Bridgewater Associates founder Ray Dalio recently advised investors to allocate approximately 15% of their portfolios to gold or Bitcoin amid growing U.S. fiscal instability. He warned that excessive borrowing and deficit spending are eroding the dollar’s value, necessitating protective measures against potential debt crises.\n\nCore Allocation Rationale\n\nHedge Strategy: The 15% allocation serves as essential risk diversification against fiat currency devaluation. Asset Preference: While personally favoring gold, Dalio emphasized that \"fiat currency debasement remains the core economic threat.\" Debt Reality: U.S. federal debt surpassed $34 trillion for the first time, with FY2023 interest payments hitting a record $659 billion. The IMF reports the dollar’s share in global reserves fell to 58%—a 20-year low.\n\nGold’s Dual Role: Protection & Performance\n\nEconomist John Maynard Keynes’ framework explains gold’s dynamics:\nShort-term volatility driven by \"animal spirits\" Long-term trends powered by \"monetary spirits\" \n\nData Insights (1971–2025)\n\n<table><thead><tr><td>Metric</td><td>Cumulative Growth</td><td>Avg. Annual Growth</td><td>Max. Annual Move</td></tr></thead><tbody><tr><td>Gold Price</td><td>541%</td><td>10%</td><td>+92% (upside)</td></tr><tr><td>M3 Money Supply</td><td>384%</td><td>7%</td><td>+29%</td></tr><tr><td>CPI Inflation</td><td>214%</td><td>4%</td><td>+14%</td></tr><tr><td>*Note: CPI flatlined in 2009/2015; M3 contracted 4% (2023) and 6% (2024).*</td></tr></tbody></table>\n\nGold vs. Traditional Assets (1971–2025)\n\n<table><thead><tr><td>Asset Class</td><td>Cumulative Return</td><td>Avg. Annual Return</td><td>Volatility</td></tr></thead><tbody><tr><td>Gold</td><td>541%</td><td>10%</td><td>27%</td></tr><tr><td>S&P 500</td><td>484%</td><td>9%</td><td>17%</td></tr><tr><td>Nominal GDP</td><td>339%</td><td>6%</td><td>3%</td></tr></tbody></table>\n\nKey Observations\nInflation Hedge: Since the gold standard ended in 1971, gold has consistently outpaced CPI and M3 growth. Crisis Resilience: Gold significantly outperformed equities during the 2001 dot-com crash, 2008 financial crisis, and 2020 pandemic. Monetary Spirits Effect: Fiat currency expansion fuels both inflation (broad CPI impact) and asset bubbles (concentrated valuation surges).\n\nConclusion\nGold’s enduring value—rooted in its zero default risk and inverse relationship to fiat debasement—makes it a critical portfolio component. As economist Mark Skousen noted: Gold and silver have never fallen to zero. Can stocks or bonds claim the same?

Why Allocate to Gold? Ray Dalio Recommends 15% in Gold or Bitcoin

Ray Dalio, founder of Bridgewater Associates, advises investors to allocate approximately 15% of their portfolios to either gold or Bitcoin due to concerns over U.S. fiscal instability and rising federal debt. He argues that excessive borrowing and deficit spending are eroding the dollar's value, making gold a critical hedge against fiat currency devaluation. Dalio emphasizes that while he personally favors gold, both assets serve as protective measures against monetary debasement. Data from 1971 to 2025 shows gold outperforming inflation and traditional assets like the S&P 500 during crises, with a strong inverse relationship to money supply expansion and inflation. The article references historical performance, including gold's outperformance during the 2001 dot-com crash, 2008 financial crisis, and 2020 pandemic, and highlights that gold has never fallen to zero, unlike stocks or bonds.