The billionaire Ray Dalio, founder of Bridgewater Associates, one of the world’s largest hedging funds, recently presented an interesting investment council. In a recent interview with Master Investor, Podcast stated that the optimal wallet should contain about 15% of allocation in gold or Bitcoin. Why?
Currency devaluation – the scenario from the past may happen again
Dalio warns against a “classic devaluation” similar to that of the 70s or even the 30th century, when the fiduciating currencies can lose value in relation to hard assets. His fears are not unfounded – the United States federal debt has already reached 125% of GDP, and the fiscal deficit is 7% of GDP, which is the highest level among highly industrialized countries.
The legendary investor explains:
If you were neutral with everything and optimize your portfolio in terms of the best risk return, you would have about 15% of your money in gold or bitcoin
Gold is still at the forefront of investors’ preferences
Although Dalio recommends both gold and Bitcoin, it clearly prefers the legendary ore, describing it as a “purest game” in the context of storing value. He emphasizes that gold is currently the second largest reserve currency in the world after the American dollar, which loses its value.
The billionaire admits that he has both assets, but his gold positions are much greater than Bitcoin’s allocation. This approach reflects his skeptical attitude towards cryptocurrencies as a reserve currency, although Dalio sees the future Bitcoin potential as an alternative form of money.
“3%solution” – a rescue plan for the economy
Dalio is not limited to investment councils. It proposes a specific recovery plan for the American economy, called “3% solution”, which would require immediate action to reduce the deficit from 7.5% to 3% of GDP by a combination of tax increases and expenditure cuts.
Would such a plan like the American voter, in particular the Republican who supported Donald Trump because of the announcements of great tax cuts?
Bitcoin – a chance or a threat?
Although Dalio sees the advantages of Bitcoin, such as limited supply and the possibility of global transactions, remains cautious about his role as a reserve currency. His approach reflects a wider debate in the world of finance about the cryptocurrency place in traditional investment portfolios.
Recommendation 15% allocation in alternative assets is a radical change compared to traditional portfolio models. For an average investor, this may mean the need to re -evaluate the current strategy and consider a larger share of inflation protecting assets.
In the era of growing public debts and monetary uncertainty, the council of one of the most respected investors in the world deserves special attention. Are we really at the threshold of another great currency devaluation? Time will tell, but preparing for such a scenario can be crucial for the protection of assets.
