Gold and "a little" Bitcoin: Dalio Advises Investors to Prepare for a Debt Crisis

Market participants should diversify their portfolios across assets and countries with stable financial conditions, as well as reduce their bond holdings and allocate up to 15% of their funds to gold, according to the founder of Bridgewater Associates — billionaire investor Ray Dalio. In his view, this would provide protection against the risks of a U.S. debt crisis, which, if the situation does not change, could occur “in three years, give or take two,” Dalio wrote on LinkedIn.

This week’s announcement by U.S. Treasury Secretary Scott Bessent regarding an expansion of the government bond buyback program is part of a broader trend that may signal an impending crisis, according to an investor. “I am convinced that the country’s financial condition is now at a tipping point,” Dalio wrote. “If we don’t address this now, debt will grow to a level where it can only be managed at the cost of serious upheaval,” he believes.

Against the backdrop of a record increase in U.S. national debt to more than $40 trillion, rising Treasury yields, and interventions by the U.S. Treasury in the bond market, Dalio called on the U.S. government to cut spending, increase tax revenue, and lower interest rates. It is important to take action right now—while the economy is healthy—otherwise, during a recession, it will require increased government spending, Dalio warned.

Speaking about a potential debt crisis in the U.S., he noted that other events—ranging from military conflicts to political changes—could also influence the situation. Given the current trajectory of events, the U.S. could enter such a crisis in as little as a year or as long as five years, Dalio believes: “My guess—and I don’t think it’s the best one—is that this will happen in three years, give or take two, if the course we’re on doesn’t change,” he wrote.

Nevertheless, according to the founder of Bridgewater Associates, investors need to prepare for a potential crisis: to this end, Dalio recommended that market participants reduce the proportion of debt assets (bonds) in their portfolios. Up to 10–15% of an investment portfolio can be allocated to gold, as well as to “a little” Bitcoin, Dalio noted. These assets, he estimates, can help not only reduce risk but also increase returns.

On Friday, gold surged to its highest level since May, while Bitcoin surpassed the $77,000 mark, ending the week with its biggest gain since 2023, according to Bloomberg.

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