Billionaire hedge fund manager Ray Dalio said the threat facing the world is not just a Cold War or a trade war, but a capital war where money is weaponized. He advises that investing in an asset is safest during turbulent times.
The founder of Bridgewater Associates said in a statement interview At the World Government Summit in Dubai on Tuesday, the world is on the cusp of widespread conflict, with countries turning on each other with means of controlling financial flows, such as leveraged debt ownership, rather than ammunition.
“We’re on the edge,” Dario said. “That means no, but it means we are very close to (capital wars) and can easily fall to the brink of capital wars because there is a shared fear.”
Dalio blames President Donald Trump for the escalating feud recent threats Taking over or buying Greenland from Denmark, analysts say, weakens the alliance formed through the North Atlantic Treaty Organization (NATO). He said the friction could stoke fears among European holders of U.S. securities, bonds and stocks that they could be subject to sanctions. That anxiety, in turn, could create a “mutual fear” that the U.S. will be denied access to vital foreign funding, Dalio said.
Dalio’s broader warning about global market volatility echoes a similar message he gave last month at the World Economic Forum in Davos, Switzerland. In conversation with Kamal Ahmed, wealthDario, executive editorial director UK and Europe, warns The collapse of the world monetary order. Specifically, he said, the world is in a larger cycle in which U.S. power is weakening, in large part due to Huge national debt of $38 trillion. Dalio warned that geopolitical tensions and technological changes are exacerbating this collapse.
“Let’s not be naive and say, ‘Oh, we’re breaking the rules-based system,'” he said. “Gone.”
Global Tensions and the “Sell America” Model
Indeed, the market Entering “Selling America” Mode Following Trump’s push for Greenland, the dollar fell and sharply increased five-year Treasury yields, signaling concerns about rising government debt supplies. Danish pension fund AkademikerPension confirmed the news Will withdraw from U.S. Treasury bonds By the end of January, because U.S. government finances are no longer sustainable. Swedish pension fund Alecta Also reduced its holdings. The sell-off also coincides with Investigation into Fed Chairman Jerome Powellwhich has made global investors uneasy about the possibility that the Federal Reserve may lose its independence. The assets have now been recovered.
European investors account for the vast majority of holders of dollar-denominated assets, Foreign buyers account for 80% The volume of U.S. Treasury securities between April and November 2025, according to Citi.
Recent trade moves demonstrate Trump’s interest in America’s global standing. follow landmark trade deal Trump between EU and India signed his own agreement Prime Minister Narendra Modi lowered tariffs from 25% to 18% after India agreed to stop buying Russian oil.
Dalio noted that capital wars emerge within broader conflicts, citing the United States’ entry into World War II as an example. Freeze Japanese assets An attempt was made to control the country and its eastward expansion without the use of force. He sees “a similar situation” today between the United States, China and Europe.
The golden return of the Nixon era
Dalio said that in times of global financial stress, gold remains the safest investment asset. The value of gold tends to be inversely related to the value of the U.S. dollar, because when the U.S. dollar is weak, gold is cheaper and in higher demand from foreign buyers. Gold and silver rise after record rally Historic sell-off before eventual stabilization.
“Among reserve currencies, gold is the second largest reserve currency,” Dalio said. He added that monetary policymakers still refer to gold as “the safest currency in this environment.”
“Gold is up about 65% from a year ago and is down about 16% from its highs,” Dalio said. “I think people mistakenly think, is it going to go up or is it going to go down, should I buy it?”
Dalio compared today to 1971, when former President Richard Nixon abolished the gold standard. In the early 1970s, inflation, huge debt burdens, and government spending shook investor confidence in the U.S. dollar, making gold an effective hedge. Dalio has previously advocated for investors to view gold as 15% of its portfolio.
“Because gold is a diversifier, it does particularly well when the economy is bad and not so well when the economy is good, (but) it is an effective diversifier,” Dalio said on Tuesday. “I would say the most important thing is to have a diversified portfolio.”