Ray Dalio, the billionaire asset manager and founder of Bridgewater Associates, has advised investors to allocate at least 15% of their portfolio to gold and Bitcoin to hedge against macroeconomic risks, particularly those related to the rising government debt.
Concerns about public debt and asset protection choices
#Dalio emphasizes that the massive government debt of the US and other countries is not accurately reflected in the global market, which could lead to a significant downturn. He points out that the US government is spending more than 40% beyond its revenue and must continue to issue new debt or have the Federal Reserve (FED) print money to pay off debt. This situation could cause market instability, even a major collapse if there is further quantitative easing or government control over the FED.
To cope with these unpriced risks, Dalio recommends that investors allocate at least 15% of their assets to gold or Bitcoin, viewing them as a hedge against fiat currency and cash-equivalent assets.
However, Dalio "prefers gold over #bitcoin ", as he doubts any central bank will accept cryptocurrency as reserve currency due to the transparency of transactions and concerns about the ability to break the code or alter Bitcoin's protocol. Nevertheless, he still holds a certain amount of Bitcoin in his portfolio.
While some other experts like Laith Khalaf (AJ Bell) consider gold to be a "more stable anchor" than Bitcoin in the context of risks, others argue that gold can also be volatile and has had historically difficult periods.