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Hey everybody, Smarts Silver Stacker here. Hope you're doing well. So, here's a piece of gold news that you might find interesting. Billionaire hedge fund manager Ray Dallio recently made a huge bet on gold. His hedge fund, Bridgewater Associates, opened a new $318.8 million position in the GLD ETF in Q1 of this year.
That was recently revealed via an SEC filing. Now, if you want to follow suit and buy some gold and silver, I would forget the GLD ETF, just get the real thing. You can check out sdbullion.com. Right now, new customers can get gold or silver at spot by visiting sdbullion.com/new. Now, why is Ray Dallio so bullish on hard money assets like gold?
Well, during a presentation at Abu Dhabi Finance Week, Dallio recently forecast a coming quote debt money problem due to hyper borrowing by the US, China, and virtually every large economy on the world. And it's important to note that in the current monetary system, all the fiat currencies, the US dollar, the Chinese yuan, all of them, they are all just units of debt borrowed into existence.
Now, let's take a look here at the chart of gold because gold has put on some big gains over the past year. Even with the recent pullback that we saw this week to around $3,200, gold is still up about 30% yearoveryear. But let's examine the recent historical bull market in gold that occurred between 2002 and 2011 because that's our most recent example of a major gold bull market.
Now during that time the gold price rose from about $250 an ounce to over $1,900. So that's a gain of more than 7x. Now, in the current bull market, gold bottomed in 2015 at around $1,50. Currently, it is trading at around $3,200 and it recently rose as high as 3500. But still, that is less than half of the move that gold made during its previous bull market.
So, that to me is a sign that this gold bull market has a long way to go. and the fundamentals seem to support that. Also, as I mentioned, you know, gold has pulled back from 3,500 bucks down to under 3,200 in the past few weeks. So, this looks like a good entry point to me. Feel free to leave a comment down below if you agree with that or if you disagree, let me know why.
Now, you might remember this book, Principles for Dealing with the Changing World Order. This was published a few years ago. It was written by Ray Dallio. It's a great book. definitely worth a read. But I want to just examine one chart from that book. Now, this is a chart of the course that a great power takes on its ascent, its peak, and then inevitably its decline.
And let's focus on the decline portion of this chart here. So number 13, the the first step towards the decline of a great power is the accumulation of large debts. Now, I think it's safe to say that we can definitely check that box in the US with a national debt that is approaching $37 trillion and growing rapidly.
Now, the next step is the printing of money and we have checked that box as well. This is a chart of the Federal Reserve, the central bank of the United States balance sheet, which you can see began rising significantly in 2008 following the great financial crisis when they launched their program of QE, which is just money printing by another name.
It means the treasury, they create money, they borrow it, they spend it into the system, and who is the buyer of that debt? Well, it's the central bank, the Federal Reserve. This is called debt monetization. And it's just another way of saying printing money. And it debases the currency. That's why the price of gold has risen as high as $3,500.
That's why everything you buy costs a lot more than it did back in 2008. And you can see there have been some ups and downs here along the way. But overall, the trend is up. There's actually been some quantitative tightening, the opposite of QE going on since 2022. You can see the balance sheet then peaked right around 9 trillion and it's come all the way down to 6.7 trillion or so.
So still a lot higher than it was a decade ago, but they have been trimming the balance sheet since 2022. But that is probably going to end soon. This is one reason why and that is the rising yield on US treasuries or the cost of borrowing money for the treasury. And this chart here goes all the way back to the 1980s.
You can see that there was actually a bull market in bonds. That means the yields were going down because they were getting bought up all the way from the 80s and before that to 2020. But in 2020, something changed and the trend of the yield on US debt reversed and it began climbing and it rose all the way from near zero to where it's at today on a 10-year, which is a benchmark rate of 4.43%.
Now, the national debt, a lot of this debt is older and it was taken out at lower interest rates and now that yields are going up, the debt is continuing to accumulate and also that older debt is being rolled over at today's higher interest rates. That means the cost of servicing the debt is rising.
This risks becoming an exponential debt crisis. So, what's the Fed going to do? Well, they're going to have to get back into the market and buy up more of this debt to prevent those yields from continuing to rise, which is something that would create a massive debt crisis and potentially a loss of confidence in the dollar.
So, the Fed's going to buy the debt, but is that going to fix the problem? Well, what's the next step in the decline? Well, first we got internal conflict. I think it's safe to say we check that box as well. I mean, that's a subjective statement, but the society that I live in here in the US seems more divided right now that at any time in my memory at least.
Leave a comment down below. Let me know if you agree with that sentiment. But I think we can say that safely that we have our share of internal conflict now. And then the next step is the loss of reserve currency status. Now that has not happened yet. However, the scenario that I just laid out for you of exponentially rising debt, rising cost to service that debt, the Fed's intervention in the markets, which is likely right around the corner, and the monetization of large amounts of debt along with geopolitical conflict and a number of other factors that are contributing to global darization.
These all indicate that the dollar's reserve currency status it its days are numbered and it may very well be coming to an end in the near future. And when that happens, well, the dollar price of everything is going to rise, but especially hard money assets like gold and also silver. And that is why I believe Ray Dallio is accumulating large amounts of gold right now.
That's why he's making this huge bet on gold. More than a quarter of a billion dollars invested in gold via his hedge fund just in the first quarter of this year. Maybe he'll continue to accumulate. He may well be buying the dip right now. And there are a number of other actors, smart money actors, central banks around the world who are loading up on gold.
And for that reason, I think that it's probably a good time for us as stackers to continue focusing on stacking. Yes, it's true. A year or two, you could have bought gold much cheaper. It has risen. It's probably going to continue to rise. The one thing that I think is almost guaranteed is that the debt money, the dollars are going to continue to be debased and decline in value.
So, if you want to be smart like Ray Dalio, probably a good time to stack. Anyway, leave me a comment down below to let me know what you think about this move by Ray Dallio and his hedge fund. You think we as stackers should take heed of this? When is the public at large, when are investors and the retail public going to start paying attention to this?
Uh, I think it's going to be soon, but leave me a comment down below to let me know what you think. Thanks for watching everybody. Stay safe and happy stacking. And I will catch you next time. Smarts Stacker
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