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Billionaire investor Ray Dalio is once again sounding the alarm on the global debt crisis—and this time, he’s offering a bold suggestion: allocate 15% of your portfolio to gold or Bitcoin to hedge against the potential collapse of fiat currencies.
Dalio, founder of Bridgewater Associates and one of the world’s most respected macro investors, made the recommendation during a recent episode of The Master Investor Podcast. Drawing from decades of market experience and deep historical analysis, Dalio warned of a brewing monetary crisis that echoes the inflationary meltdowns of the 1970s and 1930s.
The full interview can be viewed on YouTube:
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A "Classic Devaluation”
Dalio described the current economic trajectory as a “classic devaluation,” noting that Western governments—especially the United States—are caught in an unsustainable debt spiral.
According to Dalio, the U.S. government spends $7 trillion annually while only taking in $5 trillion in revenue, a 40% overspend that shows no sign of slowing. Total U.S. debt now exceeds $37 trillion, and Dalio projects the Treasury will need to issue $12 trillion in new debt next year just to stay afloat.
“We’re at the point of no return,” Dalio warned. “The only way to deal with this is to create more debt and have the central banks print money to fund it.”
He likened the current state of government finances to “plaque in a circulatory system”—a buildup that, if left unaddressed, leads to an “economic heart attack.”
Gold and Bitcoin: Hard Currency Alternatives
In light of these risks, Dalio urged investors to consider “hard currencies” such as gold—and, to a lesser extent, Bitcoin—as a hedge against fiat currency devaluation.
“If you were neutral on everything and optimizing your portfolio for the best return-to-risk ratio, you would have about 15% of your money in gold or Bitcoin,” he said.
Dalio emphasized that his personal allocation heavily favors gold, which he described as the “purest play” for a store of value. He noted that gold has now surpassed the euro as the second-largest reserve currency in the world, trailing only the U.S. dollar.
While he does own some Bitcoin, Dalio remains skeptical of its long-term role in the global monetary system. He acknowledged that many see Bitcoin as a form of “alternative money” with advantages in scarcity and global transferability—but questioned its potential adoption by central banks as a reserve asset.
“I strongly prefer gold to Bitcoin,” Dalio said. “But that’s up to the individual. The real issue is the devaluation of money.”
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Not Just a U.S. Problem
Though Dalio focused much of his criticism on U.S. fiscal policy, he cautioned that other developed nations are in similar trouble.
“Just like in the ’70s or the ’30s, they will all tend to go down together,” he said. “We’ll pay attention to their relative movements, but they will all decline in value—relative not to fiat currencies, but to hard currencies. And that hard currency is gold.”
Dalio pointed out that while the dollar may appear strong against the euro or pound, all fiat currencies are losing purchasing power together—especially in the face of mounting debt and central bank interventions.
Warning Signs Already Flashing
Dalio explained that many of the indicators of financial instability are already flashing red. He referenced rising interest payments, unsustainable deficits, and the early signs of capital controls as clues that governments are approaching crisis mode.
“The signals are now beginning to flash or flicker,” he said, noting that these signs historically precede larger financial disruptions.
Despite the urgency, Dalio cautioned against overreacting or making emotional investment decisions. Instead, he advised building a neutrally balanced, diversified portfolio—with deliberate exposure to hard assets.
“Don’t make the money part more important than the passion,” he said when asked for his overarching investment philosophy. “Have a game plan that’s back-tested, not one based on fear or headlines.”
Diversify with Gold and Bitcoin
Ray Dalio’s warning is clear: the financial system is under strain, and traditional currencies may be on the path to long-term devaluation. For retirement savers and global investors alike, allocating 15% of a portfolio to gold or Bitcoin could serve as a vital hedge against monetary decline.
Whether you lean toward gold’s historical stability or Bitcoin’s digital scarcity, Dalio’s message is the same: diversify now—before the crisis hits.
