Ray Dalio, founder of Bridgewater Associates, renewed his case for gold, arguing it stands apart from other assets at a time of rising uncertainty and shifting policy risks. In a recent discussion, he framed gold as a self-contained store of value that does not rely on counterparties or promises.
“Gold is the only asset that somebody can hold and you don’t have to depend on somebody else to pay you money for,” Dalio said.
His view lands as investors weigh inflation trends, central bank decisions, and geopolitical stress. It also follows a stretch in which gold prices touched record levels earlier this year.
Why Gold Is Back in Focus
Dalio’s point centers on counterparty risk. A bond needs an issuer to pay. A stock needs a business to deliver profits. Gold, by contrast, is a tangible asset. Its value is not contingent on a single company or government keeping a promise.
That argument gains traction when confidence wavers. Inflation erodes purchasing power. Bank failures remind people that deposits are not risk-free. Shifts in interest rates can hurt bond prices. In these moments, investors often seek assets that can hold value.
Gold has filled that role repeatedly. During past inflation spikes, demand increased. In times of war or trade tension, buyers often move to precious metals. Several central banks have been steady purchasers in recent years, adding to their reserves as a hedge.
- Central banks reported strong net gold purchases in 2022 and 2023, according to industry data.
- Gold prices reached fresh highs in 2024, reflecting safe-haven demand and currency effects.
Supporters and Skeptics
Supporters echo Dalio’s reasoning. They note gold’s long history as money and its role in reserves worldwide. They argue it helps diversify portfolios when stocks and bonds move together.
Critics focus on costs and opportunity. Gold does not pay interest or dividends. When real yields rise, the metal can struggle. Storage and insurance add expense. Traders also point to periods when gold lagged stocks for years.
Some investors prefer digital assets as an alternative hedge. Bitcoin advocates call it “digital gold.” They argue scarcity and portability make it attractive. Others counter that crypto prices remain volatile and depend on regulatory clarity.
Financial advisors often recommend balance. They suggest a modest allocation to gold—via bars, coins, exchange-traded funds, or mining shares—rather than an all-or-nothing bet.
How Investors Are Positioning
Dalio’s remarks align with a broader positioning shift. Portfolio managers have increased exposure to assets thought to perform in inflationary or uncertain periods. That includes commodities, inflation-linked bonds, and gold.
Several forces can influence near-term moves:
- Inflation trends and the timing of rate cuts or hikes.
- Global growth data that affects currency values and risk appetite.
- Geopolitical events that drive flight-to-safety flows.
For long-term holders, the appeal is simpler. Gold acts as insurance against extreme outcomes—monetary policy mistakes, fiscal crises, or currency depreciation. That is the core of Dalio’s argument about independence from others’ obligations.
Historical Context and Data
Gold’s role has evolved since the end of the Bretton Woods system, when major currencies stopped being tied to the metal. Since then, prices have moved with market forces. Episodes of strong performance often corresponded with high inflation or weak dollar periods.
Industry reports show central banks have added to reserves at a fast pace over the past two years. Emerging market banks led buying as they sought to diversify away from single-currency exposure. This trend has supported demand even as jewelry and technology uses shifted with the economy.
At the same time, exchange-traded funds that hold bullion saw waves of inflows and outflows as rates moved. This shows that short-term holders still respond to yield and momentum, while official sector demand provides a steadier base.
What Comes Next
Dalio’s statement highlights a clear choice facing investors. Rely on assets tied to future payments, or hold something that stands on its own. The right mix depends on goals, time horizon, and risk tolerance.
If inflation cools and real yields rise, gold could face pressure. If inflation persists or new shocks hit, demand may strengthen. Central bank buying and currency moves will remain key signals.
For now, the takeaway is straightforward. Gold’s appeal stems from independence, not income. As Dalio put it, the metal does not require anyone’s promise to hold value. Investors weighing safety, liquidity, and cost will watch how policy and prices evolve in the months ahead.
