Ray Dalio, founder of the world's largest hedge fund Bridgewater Associates, expresses a preference for investing in "hard money" such as bitcoin and gold over debt assets, citing the escalating global indebtedness.
Rising Global Debt Levels
During a speech at the Abu Dhabi Finance Week conference, the seasoned investor highlighted the "unprecedented levels" of debt prevalent in major countries like the United States and China. He emphasized that the current debt levels are unsustainable and foresees an inevitable debt crisis in the coming years that will significantly devalue money.
Steering Away from Debt Assets
Dalio articulated his desire to move away from debt assets like bonds and debt, instead opting for hard money alternatives such as gold and bitcoin. He views bitcoin and gold as stable hedges against economic uncertainty.
Evolution of Dalio's Views on Bitcoin
While Dalio was initially skeptical about bitcoin's prospects, he has transitioned into a prominent supporter of the cryptocurrency in recent years. In 2022, he recommended allocating up to 2% of a portfolio to bitcoin, alongside gold, as a prudent measure to hedge against inflation.
Bitcoin as a Hedge Against Unsound Monetary Policies
Dalio's endorsement further solidifies bitcoin's position as a hedge against unstable monetary policies. As governments continue to devalue fiat currencies, bitcoin's finite supply establishes it as a secure asset amidst economic turbulence.
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The History of Gold as an Asset
From the ancient days to the early 20th Century, gold was a common currency. It was popular because of its purity, divisibility. uniformity. scarcity and beauty. Aside from its inherent value, it could be traded internationally. However, since there were no international standards for measuring gold at this point, different weights and measures existed worldwide. One pound sterling, for example, was equivalent in England to 24 carats, and one livre tournois, in France, to 25 carats. A mark, on the other hand, was equivalent in Germany to 28 carats.
The United States began issuing American coin made up 90% copper, 10% zinc and 0.942 fine-gold in the 1860s. This led to a decline in demand for foreign currencies, which caused their price to increase. In this period, large amounts of gold coin were minted by the United States, which caused the gold price to drop. The U.S. government needed to find a solution to their debt because there was too much money in circulation. They decided to sell some excess gold to Europe in order to do this.
Most European countries distrusted the U.S. Dollar and began to accept gold as payment. Many European countries started to accept paper money as a substitute for gold after World War I. The gold price has gone up significantly in the years since. Even though the price fluctuates, gold is still one of best investments.
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By: Vivek Sen
Title: Ray Dalio Prefers Bitcoin Over Bonds
Sourced From: bitcoinmagazine.com/business/ray-dalio-prefers-bitcoin-over-bonds
Published Date: Wed, 11 Dec 2024 16:43:46 GMT
