Billionaire hedge fund founder Ray Dalio has recommended that investors hold non-government-produced monies, including gold and a small amount of Bitcoin, to hedge against growing government debt.
In a recent essay, the Bridgewater Associates founder warned about the size of national debt, noting that the U.S. national debt recently surpassed the $40 trillion mark. Dalio pointed out that major economies such as the U.S., the U.K., Europe, and Japan share similar debt and deficit challenges.
"As general advice, I suggest diversifying well in asset classes and countries that have strong income statements and balance sheets and are not having great internal political and external geopolitical conflicts, underweighting debt assets like bonds, and overweighting gold and a bit of Bitcoin," Dalio wrote in the essay.
Dalio explained that when governments over-borrow and central banks print money to cover the gap between the supply and demand of debt, the value of the currency is debased. Consequently, he expects non-government-produced assets to perform relatively well under these conditions.
Over the years, Dalio's stance on Bitcoin has evolved. After previously stating he would not invest in the cryptocurrency, he later confirmed that Bitcoin was part of his portfolio, disclosing last year that it made up 1% of his investments. He has previously noted that while no one can print more Bitcoin, it faces potential risks from quantum computing advances, and he has maintained that gold should be held by all investors.
