Ray Dalio, a billionaire investor, has had some ups and downs with the U.S. dollar recently, and it seems like he’s not feeling too confident about it again.
On Thursday, Ray Dalio, who used to be the CEO of Bridgewater Associates, wrote a post on LinkedIn. He said he’s keeping gold as a way to protect himself in case there’s a big problem with debt or if prices start going up a lot.
Ray Dalio’s remarks are timely as attention shifts to the growing concern over the U.S. government’s massive debt, which has now exceeded $34.5 trillion. This issue isn’t limited to the United States alone.
At its annual spring meeting in Washington, D.C., the International Monetary Fund (IMF) highlighted that both China and the U.S. will be major drivers of global public debt over the next five years.
The IMF predicts that public debt in these two largest economies could double by 2053. Additionally, they’ve identified the United Kingdom and Italy as two countries facing significant fiscal risks due to their increasing government debt.
Ray Dalio explained that when there’s a big risk that debts won’t be paid back or will be paid back with less valuable money, people start to lose faith in money and debts. Governments might try to solve this by printing more money, which can lead to inflation, making money less valuable.
Gold, however, is different. It’s not tied to debts, so it’s not affected by inflation or default risks like cash or bonds are. That’s why Dalio thinks gold is a good thing to have when the financial system isn’t working well.
He mentioned that back in early 2020, he said that cash wasn’t a good investment because interest rates were low. But in September 2023, when interest rates went up, he changed his mind and said cash was better.
Dalio believes that gold is one of the few examples of “good money” in the world. It’s held by central banks and other investors because it’s seen as a safe way to store wealth. Some people also see cryptocurrencies, gems, and art as similar non-debt assets.
Many commodity analysts are optimistic about gold because global debt is rising, and they think gold prices could reach $3,000 an ounce. In recent months, gold has reached record highs against many major currencies.
