Ray Dalio Says Invest in Gold as US Debt Becomes Unsustainable, Urges to Allocate 10% in Portfolios

Gold prices reached record highs of over $3,800 (£2,818) per ounce on Tuesday as the US Federal Reserve Chair Jerome Powell indicated that stocks are overvalued and the central bank faces a challenging situation of balancing inflation risks with a softening labour market, snapping a 3-day stock market rally.

Gold is considered a time-tested tangible asset. The precious metals' universal demand, scarcity, exchangeability, and portability drive its value appreciation over time. Gold's intrinsic store of value and a negative correlation with stock market movements have made it one of the few asset classes that reached record highs during global recessions in the last half-century. Gold remains a top investment choice for hedging against inflation and protection from the volatility of stocks and fiat currencies, such as the US dollar.

In a recent speech at the FutureChina Global Forum 2025, Bridgewater Associates founder Ray Dalio said he sees gold and non-fiat currencies becoming 'more important' investment sources as US debt becomes 'unsustainable,' which threatens the monetary order.

'We are going to see non-fiat currencies become a more important store of wealth and money,' Dalio stated, adding that investors' portfolios should be 10% in gold for optimum diversification.

After years of 'overspending,' the US government has a mounting debt that is six times the amount of money it has taken in, according to Dalio. He added that for 'various reasons,' the US is unable to cut back on its spending.

Dalio estimated that the US will spend $7 trillion (£5.1 trillion) in 2025 while only making $5 trillion (£3.7 trillion), adding another $2 trillion (£1.4 trillion) in debt. Considering interest and old debt, he said that 'this means you have to sell $12 trillion in debt' without noting a timeframe for this.

The rest of the world 'does not have that same sort of demand for that debt, and that creates a supply-demand imbalance,' Dalio stated. 'Other factors together will determine whether we're seeing the end of the entire US empire.'

Dailo further explained that currencies risk losing their appeal as wealth repositories when governments appear reluctant to rein in excessive spending and borrowing, which makes gold and other non-fiat currencies more viable stores of value.

What is the Best Way to Purchase Gold?

Investors have several ways to gain exposure to gold: buying physical assets, investing in exchange-traded funds that track the price of the asset, or investing in gold mining companies.

A person can buy the physical metal in bar or coin form from a precious metals dealer. However, physical gold comes with additional hassles, including safety concerns, transaction fees, custodian costs, and insurance.

Investors can purchase gold exchange-traded fund (ETF) shares via their brokerage accounts to avoid these hurdles. These ETFs copy the movements of gold prices, offer high liquidity, and charge low fees.

Many investors also invest in gold mining stocks. However, they don't strictly follow gold movements since mining businesses are affected by several environmental and financial factors. Many gold mines and companies are in close proximity to politically active regions. However, closed-end trust funds, such as the Sprott Physical Gold Trust, offer exposure to gold bullion without the handling and storage issues or regulatory hurdles associated with mining companies. Investors in these trusts can buy gold secured in vaults, which allows for redemption in physical units during times of market crisis.

Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns.