Ray Dalio Recommends Gold and 'a Bit of Bitcoin' as U.S. National Debt Passes $40 Trillion
Key Takeaways
- •Dalio said he expects non-government-issued assets such as gold and bitcoin to fare relatively well as debt levels rise.
- •He recommended diversifying across asset classes and countries, while underweighting debt assets like bonds and overweighting gold and a small amount of bitcoin.
- •U.S. national debt passed $40 trillion this week, and interest payments are now roughly equal to annual defense spending.
- •Dalio said the U.K., U.S., Europe, and Japan all face similar debt and deficit challenges that could benefit assets like bitcoin.
- •He has shifted from opposing bitcoin to holding it in his portfolio, though he said it remains only a 1% allocation and could face risks from quantum computing.
Billionaire investor Ray Dalio has once again spoken positively about Bitcoin — though only a little.
The founder of Bridgewater Associates, the hedge fund he started in 1975 and built into one of the world's largest, wrote in his latest essay that he expected "non-government-produced monies like gold and bitcoin to do relatively well" as government debt grows.
Dalio has long warned investors about the scale of America's borrowing, and his caution comes as U.S. national debt passed the $40 trillion mark this week. The milestone has a price: net interest payments on the federal debt have grown to roughly match annual U.S. defense spending, and the Congressional Budget Office projects trillion-dollar annual deficits for years to come, keeping the debt on an upward path relative to the size of the economy.
JUST IN: Billionaire Ray Dalio suggests diversifying into gold, bonds, "and a bit of Bitcoin." pic.twitter.com/Z0TCviiTBV
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"As general advice, I suggest diversifying well in asset classes and countries that have strong income statements and balance sheets and are not having great internal political and external geopolitical conflicts, underweighting debt assets like bonds, and overweighting gold and a bit of Bitcoin," Dalio wrote.
He added that major economies including the U.K., U.S., Europe, and Japan all face similar debt and deficit problems, and that assets like bitcoin — which are not issued by governments — could therefore end up benefiting.
Dalio's position on Bitcoin has evolved over the years. He went from saying he would not invest in the cryptocurrency to eventually confirming that it is part of his portfolio. Last year, he said bitcoin accounted for just 1% of his investments. He reiterated that point this year and warned that although no one can print more bitcoin, it could still be hurt by advances in quantum computing. His gradual shift parallels a broader institutional embrace of the asset, made easier since U.S. regulators approved spot Bitcoin exchange-traded funds in January 2024 — funds that have since attracted tens of billions of dollars from investors.
Back in 2020, the billionaire investor said the cryptocurrency was too volatile to function as money but that it was worth holding a small amount. Gold, on the other hand, should be held by all investors, he added — a view that has coincided with record central-bank purchases of the metal in recent years, according to the World Gold Council.
In his latest essay, Dalio explains that when governments over-borrow and central banks respond by printing money to cover the gap between debt supply and demand, the value of the currency gets debased. It is the same dynamic he detailed in his 2018 book, Principles for Navigating Big Debt Crises, which examined how heavy debt burdens have historically been resolved.
Bitcoin advocates have long argued that the oldest cryptocurrency can work as a hedge against government money printing, much like gold. Bitcoin has in the past benefited when governments expanded their money supplies.
This article was written by Mathew Di Salvo and originally published by Bitcoin Magazine.
