Dalio Warns of Sovereign Debt Spiral, Recommends Investing in Gold and Bitcoin
Bridgewater Associates founder Ray Dalio has weighed in on the current state of the US economy, warning that investors should be prepared for a sovereign debt spiral. He points to Japan's trimming of its Treasury holdings and rising long-term yields as evidence that the debt dynamic is accelerating.
Dalio notes that this year's federal deficit is nearing $2 trillion, with debt held by the public around $32 trillion and interest costs approaching $1 trillion annually. In response, he recommends that investors underweight bonds, hold 10-15% in gold, and consider adding Bitcoin as a form of ballast against currency debasement.
The comments from Dalio come amid a significant rally in the price of Bitcoin, which has surged to above $78,000 in recent days. This move is tied directly to the Treasury's buyback tweak and forced short liquidations.