Billionaires Turn to Gold

UBS recently published its 10th annual Billionaire Ambitions Report for 2024, highlighting trends in billionaire wealth and their strategies for preserving it. The past decade has been particularly fruitful for billionaires. Their total wealth rose 121% globally from 2015 to 2024. Soaring from $788.9 billion to $2.4 trillion over the last decade. The number of billionaires also increased significantly, growing from 1,757 to 2,682 during this period. With all the means at their disposal, billionaires are moving to a time-tested asset to safeguard their wealth – gold.¹

A Shift in Strategy

The report found a notable shift in how billionaires plan to maintain their wealth. Increasingly, they are turning to “perceived havens from market storms.” Forty percent signaled an intention to buy more gold. Meanwhile, 27% indicated plans to decrease their hedge fund investments.²

This shift comes amid falling interest rates and growing concerns over geopolitical risks and overvalued equity markets. UBS theorizes that the move to gold reflects a defensive stance against potential market volatility. More than half of billionaires expressed concerns that within the next year, a major geopolitical conflict could negatively impact their investment portfolios. Following that, inflation was the second highest concern for the coming year. But those worries give way to fears about global recession, debt crises, and financial market instability.

³

Billionaires Backing Gold

Some high-profile billionaires have been vocal about their preference for gold. Eric Sprott is founder of the Sprott Physical Gold Trust. He has attracted billions in investment with his advocacy for gold as a safe haven. He remarked, “I believe that gold and silver are essential investments for anyone seeking protection against currency devaluations and economic uncertainties.”⁴

Seth Klarman is founder of the Baupost Group and worth $1.5 billion. He is also a proponent of gold. Renowned for his focus on risk management, he stated, “Gold is a tangible asset that retains its intrinsic value, regardless of economic policies and financial crises.”⁴

Jeffrey Gundlach, the “Bond King,” has a personal fortune of $2.2 billion. He recommends gold for portfolio diversification. Gundlach is an outspoken critic of the Federal Reserve and other central banks. He said, “Gold is one of the few currencies that is not manipulated by central bank policy.”⁴

Ray Dalio is founder of Bridgewater Associates and worth $19.1 billion. He incorporates significant gold investments into his diversification strategy. He emphasized, “If you don’t own gold, you don’t know history or economics.”⁴

Gold’s Appeal Beyond Billionaires

The attraction to gold extends beyond billionaires to ultra-high-net-worth individuals (UHNWI). Defined as those with more than $30 million in assets. On average, UHNWIs allocate about 2% of their net worth to gold. They use it as a defensive investment against inflation, a weak U.S. dollar, and currency volatility caused by trade wars and geopolitical tensions.⁵

Those who aren’t UHNWIs recognize the value of owning gold. A recent survey shows investors with at least $250,000 in assets are increasing their gold holdings. The percentage of such investors with gold in their portfolios nearly doubled. It rose from 20% in spring 2023 to 38% in summer 2024. Most invested in physical gold bullion, with the average gold allocation jumping from 14% to 21% in the same period. The primary reasons cited were hedging against stock market volatility and protecting against inflation.⁶

The Rising Price of Gold

Gold prices have surged nearly 26% since the start of the year, outpacing the S&P 500. China’s central bank resumed public gold purchases after a seven-month hiatus, driving prices to a two-week high. Analysts speculate that China has been secretly buying gold during their public hiatus. China is seeking to diversify its reserves away from the U.S. dollar and protect against currency depreciation amid several economic crises.

Geopolitical instability, such as the escalating conflict in the Middle East, has further boosted demand for gold as a safe haven. The potential for another Federal Reserve interest rate cut this month could also increase gold’s appeal. Lower rates make non-interest-bearing assets like gold more attractive.

Warnings of Market Collapse

Billionaires like Jeremy Grantham and Mark Spitznagel have issued dire warnings about the market’s future. Grantham described the current market as “the most vulnerable market there has ever been.” He advises preparing now because a crash occurs “without warning.” Spitznagel believes the market is in a “Goldilocks phase.” He cautioned that the euphoria won’t last. And that the bursting of the “biggest market bubble in history” could lead to a prolonged recession.^7,8

Conclusion

Billionaires and regular Americans can see the direction the economy is going. They are moving into physical gold to protect their wealth from whatever shocks the future holds. If you want to learn more about how physical precious metals in a Gold IRA can help safeguard your retirement, please give us a call at 800-462-0071 today.

Notes:

1. https://www.ubs.com/global/en/wealthmanagement/family-office-uhnw/reports/billionaire-ambitions-report.html
2. https://www.ubs.com/global/en/wealthmanagement/family-office-uhnw/reports/billionaire-ambitions-report.html
3. https://www.ubs.com/global/en/wealthmanagement/family-office-uhnw/reports/billionaire-ambitions-report.html
4. https://www.goldmarket.fr/en/top-10-billionaire-gold-owners/
5. https://finance.yahoo.com/news/much-ultra-wealthy-really-investing-190013474.html
6. https://www.investopedia.com/more-wealthy-investors-are-adding-gold-to-their-portfolios-heres-why-8747191
7. https://www.benzinga.com/markets/24/10/41145356/billionaire-who-predicted-2008-crash-and-dot-com-bubble-calls-the-current-economy-the-most-vulnerabl
8. https://finance.yahoo.com/news/billionaire-investor-predicted-2000-2008-000019851.html