"Gold standard-bearer" Dalio "steps up the game": Gold is the only "eternal and universal" currency that "does not rely on others."

``` Bridgewater Fund founder Ray Dalio has once again reinforced his firm bullish stance on gold, believing that gold, as an "eternal and universal" form of currency, is the only asset that does not rely on counterparty credit. In the current financial environment, its strategic value as a core asset is increasingly prominent. On Friday (October 17), Dalio explicitly pointed out that as the price of gold continues to soar, gold has begun to replace part of US Treasury bonds in investment portfolios, becoming investors’ risk-free asset. This latest assertion takes his optimism for gold to new heights, signaling a re-examination of the traditional safe-haven asset framework. Previously, even when the price of gold hit a record high this week, Dalio still advised at an economic forum in Greenwich, Connecticut that investors should allocate up to 15% of their portfolios to gold. He stated, “Gold is a very good portfolio diversification tool” because it generally performs well when other parts of a traditional portfolio fall. To elaborate on his views more systematically, Dalio later openly solicited questions about gold investment on social platform X and provided detailed answers. This series of in-depth analyses offers the market the most direct window into how this investment tycoon sees gold’s role in today’s world. --- ## Gold Is Money, Not Just a Metal Dalio believes that the key to understanding gold’s value lies in a shift of mindset. He points out that most people mistakenly see gold as a metal and regard fiat currency as real money. But in his view, gold is the most fundamental form of money, while fiat currencies are essentially debt. He explains that nearly all countries throughout history have experienced a “debt-gold-currency” cycle. When debt becomes unpayable and fiat money is massively printed to avoid default, the value of gold — a “non-fiat” currency that cannot be created out of thin air — becomes evident. From this perspective, gold functions much like cash: it can be used directly for settlement and debt repayment and does not create new debt like credit does. Dalio says that the value of debt-based money is declining relative to gold-based money, a trend which to him has long been obvious. He believes that in the event of a possible bubble burst or breakdown of national credit systems (such as during war), gold is an excellent diversifying supplement to stocks and bonds. --- ## Gold Has Become the Second-Largest Currency Dalio clearly answered the question of whether gold has begun to replace US Treasuries as a risk-free asset: “The factual answer is yes.” Gold has begun to replace part of the risk-free asset status of US Treasuries in many investment portfolios, most importantly in the holdings of central banks and large institutional portfolios. The holders of these portfolios have reduced their US Treasury holdings and relatively increased their positions in gold. From a long historical perspective, Dalio believes gold is “less risky” than any sovereign debt. He explains that the biggest risk of debt assets such as US Treasuries is default — or, more likely, “devaluation” through money printing. Historical data shows that since 1750, about 80% of the world’s currencies have disappeared, and the remaining 20% have all been severely depreciated. > "History tells us that the greatest risk is that debt assets like US Treasuries either default or devalue — more likely devalue." Historically and currently, debt assets are promises by debtors to deliver money to creditors. When there is too much debt to be repaid with existing currency, central banks print money to repay the debt, causing currency depreciation. By contrast, gold’s value does not depend on any counterparty’s promise to pay. It is itself an intrinsically valuable asset. Dalio concludes: > “Gold is the only asset you can hold that does not require someone else to pay you,” and it is an “eternal and universal currency.” --- ## Why Gold and Not Other Alternatives? Among the many assets that can hedge risk, Dalio explained why gold is irreplaceably unique. **Compared with other precious metals:** While silver and platinum also possess inflation-hedging qualities, they lack the global investor and central bank acceptance, as well as the historical and cultural significance of gold. Silver is more affected by industrial demand and has greater price volatility; platinum is limited by supply constraints and specific industrial uses. Therefore, these two metals are less widely accepted and less stable than gold as a store of value. **Compared with inflation-protected bonds (TIPS):** While Dalio thinks TIPS are underrated hedging tools for normal times, their underlying nature is still government debt. This means that in the event of a major debt crisis, their performance is highly tied to the credit standing of the issuing government. Furthermore, such bonds may face risks such as government-manipulated official inflation data. In systemic financial crises or major economic difficulties, they cannot offer the safety net that gold provides. **Compared with stocks (like AI concept stocks):** Dalio acknowledges that stocks in high-growth sectors like artificial intelligence offer high return potential, but he also warns of bubble risks. He notes that technology breakthrough companies throughout history have all experienced similar frenzy. Currently, the boom in AI stocks contributes greatly to markets and economic growth, but also creates concentration risks. If their performance falls short of expectations, it could severely impact the market and economy. Therefore, he believes prudent diversification is the wise choice. --- ## Tactical Allocation Advice: 15% Gold Position with Leverage Strategy Faced with the question, “Gold prices have already risen, should we still buy?”, Dalio emphasizes thinking from the perspective of strategic asset allocation rather than tactical betting. He thinks every investor should answer a fundamental question: in a world where market direction can't be predicted, how much gold should you hold? **Based on gold’s historical negative correlation with stocks and bonds (especially when stock and bond real returns are poor), Dalio’s answer is about 15%.** He analyzes that this ratio can bring the best “return-to-risk ratio” for a portfolio. Although, like cash, gold’s long-term expected return is low, it performs best “when it’s needed most.” **To optimize risk without sacrificing expected return, he suggests holding the gold position through overlay or portfolio-wide leverage strategies.** Dalio also points out that while the rise of gold ETFs has brought greater market liquidity and transparency, their market size is much smaller than physical gold investments or central bank gold holdings and is not the main driver of this round of gold price increases. He further infers that if individuals, institutional investors, and central banks worldwide allocate an appropriate proportion of their assets to gold for diversification purposes, given its extremely limited supply, the price of gold “will have to be much higher.” --- Risk Warning and Disclaimer The market has risks, investment requires caution. This article does not constitute individual investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Investing accordingly is at your own risk. ```