Ray Dalio Doubles Down on Debasement Trade, Says Record Gold Rally Contains a Warning for Investors

Bridgewater Associates founder Ray Dalio issued multiple warnings related to the US economy amid record debt levels and the devaluation of fiat currencies in 2025, and he continues to do so this year.

In an X post this week, Dalio said the record gold rally last year contained a warning for investors as it is linked to the waning value of fiat money.

Factors like central bank buying of gold, geopolitical tensions, and individuals buying the precious metal pushed gold prices to an all-time high, but Dalio believes that the gold rally was primarily a result of fiat currency losing real value.

'The best major investment of the year was long gold (returning 65% in dollar terms), which outperformed the S&P index (which returned 18% in dollars) by 47%. Or, said differently, the S&P fell by 28% in gold-money terms,' Dalio wrote.

He recommended that investors account for key factors when assessing the forces that drove markets in 2025. The billionaire investor said that evaluating investments through calculations made in a depreciating currency could be incorrect, as it can make returns look like they were stronger than they actually were.

'When one's own currency goes down, it makes it look like the things measured in it went up. In this case, the S&P returned 18% for a dollar-based investor, 17% for a yen-based investor, 13% for a renminbi-based investor, only 4% for a euro-based investor, only 3% for a Swiss franc-based investor, and, for a gold-based investor, it returned minus 28%,' Dalio explained.

Experts Argue Against Trump's View on the US Economy

US President Donald Trump highlighted the economic benefits of a weakening US dollar, portraying it as beneficial for US exports.

However, economic think tanks like the Cato Institute have argued against this view, claiming that it does not consider the negative impact on US consumers. Dalio also believes that a weaker currency generally lowers the cost of a nation's exported goods for global purchasers, but raises the price of domestic imports.

'When one's currency goes down, it reduces one's wealth and one's buying power, it makes one's goods and services cheaper in others' currencies, and it makes others' goods and services more expensive in one's own currency,' he noted.

Dalio continues to see the strength of the debasement trade as a warning for the US. The stock market rally in recent years could be making it easier for investors to overlook other warning signals in the economy. Dalio stressed that the gold rally is a reason to re-evaluate the macroeconomic landscape and take a more cautious stance. He added that stocks and gold benefited from monetary policy easing in 2025, but given that both assets are no longer cheap, investors should reassess their exposure.

'Whether or not you are currency hedged matters a lot. You should always be hedged to your least-risk currency mix and make tactical moves from there if you think you are capable of making them well,' Dalio concluded.

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