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Ray Dalio, the legendary investor and founder of Bridgewater Associates, is once again urging investors to think carefully about how they protect their portfolios especially in light of what he views as growing risks in the global economy and the stability of fiat currencies.
In a recent appearance on the Master Investor podcast, Dalio explained why investors should consider allocating a meaningful but not excessive portion of their portfolios to assets like gold and bitcoin, which he views as hedges against the weakening of paper currencies like the US dollar.
“If you were neutral on everything and optimizing your portfolio for the best return-to-risk ratio,” Dalio said, “you would have about 15% of your money in gold or bitcoin.”
A Hedge Against Currency Debasement
Dalio has long been outspoken about the dangers of fiat currency debasement, particularly when governments engage in large-scale deficit spending and excessive borrowing. In his view, the U.S. is entering such a phase and that has significant implications for investors.
“The real problem is the devaluation of money,” he explained. “When that happens as we’ve seen throughout history people who own assets that store value well, like gold, do better than those holding traditional currencies.”
While Dalio is far from a crypto enthusiast, he recognizes that bitcoin has emerged as a modern alternative to gold for many investors. Still, he noted that he personally favors gold over bitcoin for its centuries-long track record as a reliable store of value. Nevertheless, he believes both assets play a similar role as diversifiers and hedges.
A Conservative But Strategic Allocation
Dalio’s recommended 15% allocation might seem small to some investors in the crypto community, but it's consistent with his long-held investing philosophy: build a balanced portfolio that can withstand a wide range of economic environments.
“You don’t want to go overweight,” he warned. “Diversification is more important than trying to outguess the market.”
In contrast, some financial experts such as Ric Edelman, founder of Edelman Financial Engines have proposed allocations of up to 40% of a portfolio in crypto assets for long-term investors. But Dalio’s take reflects a more measured, risk-conscious approach that still acknowledges the growing importance of alternative stores of value in today's uncertain landscape.
“Fifteen percent of a portfolio is a rather small share,” said Arthur Azizov, founder of B2 Ventures, when asked about Dalio’s comments. “After all, the remaining 85% can be invested however you like. Dalio is simply encouraging people to build a solid foundation so that if unexpected events occur, they’re better positioned to weather the storm.”
Lessons From History and Today
Dalio's concern about fiat money isn’t purely theoretical. He frequently points to past episodes of monetary debasement, such as the stagflation of the 1970s, when inflation surged, the dollar weakened, and gold soared. He believes the current combination of economic excess, rising debt levels, and geopolitical instability is reminiscent of that era or worse.
In such times, Dalio argues, investors need to hold "effective diversifiers" assets that are uncorrelated with traditional stocks and bonds and that can provide upside if inflation surges or the value of paper currencies erodes.
While he's been cautious in his praise of bitcoin in the past, he now acknowledges its potential as a kind of "digital gold" particularly among younger generations of investors who may not resonate with physical bullion. Still, his message remains consistent: hedging is not speculating it’s protecting against risk.
A Practical Takeaway
For everyday investors, Dalio’s advice offers a balanced roadmap: Don’t ignore the mounting economic challenges, but also don’t bet your entire future on one asset class. By allocating around 15% of your portfolio to gold and/or bitcoin, you gain a level of protection without overcommitting to any single market narrative.
Whether you lean more heavily toward precious metals, crypto, or a mix of both, the key is understanding why you’re holding them: not to get rich quick, but to safeguard wealth in times of monetary turbulence.
Ray Dalio recommends that investors allocate approximately 15% of their portfolios to gold or bitcoin to hedge against the weakening of fiat currencies a scenario he believes is increasingly likely as government debt and spending rise. While he prefers gold, Dalio sees both assets as valuable diversifiers in a world where traditional money is losing purchasing power. Still, he urges moderation and diversification above all.
