Key Points
- Billionaire investor Ray Dalio advocates for “hard money” assets like gold and Bitcoin over debt assets.
- Dalio warns of a potential debt crisis due to rising indebtedness in major economies.
Ray Dalio, the billionaire founder of Bridgewater Associates, recently shared an insightful investment strategy during a series of finance and cryptocurrency conferences in Abu Dhabi. His advice was to prioritize “hard money” assets such as gold and Bitcoin over debt assets.
Dalio expressed serious worries about the escalating debt in major economies, including the United States and China. During his speech at the Abu Dhabi conference, he stated his belief in an impending debt money problem, and his preference for hard money like gold and Bitcoin over debt assets, such as bonds.
Gold and Bitcoin: The Preferred Investments
Dalio, who owns a small amount of Bitcoin, has previously referred to it as “almost a younger generation’s alternative to gold.” Despite his cautious support for Bitcoin, he emphasized gold’s status as the “well-established blue-chip alternative to fiat money.”
Both gold and Bitcoin are currently receiving considerable attention, with both trading near record highs. Investors increasingly view these assets as reliable safeguards against economic volatility, geopolitical conflicts, and changing monetary policies. Recently, Bitcoin surpassed $100,000 for the first time, driven by optimistic remarks from influential figures.
Assets linked to physical commodities or controlled supply systems, often referred to as hard money, seem more attractive amid skyrocketing global debt levels. Dalio emphasized that the escalating debt in the United States, China, and other major economies, except Germany, has reached unsustainable levels. He cautioned about an inevitable debt crisis that could destabilize various currencies.
The Future of Currency
Dalio identified five major forces shaping the future: debt, monetary systems, economic stability, rising wealth inequality, and international conflicts. In a 2023 interview with CNBC’s Squawk Box, he warned of an imminent threat to traditional currency systems. According to Dalio, excessive money printing, a global phenomenon not limited to the United States, undermines financial stability.
Following the 2008 financial crisis and during Bitcoin’s early phase, Dalio began studying the rise and fall of the three latest global reserve currencies: the Dutch guilder, British pound, and US dollar. According to Dalio, three concurrent cycles shape currency dominance: the generation of debt and financial assets, internal conflicts fueled by wealth, and the emergence of a new power challenging the reigning currency.
A currency’s ability to survive these cycles depends on the economic strength backing the reserve status. Currently, the US dollar is in the initial cycle, where debt and credit boost purchasing power. Dalio’s recognition of Bitcoin as an “alternative to gold” indicates its increasing importance in investment circles.
