider gold as part of a diversified global portfolio.
Dalio’s belief in gold is not just theoretical. In a 2022 filing, Bridgewater’s investment portfolio revealed a consistent focus on gold, despite the rise of alternative assets like cryptocurrencies. While Dalio has expressed some interest in Bitcoin, he maintains that gold is the superior choice for those looking to hedge against long-term economic risks.
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