Trump's actions could turn into a sell-off of U.S. assets to foreigners - Dalio

The tough foreign policy of US President Donald Trump may provoke a new stage of global financial confrontation, said billionaire and founder of the Bridgewater Associates fund Ray Dalio on CNBC. According to the investor, growing anxiety and economic tensions may force foreign governments and investors to reconsider their interest in U.S. assets or even start getting rid of them.

"On the other side of trade deficits and trade wars are capitals and capital wars," Dalio told CNBC on the margins of the World Economic Forum in Davos. - If you take conflicts into account, you can't ignore the possibility of capital wars. In other words, there may no longer be the same desire to buy U.S. debt and so on."

According to Dalio, countries that hold large reserves in dollars and U.S. Treasuries may be less inclined to finance U.S. budget deficits if their confidence is breached. At the same time, the investor notes, the U.S. continues to actively increase borrowing, which is fraught with problems if confidence weakens on one side or the other.

"We know that both holders of dollar assets and those who need them - the U.S. - are worried about each other. If other countries hold the dollar and have doubts and we keep printing it - that's a serious risk," the investor said.

Dalio noted that there have already been precedents in history when economic confrontation turned into capital outflows and currency disputes. "When geopolitical conflicts arise, even allies don't want to hold other people's debt. They move into hard currency. This is logical, it is a fact, and it has happened repeatedly in world history," he said.

He reiterated the importance of diversification and cautioned investors against over-reliance on one country or asset class. Dalio singled out gold as a protective instrument and recommended allocating 5% to 15% of the portfolio to gold.

On Tuesday, the prices of Treasury bonds fell sharply: investors reacted to the strengthening of the White House rhetoric towards Europe, where fears of a trade war have reappeared, writes CNBC. The occasion was Trump's statements about Greenland: he threatened to impose new duties against countries that oppose the possible sale of the Danish territory to the United States.

Against this backdrop, the spot gold price hit an all-time high of $4766.31 on Tuesday.

This article was AI-translated and verified by a human editor