Ray Dalio has at all times liked an excellent macro plot, however this time he saved it strictly metallic. Final week on X, the founding father of Bridgewater Associates, argued that gold isn’t only a shiny relic; it’s the one most secure type of cash, with a monitor report that leaves trendy fiat within the mud.
His reasoning? Gold has weathered 1000’s of years and each foreign money experiment, from hard-asset backing to the period of infinite-print fiat. All different monies come and go; gold simply watches the parade (and typically cashes in whereas the confetti settles).
What Ray Dalio actually means by ‘most secure cash’
Ray Dalio’s take is straightforward however forceful. All through historical past, all currencies have been both linked to exhausting property (suppose gold or silver) or completely fiat, however each break down when the debt piles up and politicians begin reaching for the print button.
Gold, then again, isn’t prone to being devalued or confiscated. It doesn’t depend on anybody else’s promise, and might’t be frozen by any central financial institution cyber-wizard. You truly get to carry it, making it the go-to in instances of disaster, inflation, or authorities asset grabs.
What’s notable is that Ray Dalio, who’s inspired traders to carry Bitcoin as a hedge up to now, doesn’t point out BTC in any respect right here. He’s going full old style. Possibly that’s as a result of, as he notes, gold continues to be the second-largest world reserve foreign money (after the greenback), and in contrast to the greenback, it doesn’t lose worth each time somebody in D.C. sneezes.
Gold vs. fiat: a battle of (de)valuation
Because the U.S. moved off the gold commonplace in 1971, the dollar has been lit up like Vegas. The Federal deficit has ballooned previous $2 trillion, whereas the U.S. has rolled out $1 trillion annual deficits for 4 years and counting. In keeping with authorities information, the greenback has misplaced over 85% of its buying energy since Nixon’s huge decoupling. In the meantime, gold retains up with residing prices (even when it gained’t purchase you dinner at Ruth’s Chris).
Dalio factors out that gold solely lags when paper cash pays extra curiosity than its underlying decline. In any other case, timing the market is “a idiot’s errand.” As a substitute, maintain gold as your insurance coverage towards system breakdowns, wars, and runaway spending sprees. He recommends a portfolio allocation of 5-15% in gold relying in your threat tolerance.
What received ignored: the place’s Bitcoin?
Right here’s the kicker: regardless of Dalio’s historical past of calling Bitcoin “digital gold” and a beneficial hedge, he didn’t convey it up a single time in his current arguments for gold. Possibly it’s a tactical omission; possibly he’s centered on real-world disaster insurance coverage. Regardless of the case, gold stays his final secure haven, at the same time as the group retains asking about Bitcoin.
In order the fiscal time bomb ticks and gold spikes previous $4,000 an oz., the message of Ray Dalio is evident: gold continues to be the final man standing… and Bitcoin is waving from the sidelines, ready for its subsequent huge point out.