When investors think of famous billionaires, like hedge fund kings Steve Cohen and Ray Dalio among others, they think of their success trading stocks, bonds, currencies and derivatives. That may be how they made their money in the first place, but what do they do to preserve wealth once they have the money?
I’m personally acquainted with a number of hedge fund billionaires, both through my work in the industry and among my friends and neighbors in Fairfield County, Connecticut, where I lived for 35 years. That part of Connecticut includes the wealthy towns of Greenwich, Darien, Stamford and New Canaan that are home to many of the world’s largest hedge funds and banks.
Every billionaire I know has a large hoard of physical gold in safe nonbank storage. They won’t talk about gold publicly because it’s not what they trade and they don’t want to spook their investors. But in private conversations, they will let you know that they have stacks of 1-kilo gold bars in their private vaults.
As this article shows, there is at least one billionaire who is willing to discuss his gold holdings. This article reports on an Egyptian billionaire worth $5.7 billion who keeps 50% of his net worth in gold. That’s higher than my preferred allocation; I recommend that investors put 10% of their investible assets in physical gold.
Whether you allocate 10% or 50% is up to you, but a portfolio without some physical gold as insurance against catastrophe is a sitting duck for 85% losses when the next financial panic comes… which could be any day.
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