Dalio Urges Investors to Diversify into Gold and Bitcoin Amid US Debt Worries

Prominent fund manager Ray Dalio has recommended that investors hold 'a bit of Bitcoin' due to rising US debt risks. He believes that if investors lose confidence in government bonds, their value could decline.

The Bridgewater Associates founder pointed out that the recent moves in government bond markets align with his book's description of how countries go bankrupt. These include Japan selling some of its US Treasury holdings and long-term US bond yields rising alongside a weaker dollar.

Dalio also noted that the US government is struggling to manage its debt, with expected revenue of $5.5 trillion this year and spending around $7.5 trillion, leaving a deficit of approximately $2 trillion. The total federal debt excluding money owed by the government to itself stands near $32 trillion, while interest costs alone are expected to reach about $1 trillion.

Dalio expects similar pressures in other major economies such as the UK, EU, China, and Japan. He recommends underweighting bonds, holding around 10-15% of a portfolio in gold, and owning 'a bit of Bitcoin'. Although he didn't specify a target allocation for BTC, it's worth noting that in 2025, he suggested allocating 15% of portfolios to either gold or Bitcoin, up from his 2022 recommendation of just 1-2% in Bitcoin.