Bridgewater's Dalio favors gold as monetary-stimulus hedge

NEW YORK Fri Sep 21, 2012 12:00pm EDT

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NEW YORK (Reuters) - Hedge fund manager Ray Dalio said that investors should benefit from gold ownership as a hedge against the adverse effects of money printing by central banks.

"I think gold should be a portion of every one's portfolio to some degree because it diversifies the portfolio. It is the alternative money," Dalio said on CNBC Television on Friday.

"We have a situation now where we have too much debt, and too much debt leads to printing money," and owning gold makes it easier to service the debt, he said.

Dalio, however, said gold is not the best investment over the long run because he believes that the metal is an alternative form of cash.

Last week, the Federal Reserve said it would pump $40 billion into the U.S. economy each month until it saw a sustained upturn in the weak jobs market. Gold prices had rallied following the announcement due to inflation fears.

Dalio said last week that a major challenge for the U.S. economy was the so called "fiscal cliff," the year-end expiration of tax cuts and automatic slashing of spending which has stoked fears of a recession.

Dalio, who runs the $120 billion hedge fund Bridgewater Associates, has previously expressed his bullish view on gold. Dalio told a conference last week that "there is no sensible reason not to own gold.

Asked on Friday if billionaire Warren Buffett was wrong about his comments on staying away from gold investments, Dalio said: "I think he's making a big mistake."

On Friday, spot gold edged up around 0.2 percent to $1,770 an ounce, within reach of its 2012 high of $1,790.30. So far this year, gold is up 13.5 percent and on track for a 12th consecutive annual gain.

(Reporting By Frank Tang; Editing by Tim Dobbyn)

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