Key Takeaways
- Famed investor Ray Dalio mentioned it is time to rethink your safe-haven belongings in gentle of current authorities insurance policies and financial modifications.
- He advises buyers to allocate 10% to fifteen% of their portfolios to gold.
- Dalio says that the first threat for Treasury holders might be from continued cash printing by the U.S. Federal Reserve.
Dalio is elevating a purple flag on Treasurys, telling these at a launch occasion for Abu Dhabi Finance Week that he’s as a substitute shopping for gold as his most well-liked secure haven. He argued that Treasurys are now not essentially the most safe funding because of the ballooning U.S. nationwide debt, now north of $37 trillion, with the annual price range deficit getting near $2 trillion.
Dalio is main by instance, as his fund, Bridgewater Associates, invested $319 million in SPDR Gold Shares (GLD) in the course of the first quarter of 2025. (In the summertime of 2025, he bought his remaining shares within the fund he made well-known.)
Why Dalio Sees Dangers in US Treasurys
Dalio just lately took to X to offer an in depth evaluation of why Treasurys should not as secure as as soon as thought. After Moody’s introduced a downgrade of the U.S.’s sovereign debt from Aaa to Aa1 in Could 2025, he wrote, “It’s best to know that credit score rankings understate credit score dangers as a result of they solely charge the chance of the federal government not paying its debt. They do not embody the higher threat that the nations in debt will print cash to pay their money owed, thus inflicting holders of the bonds to endure losses from the decreased worth of the cash they’re getting.”
Dalio likened the mounting debt burden to clogged arteries: As extra of the U.S. authorities’s income goes towards paying curiosity, different areas endure, doubtlessly triggering a pointy financial slowdown—or a “coronary heart assault.” If that occurs, Treasurys, lengthy thought-about the most secure asset worldwide, would shortly lose their enchantment.
Gold Steps In
Gold, in contrast, has traditionally retained worth or appreciated throughout such intervals. As a retailer of worth and inflation hedge, these bullish on gold argue that it is the solely funding that isn’t a legal responsibility to another person. And it has no counterparty threat, defending its holders from the whims of governments and central banks.
Dalio’s Recommendation
Dalio prompt that buyers reassess the normal portfolio mixture of 60% shares and 40% bonds. As authorities spending is a minimum of 40% greater than its revenues, the first manner it should repay the debt is by the Federal Reserve printing cash for the federal government to pay the curiosity on Treasury bonds, he mentioned.
Even with gold costs reaching greater than $3,600 an oz, he recommends most buyers allocate 10% to fifteen% of a well-diversified portfolio to gold.
Tip
To spend money on gold, you may have a number of choices, together with shopping for the bodily stuff within the type of cash, bars, and even jewellery, however which means coping with storage, insurance coverage, and the chance of theft or loss. A extra accessible route is thru gold exchange-traded funds, such because the SPDR Gold ETF (GLD), which allow you to purchase shares that observe the worth of gold with out ever having to carry the steel itself.
The Backside Line
Given the uncertainty within the bond market surrounding the U.S. authorities’s fiscal place and rising debt load, Ray Dalio has been shifting out of Treasurys and into gold. His recommendation? You may need to observe go well with with as much as about 10% to fifteen% of your general portfolio.
