Ray Dalio: Investors Should Hold More Gold Than Usual

Renowned investor Ray Dalio urged investors to increase their gold allocations this week, arguing that today's financial landscape closely resembles the early 1970s - a period of runaway inflation, heavy government spending and weakening faith in paper money. Dalio told attendees at the Greenwich Economic Forum that, from a strategic asset-allocation perspective, "you would probably have something like 15% of your portfolio in gold."

The call comes as gold has surged above $4,000 an ounce, rising more than 50% year-to-date as investors seek havens amid mounting fiscal deficits, geopolitical tensions and persistent inflationary pressures.

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Dalio's recommendation rests on a simple premise: gold behaves differently from conventional financial assets when the monetary system is under stress. As he put it, gold is a diversifier that performs when "the typical parts of the portfolio go down." In his words, "Gold is the only asset that somebody can hold and you don't have to depend on somebody else to pay you money for." (Correction: that is the accurate rendering of the quote.)

• Price action: Gold futures have traded above the $4,000 mark in recent sessions, reflecting strong demand and tight positioning.

• Year-to-date performance: Gold's rally of roughly 50% YTD has forced re-assessments of standard portfolio mixes.

• Other big voices: Jeffrey Gundlach of DoubleLine has publicly suggested even larger gold weightings - as much as 25% - underscoring growing institutional receptivity to higher allocations in precious metals.

• Macro drivers: Analysts cite persistent fiscal deficits, high global debt loads, and a fragile geopolitical backdrop as the main catalysts pushing investors toward physical and monetary metals.

Dalio's 15% figure is strategic rather than prescriptive. It's intended as a portfolio hedge, not a market-timing signal. Practical implications:

• Diversification purpose: A higher gold allocation acts as insurance if inflation, currency debasement, or systemic market stress accelerates.

• No yield: Gold does not generate income (interest or dividends), so higher allocations can reduce near-term yield for long-term insurance.

• Form matters: Investors must choose between physical gold (bullion/coins), allocated/segregated storage, and financial proxies (ETFs, futures). Each has custody, liquidity and counterparty trade-offs.

• Advisory impact: Financial advisers may need to revisit portfolio glidepaths and liquidity plans if clients shift material capital into non-incomeing assets.

Dalio's message is stark but clear: given the current macro mix - heavy sovereign debt, persistent inflationary pressures and rising geopolitical risk - gold deserves a materially larger place in strategic portfolios than conventional practice suggests. Whether investors adopt a 5%, 15% or even higher allocation depends on risk tolerance, time horizon and views on future monetary policy - but Dalio is urging the market to treat gold as insurance, not speculation.