Dalio: The world is on the brink of a capital war, and gold remains the top hedge tool

BlockBeats News, February 3 — Legendary investor Ray Dalio warned Tuesday that the world is on the brink of a capital war amid ongoing geopolitical tensions and increased volatility in capital markets. The so-called capital war refers to the weaponization of funds, where countries engage in strategic battles through trade embargoes, blocking access to capital markets, and leveraging debt holdings.

Dalio cautioned that European investors holding dollar-denominated assets are becoming increasingly worried, fearing potential sanctions; meanwhile, “the U.S. side may also have corresponding concerns, worried about losing European capital inflows or Europe no longer increasing its holdings of American assets.”

Despite recent historic sell-offs causing precious metals to decline across the board, Dalio stated that in the current tense situation, gold remains the best store of value. “Central banks, governments, or sovereign wealth funds should consider: what should be the allocation of gold in my investment portfolio, and maintain this fixed ratio — because gold is a highly effective risk diversification tool for other underperforming asset classes in the portfolio.”

Dalio added, “Because gold can diversify risk, it performs especially well during economic downturns and crises; during periods of economic prosperity, its performance may be relatively flat, but it remains an effective risk diversification tool. I want to say that the most important thing is to build a sufficiently diversified investment portfolio.” (Jin10)