Ray Dalio calls gold the best place to store money — ‘People make the mistake…'

Ace investor Ray Dalio on Tuesday backed gold as the best place to store money, as prices of the precious metal rebounded strongly after a brief dip amid a selloff.

Speaking to CNBC at the ‘World Governments Summit in Dubai’, United Arab Emirates, Dalio called gold a safe investment because it “does not change by the day.”

His comments came at a time when gold had experienced a historic selloff, dragging prices lower across the board.

“Gold is up about 65% from a year ago, and down about 16% from its high, and I think people make the mistake of thinking, is it going to go up and down, and should I buy it?” Dalio said.

Instead of thinking about buying it, central banks and sovereign wealth funds should ask how much gold should be allocated in their portfolios, as per the ace investor. “Instead, … perhaps central banks or governments or sovereign wealth funds should say, what percentage of my portfolio should I have in gold [and] keep a certain percentage, because it’s a very effective diversifier to other poor parts of the portfolio.”

Dalio added, “Because gold is a diversifier, when the bad times come along, it does uniquely well, and when the good times are prosperous, less so, [but] it’s an effective diversifier.”

He advised that the “most important thing is to have a well-diversified portfolio.”

The legendary investor further warned that the world is on the “brink of a capital war” as simmering geopolitical tensions and volatile trade markets continue to lurk around.

“That means not in, but it means we are quite close to [capital war], and it would be very easy to go over the brink into a capital war, because there are mutual fears.”

Gold price today rebounds

Gold price increased for the second straight day on Tuesday, regaining the $5,000 an ounce spot and rising over 2% amid a strong US dollar.

Spot gold rate rose 2.2% at $5,044.74 per ounce, after gaining 5.9% on Tuesday, its biggest daily gain since November 2008.

The yellow metal scaled a record high of $5,594.82 last Thursday. US gold futures for April delivery rallied 2.7% to $5,067.0 per ounce.

In India, the MCX gold price rallied on Tuesday. MCX gold rate on Tuesday for April futures contracts ended higher by ₹7,307, or 5.16%, at ₹1,53,650 per 10 grams. MCX silver price for March contracts jumped by ₹30,739, or 13.01%, to close at ₹2,67,000 per kg.