Billionaire Dalio sends 2-word warning as stocks sell-off
If you’re an investor like me, you wouldn’t be fooled into looking at the returns since last April and thinking everything is rosy. After a disastrous, tariff-induced 19% drop S&P 500Shares have risen sharply from their April lows. Nasdaq Comp and S&P 500 rose 50% And 36%respectively in less than a year.
This is impressive by any measure, but it has arguably created a problem.
Even though trade wars have flared up due to new tariffs imposed on Europe over the weekend, stocks are claimed to be perfectly priced. It’s no surprise to the billionaire that tensions have increased over the past year Ray DalioFounder of Bridgewater Associates, which manages $112 billion It is among the most successful hedge funds of all time in assets.
Dalio has been around the United States for the past year. mountain of debt is causing a seismic shift in the global monetary order and prompting central banks to rethink their exposure to U.S. debt relative to gold, the second-largest reserve currency worldwide.
His concerns point to an increasingly fragmented and insecure global order, and he summarized it in two words: “capital wars.”
These capital wars pose real risks and consequences for investors.
The US dollar’s reign as the world’s preferred reserve currency is under increasing pressure as trade wars deter foreign central banks from buying US bonds and Treasury yields rise.
“The monetary system is breaking down,” Dalio said. CNBC Today. “Fiat currencies and debt as a store of wealth are not held in the same way by central banks.”
Fund manager buys and sells
Instead, central banks are rethinking their exposure to risks as tensions and risks rise, leading even our allies to rethink their relationships with US bonds and the Dollar.
“The biggest market that moved last year was the gold market,” Dalio continued. “On the other end of trade wars are capital wars.”
Gold prices increased by 66.2 percent in 2025 NYU SternIt far outpaced the S&P 500’s 17.8% return for the full year. dividends. This trend has been carried over to 2026. SPDR Gold Shares (GLD) ETF got up 10.3% since the beginning of the yearincluding 3.8% increase today After President Trump made a new statement 10% tariff against its European allies in support of NATO’s Greenland plans.
“The holders of U.S. dollar debt and the United States that needs it are worried about each other,” Dalio said. “That’s a big problem… maybe there isn’t the same inclination to buy U.S. bonds.”
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If so, then gold is the most likely beneficiary. We saw a huge increase in central bank gold purchases last year, and this is unlikely to change in 2026 if uncertainty continues to put pressure on US debt financing.
“Central banks and sovereign wealth funds are buying gold for diversification purposes,” Dalio said.
US debt pile reaches its peak 38 trillion dollarsand shows no signs of slowing down.
“There’s a supply-demand issue when you have a certain amount of debt… and you have to sell a lot more,” Dalio said. “When there are conflicts, international geopolitical conflicts, even allies do not want to pay each other’s debts. They prefer to switch to foreign currency.”
Dalio calls this a logical truth that has been repeated over and over throughout history.
He thinks gold has become attractive enough for Main Street investors to consider owning it as part of a diversified portfolio. Everyone’s situation is different, but Dalio generally recommends: 5% to 15% allocation He switches to a ‘normal’ portfolio because “it performs very well when other assets are not performing well.”
He believes central banks should hold a higher percentage of gold than they currently do; Dalio’s personal position is tilted toward gold rather than bonds, and his holdings are above his typical level.
Obviously Dalio is a fan of gold and I agree. The gold allocation makes sense to me, and his arguments are similar to the arguments that convinced me to make gold part of my own personal portfolio last November (for full disclosure, it represents 5.5% of my portfolio, the largest allocation I’ve had since I started investing in the early 1990s).
In short, owning gold does not mean avoiding stocks. It just means Dalio is balancing them with more gold than in bonds than in the past.
Dalio is not the only one Wall Street Those who think that gold should be in portfolios due to geopolitical and monetary conditions. TheStreet Charlie Blaine Major banks were recently surveyed and most said they expect gold to gain more ground in 2026.
Goldman SachsFor example, he sees a path for gold to reach $4,900 per ounce this year.
“We still see upside risk to our base scenario of the gold price rising 14% to $4,900 by December 26. diversification Goldman Sachs wrote “to private investors” in the research note he shared with me. “Central banks will continue to further diversify gold to hedge against geopolitical and financial risks.”
According to figures from Goldman Sachs, gold ETFs represent just 0.17% of private financial portfolios; That’s about six basis points, or 0.06%, below the 2012 high. for each basic point HE retail investors Goldman Sachs, which has increased its allocations to gold, estimates that gold prices could rise by 1.4%.
If more individual investors If they increase their exposure to gold, as I did last year, that could help support additional gains this year, especially if global unrest continues to push central banks away from the United States. treasury bonds.
