Ray Dalio warned that the world could also be nearing an period of worldwide monetary battle that he described as “capital wars.”
The Bridgewater Associates founder spoke on the World Financial Discussion board in Davos, Switzerland, as President Donald Trump’s aggressive posture on commerce and geopolitics drew consideration, together with feedback associated to Greenland.
Dalio’s warning at Davos
Talking with CNBC, Dalio argued that commerce disputes can spill over into capital markets.
Dalio stated:
“On the opposite facet of commerce deficits and commerce wars, there are capital and capital wars.”
He added that traders shouldn’t ignore the likelihood that overseas patrons change into much less inclined to buy US debt.
Belief in US debt
Dalio stated frictions between the US and different nations can pressure capital flows by elevating questions on who funds deficits and which nations are keen to carry sure belongings.
He additionally warned that eroding belief might scale back demand for US Treasurys.
In his view, each the holders of dollar-denominated debt and the US, which wants financing, are more and more cautious of one another.
Inflation and debasement dangers
If overseas demand weakens, Dalio stated the US may very well be pushed towards inner measures to fund itself.
He stated that would imply greater inflation or foreign money debasement.
Gold allocation view
Dalio reiterated his optimistic view of gold as a reserve asset in a interval of capital wars.
He stated that in regular occasions, gold ought to account for five% to fifteen% of a well-diversified portfolio.
He additionally famous he would tilt towards gold greater than regular.
Dalio has beforehand pointed to gold’s sturdy rally as a possible warning signal for traders heading into 2026.