Dalio: Global Debt Crisis Undermines Fiat Trust, Drives Shift to Gold and Non-Fiat

Ray Dalio, founder of Bridgewater Associates, has reiterated his stance that gold and non-fiat currencies will grow in importance as global debt pressures intensify, particularly in the United States. Speaking at the FutureChina Global Forum 2025, Dalio warned that the U.S. fiscal situation has become “unsustainable,” with government spending six times its revenue. He highlighted that the U.S. will spend $7 trillion in 2025 against $5 trillion in revenue, creating a $2 trillion deficit. When factoring in interest payments and maturing debt, the government would need to sell an additional $12 trillion in debt, yet global demand for such debt is insufficient, leading to a critical supply-demand imbalance .

Dalio emphasized that all major currencies face devaluation risks due to excessive government spending and borrowing. He argued that this undermines trust in fiat currencies as reliable stores of value, prompting a shift toward alternatives like gold and non-fiat assets. “We are going to see non-fiat currencies become a more important store of wealth and money,” Dalio stated, urging investors to allocate approximately 10% of their portfolios to gold as a hedge . This recommendation aligns with recent market trends, as gold prices surged past $3,700 per ounce, reflecting heightened demand for safe-haven assets .

The U.S. dollar, while retaining its dominance as a medium of exchange, faces challenges as global trade increasingly diversifies. Dalio noted that the dollar index has fallen 10% year-to-date, while other currencies have also weakened against gold. He acknowledged the growing role of the Chinese yuan in global trade but stressed that the dollar’s primacy remains unchallenged for now . However, he warned that the U.S. fiscal crisis could erode confidence in the dollar’s long-term stability, particularly as other economies, including those of France, Japan, and China, face similar debt pressures .

Non-fiat currencies, including cryptocurrencies like Bitcoin, are gaining traction as alternatives to traditional assets. While Dalio did not explicitly mention crypto, he highlighted the broader appeal of non-inflationary stores of value. This sentiment has been reflected in market activity, with Bitcoin and gold prices rising in tandem as investors seek protection against inflation and economic uncertainty . Analysts note that Bitcoin’s characteristics align with Dalio’s vision, as it functions as a decentralized, finite asset. Similarly, silver has reached its highest levels since 2011, signaling a broader shift in investor preferences .

The implications of Dalio’s warnings extend beyond the U.S. fiscal landscape. He stressed that the global monetary order is at risk, with excessive debt accumulation threatening the stability of multiple economies. Institutional investors are already repositioning portfolios, increasing allocations to gold and non-fiat assets. This trend has driven heightened trading volumes in both crypto and gold markets, with cryptocurrencies like Bitcoin and Ethereum seeing increased activity as macroeconomic uncertainties persist .

Critically, Dalio’s analysis underscores the need for structural reforms to address fiscal imbalances. He proposed reducing the U.S. fiscal deficit to 3% of GDP but noted political inaction has hindered progress. With President Donald Trump’s proposed tax-and-spending bill expected to add $3.4 trillion to the national debt over the next decade, concerns about long-term sustainability remain unaddressed . The lack of political will to curb spending, Dalio argued, exacerbates the risk of a fiscal crisis that could destabilize the global financial system.

As the debate over alternative assets intensifies, Dalio’s advocacy for gold and non-fiat currencies reflects a broader shift in investment strategies. The convergence of rising debt, currency devaluation risks, and institutional demand for safe-haven assets suggests that non-fiat currencies may play an increasingly pivotal role in the global economy. However, the path forward remains contingent on policy decisions and market confidence in the ability of governments to address their fiscal challenges.