Global debt crisis: As Ray Dalio sees the role of gold and crypto
The founder of Bridgewater Associates sees the global economy at a critical point. Growing debts put currencies such as the dollar under pressure, which is why Ray Dalio recommends alternatives.
Values in this article
Raw materials
3,856.53 USD -9.27 USD -0.24%
currency
95,959,1947 CHF 1,567,2497 CHF 1.66%
102,688,7440 EUR 1,761,3315 EUR 1.75%
89,527,6026 GBP 1,662,9524 GBP 1.89%
17,718,527,0965 JPY 298,806,2971 JPY 1.72%
USD 120,338,1368 1,892,6345 USD 1.60%
0.7976 CHF 0.0006 CHF 0.07%
0.8534 EUR 0.0012 EUR 0.13%
0.7440 GBP 0.0020 GBP 0.27%
147,2300 JPY 0.1810 JPY 0.12%
• US debt load and excessive expenses endanger the stability of the dollar
• Ray Dalio advises to invest ten percent of the portfolio in gold
• Gold and digital currencies as safe ports in uncertain times
Dalios Warning of a US fiscal crisis
At the Futurechina Global Forum in Singapore, Ray Dalio drew a dark picture of the American financial situation. He spoke of an “intolerable” policy because the US government spends more permanently than taking. According to his calculations, public debt is now six times as high as the annual income. In order to finance a deficit of two trillion dollars, an interest burden of a trillion dollar and expiring bonds of nine trillion dollars, Washington has to sell an additional twelve trillion dollars of guilt titles.
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As CNBC reports, Dalio warns that global demand for American bonds is not sufficient for such a volume. This mismatch of supply and demand could trigger a chain reaction that undermine trust in the dollar and thus the stability of the entire financial system. Bloomberg points out that Dalio spoke of a real danger to the “monetary order” in this context – an indication that the United States could head for a fiscal crisis.
Global debt increases the risk of devaluation
Other experts also share Dalio’s opinion that the United States are in a precarious situation. A report by Bloomberg shows that, according to NG KOK Song, founder of Avanda Investment Management, the United States had already reached the “tilting point”. Due to the growing debt, the scenario of a crisis seems more and more likely.
In addition, according to CNBC, NG KOK Song explains that these challenges are not limited to the United States. France, Japan and China also bear similar risks. The excessive deficits have become a global phenomenon, against the background of which gold and also digital currencies such as Bitcoin are attracted to attractiveness.
Gold and digital currencies as safe ports
As a consequence of these risks, Ray Dalio recommends investors to keep around ten percent of their portfolio value in gold. The precious metal has not only proven itself in times of crisis, but is now also the second largest reserve currency worldwide. According to CNBC, the dollar index has given in around ten percent since the beginning of the year, while gold has gained strength compared to all major currencies.
Bloomberg reports that Dalio sees all classic currencies under pressure as long as governments do not limit their expenses. In this environment, gold as well as digital currencies gain in importance as a reliable value memory. As a result, the founder of Bridgewater Associates expects increasing demand and thus a growing importance for the precious metal and non-Fiat currencies.
Editor finance.net