Why Ray Dalio says gold is the safest money

Ray Dalio has at all times liked an excellent macro plot, however this time he stored it strictly metallic. Last week on X, the founding father of Bridgewater Associates, argued that gold isn’t only a shiny relic; it’s the single safest type of money, with a monitor document that leaves trendy fiat in the mud.

His reasoning? Gold has weathered 1000’s of years and each forex experiment, from hard-asset backing to the period of infinite-print fiat. All different monies come and go; gold simply watches the parade (and generally cashes in whereas the confetti settles).​

What Ray Dalio actually means by ‘safest money’

Ray Dalio’s take is easy however forceful. Throughout historical past, all currencies have been both linked to onerous belongings (assume gold or silver) or completely fiat, however each break down when the debt piles up and politicians begin reaching for the print button.

Gold, on the different hand, isn’t liable to being devalued or confiscated. It doesn’t depend on anybody else’s promise, and might’t be frozen by any central financial institution cyber-wizard. You truly get to carry it, making it the go-to in occasions of disaster, inflation, or authorities asset grabs.​

What’s notable is that Ray Dalio, who’s inspired traders to carry Bitcoin as a hedge in the previous, doesn’t point out BTC in any respect right here. He’s going full old style. Maybe that’s as a result of, as he notes, gold is nonetheless the second-largest international reserve forex (after the greenback), and in contrast to the greenback, it doesn’t lose worth each time somebody in D.C. sneezes.

Gold vs. fiat: a battle of (de)valuation

Since the U.S. moved off the gold customary in 1971, the buck has been lit up like Vegas. The Federal deficit has ballooned previous $2 trillion, whereas the U.S. has rolled out $1 trillion annual deficits for 4 years and counting. According to authorities information, the greenback has misplaced over 85% of its buying energy since Nixon’s huge decoupling. Meanwhile, gold retains up with residing prices (even when it gained’t purchase you dinner at Ruth’s Chris).​

Dalio factors out that gold solely lags when paper money pays extra curiosity than its underlying decline. Otherwise, timing the market is “a idiot’s errand.” Instead, maintain gold as your insurance coverage in opposition to system breakdowns, wars, and runaway spending sprees. He recommends a portfolio allocation of 5-15% in gold relying in your danger tolerance.​

What obtained unnoticed: the place’s Bitcoin?

Here’s the kicker: regardless of Dalio’s historical past of calling Bitcoin “digital gold” and a useful hedge, he didn’t convey it up a single time in his latest arguments for gold. Maybe it’s a tactical omission; perhaps he’s targeted on real-world disaster insurance coverage. Whatever the case, gold stays his final protected haven, whilst the crowd retains asking about Bitcoin.

So as the fiscal time bomb ticks and gold spikes previous $4,000 an oz, the message of Ray Dalio is clear: gold is nonetheless the final man standing… and Bitcoin is waving from the sidelines, ready for its subsequent huge point out.

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