Dalio urges investors to cut bonds, hold 10-15% gold amid US debt risk
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Ray Dalio advised investors to reduce bond holdings and allocate 10-15% of portfolios to gold, with a small Bitcoin position, citing a potential US debt crisis within three years. The Bridgewater Associates founder made the comments in a LinkedIn post on Friday as long-term Treasury yields hit multiyear highs. Gold rose to its highest since May and Bitcoin topped $77,000.
Key Facts
- Dalio recommends holding 10-15% of a portfolio in gold and 'a bit' of Bitcoin.
- He estimates a $2 trillion US budget shortfall this year, with revenue of $5.5 trillion against $7.5 trillion in spending.
- Dalio says a US debt crisis could arrive 'in three years, give or take two' without a change in course.
- Treasury Secretary Scott Bessent announced plans this week to boost buybacks of long-dated debt.
- Gold jumped to its highest since May on Friday, while Bitcoin topped $77,000.
Dalio's Portfolio Advice
Ray Dalio said investors should reduce their bond holdings and put as much as 15% of their money in gold to hedge against the risk of a US debt crisis. In a LinkedIn post Friday, the Bridgewater Associates founder said investors should diversify across assets and countries with strong finances. Underweighting bonds and holding about 10% to 15% of a portfolio in gold and 'a bit' of Bitcoin could both reduce risk and boost returns, said Dalio. Dalio has long warned about the dangers of mounting government debt.
US Fiscal Strain
Dalio estimates US government revenue at about $5.5 trillion this year against $7.5 trillion in spending, leaving a $2 trillion shortfall. Interest costs alone will be around $1 trillion this year, while about $10 trillion of debt needs to be refinanced. Without a change in course, a US debt crisis could arrive 'in three years, give or take two,' Dalio said. He advocates reducing the budget deficit to 3% of gross domestic product, from the current level of about 6%, through spending cuts, higher tax revenue and lower interest rates.
Market Reaction
Dalio's comments come at a time when long-term Treasury yields have risen to multiyear highs and Japan, America's largest foreign creditor, has sold US bonds to support the yen. To stem the bond rout, Treasury Secretary Scott Bessent this week announced plans to boost buybacks of long-dated debt, a surprise move that so far has provided little more than short-term support. Gold jumped to the highest since May on Friday while Bitcoin topped $77,000, heading for its biggest weekly rally since 2023.
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Dalio urges investors to cut bonds, hold 10-15% gold amid US debt risk
