Ex-Bridgewater Founder: Allocate 15% of Portfolio to Bitcoin or Gold!
Billionaire investor and former founder of the world’s largest hedge fund, Bridgewater Associates, Ray Dalio, who has retired, recently suggested allocating 15% of an investment portfolio to Bitcoin or gold. His reasoning centers on the worsening U.S. debt problem and potential currency devaluation risks.
Dalio shared his pessimistic outlook on the economic future in a recent podcast. He focused on the U.S., noting that government revenue is about $5 trillion, while spending reaches $7 trillion. He said:
“Its spending is 40% higher than its revenue, and it can’t really cut spending because a large part is fixed. The debt it’s accumulated is six times its revenue…
The credit system is like a circulatory system, delivering nutrients (purchasing power) to all parts of the economy. If that purchasing power is used to generate income, the income can repay the debt—that’s a healthy system.
But when debt, debt service costs, and interest rates rise, they start crowding out other spending—like plaque in the circulatory system, causing an economic heart attack.”
He made these remarks as U.S. government debt exceeds $37 trillion. Dalio pointed out that due to ongoing deficit spending, the government may need to issue nearly $12 trillion in bonds next year to service its debt.
“We’ve reached a point of no return,” Dalio warned, adding that the only option left is for the government to increase borrowing and rely on central banks to print money.
However, while Dalio focused on the U.S., he emphasized that all Western-led economies face similar challenges. He warned of an impending “classic devaluation” scenario akin to the 1970s or 1930s, where fiat currencies might depreciate against hard assets together.
“And that hard asset is gold,” he said. Dalio noted that gold has become the world’s second-largest reserve asset, surpassing the euro earlier this year.
Beyond gold, he considers Bitcoin an attractive monetary asset. Dalio believes that in a scenario where fiat currency depreciates relative to hard assets, both gold and Bitcoin serve as “effective diversification tools.”
However, he favors gold over Bitcoin, primarily because he expects central banks won’t adopt the latter as an official reserve asset due to concerns over regulation and blockchain transparency.
“I can’t say for sure how effective it is as a form of money, but many see it as an alternative,” he said.
Nevertheless, regardless of the debate between Bitcoin and gold, Dalio stressed that the key goal is to hold assets that can protect against widespread currency devaluation. He suggested a neutrally balanced portfolio should include about 15% exposure to gold or Bitcoin.
“My own portfolio has gold and a small amount of Bitcoin,” he said. “I’m strongly bullish on gold rather than Bitcoin—but it depends on the individual. The real issue is currency devaluation.”