Billionaire Ray Dalio says put 10% to 15% of your portfolio into gold

Ray Dalio wants investors holding 10 to 15 percent of their money in gold, and he thinks they have somewhere between one and five years to get there.

The Bridgewater Associates founder set out the recommendation in a long post on X on Friday, arguing the United States government is spending 40 percent more than it collects while its budget deficit keeps widening. He told investors to underweight debt assets such as bonds and move into what he called safe haven assets, putting gold at "maybe 10-15 percent" of a portfolio with a smaller allocation to Bitcoin. Doing so, he said, lowers a portfolio's risk while raising its return.

He is recommending it at close to the worst possible entry point on price. Gold trades near $4,590 an ounce after a sustained run driven by central bank buying and demand for assets outside the financial system, which means anyone following the advice today is buying near record levels.

Dalio pointed to the United States Treasury's recent decision to expand government debt buybacks as one signal among several, and to Japan trimming its holdings of American bonds as long-dated yields climb.

His prescription for Washington needs three things happening at once. The government should cut spending, raise tax revenue and lower interest rates gradually, and none can be allowed to dominate.

"All three need to happen concurrently so as to prevent any one from being too large," Dalio wrote. "If any one is too large, the adjustment will be traumatic."

He extended the warning well past the United States. Britain, the European Union, China and Japan face comparable debt and deficit problems, he said, and he expects currency devaluation across most major economies as a result.

That is the argument underneath the gold call. If governments devalue, Dalio expects what he described as non-government-produced monies, meaning gold and Bitcoin, to perform relatively well.

He has made versions of this argument before, and his critics point out that he has been making them for years while American markets kept rising. Dalio warned of a debt crisis through much of the last decade, and investors who moved out of United States equities on that advice gave up substantial returns.

The backdrop has shifted in his favour lately. American national debt passed $40 trillion this month. Bitcoin rose above $79,000 on Aug. 21 after the Treasury announcement and was trading near $77,500 shortly afterwards.

Dalio built Bridgewater into one of the largest hedge funds in the world and now serves as its founder and chief investment officer mentor. He has spent recent years warning about sovereign debt, the dollar's position and the risk of monetary disorder.