Billionaire Ray Dalio Says Global Monetary System Breaking Down as Gold Soars

TLDR

• Bridgewater Associates founder Ray Dalio says global monetary system is breaking down at World Economic Forum
• Gold hit record high of $2,689.39 on Tuesday, beat all major markets in 2024 including technology stocks
• Dalio warns countries may stop buying US debt and Treasury bonds as trust erodes between nations
• The hedge fund billionaire recommends investors hold 5-15% of portfolios in gold for protection
• US continues issuing massive debt volumes while foreign holders grow concerned about dollar holdings

Billionaire investor Ray Dalio delivered a stark message about the world financial system this week. Speaking at the World Economic Forum in Davos, the hedge fund manager said the monetary order is collapsing.

Dalio told CNBC that central banks are changing their approach to fiat currencies. The shift represents a break from historical patterns.

Gold emerged as the top performing market in 2024. The precious metal beat technology stocks and other major asset classes.

On Tuesday, gold prices reached an all-time high of $2,689.39 per ounce. Investors rushed to safe-haven assets as global tensions increased.

Capital Wars Could Follow Trade Conflicts

The Bridgewater Associates founder warned of potential “capital wars” emerging from trade disputes. Countries holding US dollars and Treasury bonds may reduce their appetite for American debt.

The United States continues to issue large amounts of debt. Dalio called this a problematic situation when combined with weakening confidence.

Both holders of US dollar-denominated assets and the United States are worried about each other. This mutual concern creates major issues for the financial system.

Treasury bond prices dropped on Tuesday. Investors reacted to fresh tariff threats from President Donald Trump targeting European nations.

Trump threatened new tariffs on countries opposing his statements about Greenland. The president questioned Denmark’s ownership rights to the Danish territory.

Historical Patterns Show Risk

Dalio referenced historical examples of economic conflicts spreading beyond trade. These disputes often escalate to capital flows and currency problems.

The pattern has repeated throughout world history. Dalio said the current situation follows logical and factual precedents.

Portfolio Strategy for Uncertain Times

The billionaire investor emphasized diversification as a key strategy. He warned against relying too heavily on any single asset class or country.

Dalio recommends allocating between 5% and 15% of investment portfolios to gold. He described the precious metal as an effective diversifier during financial stress.

Crypto industry leaders also attended the Davos meetings this week. Coinbase CEO Brian Armstrong said he would discuss blockchain technology with world leaders.

Armstrong plans to address how cryptocurrency can modernize financial systems. He also intends to talk about pending digital asset legislation with banking executives.

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