NEW YORK, NEW YORK – MAY 22: Ray Dalio, Founder and CIO Mentor, Bridgewater Associates speaks onstage throughout The Wall Street Journal’s 2024 The Future Of Everything Festival at Spring Studios on May 22, 2024 in New York City.
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Bridgewater founder Ray Dalio stated Friday that gold and non-fiat currencies will change into stronger stores of value as main currencies face devaluation dangers amid mounting debt pressures globally.
Speaking on the FutureChina Global Forum 2025, Dalio warned that the extreme spending and spiraling debt by the U.S. authorities has change into “unsustainable” and that the world’s largest economic system is dealing with a significant fiscal disaster that will put its financial order in danger.
He added that every one currencies threat shedding their attraction as repositories of wealth when world governments seem reluctant to rein in extreme spending and borrowing — making gold and non-fiat currencies extra viable stores of value.
Dalio urged buyers to diversify their belongings with round 10% of their portfolio in gold.
Ng Kok Song, founding accomplice and chairman of Avanda Investment Management, stated on the identical panel that the unsustainability of the U.S. debt “has reached the tipping point. We do not know when the crisis is going to unfold.”
He additionally famous that the fiscal dangers weren’t distinctive to the U.S. but in addition seen in international locations like France, Japan and China.
While the buck has depreciated in opposition to different main currencies this yr, with the greenback index tumbling over 10%, these currencies have additionally weakened in value relative to gold, Dalio stated, noting that gold has change into the second largest reserve forex globally.
Supply-demand imbalance
After years of “over-spending,” U.S. authorities has a swelling debt that’s six instances the quantity of cash that it has taken in, Dalio stated.
He estimated, with out giving a timeline, that the federal government must promote an extra $12 trillion in debt to be capable of cowl the $2 trillion deficit, $1 trillion of curiosity cost and roll-over of $9 trillion in maturing borrowings.
But, “the market in the world does not have that same sort of demand and that creates a supply-demand imbalance,” he stated.
Dalio added that he proposed to lawmakers in Washington to scale back the fiscal deficit to three% of its gross home product, however politicans on each side of the aisle have been reluctant to steadiness the debt stage. U.S. President Donald Trump’s huge tax-and-spending invoice is expected to add $3.4 trillion to the nationwide debt over the subsequent decade.
The U.S. greenback will, nonetheless, retain its dominant use as a “medium of exchange,” Dalio stated, though the rising function of Chinese forex in world commerce will take some shine off the greenback.