Ray Dalio says today is like the early 1970s and investors should hold more gold than usual
Overview
Ray Dalio, founder of Bridgewater Associates, argues that gold deserves a significantly larger role in investment portfolios than conventional models suggest. He advocates allocating up to 15% of total assets to gold, viewing it as a strategic diversifier that tends to perform well when traditional holdings such as stocks and bonds decline. His view contrasts with the standard 60/40 portfolio model, which places minimal emphasis on commodities and precious metals.
Gold prices recently exceeded $4,000 per ounce, marking a record level and reflecting a surge of more than 50% within the year. The rise has been driven by investor demand for stability amid growing fiscal deficits, persistent inflationary pressures, and geopolitical tension. Dalio interprets this environment as similar to the early 1970s, a period marked by high inflation, expanding government debt, and weakening confidence in fiat currencies.
He warns that excessive debt issuance and currency devaluation reduce the reliability of paper-based assets as stores of wealth. In his view, gold functions as a non‑liability asset—one that does not depend on another party’s promise to pay. This characteristic, he argues, makes gold particularly valuable during periods of monetary instability or declining trust in government-backed currencies.
| Investor | Suggested Gold Allocation | Rationale |
|---|---|---|
| Ray Dalio | Up to 15% | Diversification and protection against declining paper assets |
| Jeffrey Gundlach | Up to 25% | Hedge against inflation and a weakening U.S. dollar |
Dalio’s recommendation challenges conventional portfolio construction, which typically limits gold exposure to only a few percent because it produces no yield. However, he maintains that its role is not to generate income but to preserve purchasing power when other assets lose value.
Other prominent investors, such as Jeffrey Gundlach of DoubleLine Capital, have expressed similar views, emphasizing gold’s resilience under inflationary conditions. Both investors highlight the potential for continued demand as central banks and individuals seek protection from currency depreciation.
Dalio’s perspective underscores a broader shift toward tangible assets in uncertain economic times. His remarks suggest that investors may increasingly view gold not as a speculative commodity but as a core component of long‑term wealth preservation strategies.
