Billionaire investor Ray Dalio is raising a red flag on the global financial system. Speaking at the World Economic Forum in Davos, the hedge fund founder warned that the traditional monetary order is currently “breaking down.” As geopolitical tensions flare, Dalio explained that central banks are moving away from paper money and government debt, choosing instead to protect their wealth through assets like gold (CM:XAUUSD).
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Dalio Predicts a Global Monetary Breakdown
The core of Dalio’s concern is a massive shift in how world banks view their cash reserves. He believes the long-standing trust in paper currencies and government bonds is fading fast. According to Dalio, “Fiat currencies and debt as a storehold of wealth, are not being held by central banks in the same way, and … there was a change.” This change suggests that the people who own the money and the people who need to borrow it are becoming deeply worried about each other’s financial health.
Trump Escalates Trade Friction with Europe
This warning comes at a time of high tension between the U.S. and its allies. President Donald Trump has recently threatened new tariffs on European countries after a disagreement over the ownership of Greenland. Dalio suggested that these “unpredictable” policies are making the breakdown worse. He also noted that if the political tide turns in the 2026 mid-term elections, many of these current economic strategies could be “weakened greatly” or even totally reversed.
Crypto Leaders Push for Digital Financial Updates
While Dalio focuses on gold, other leaders at Davos are looking for digital answers. Coinbase (COIN) CEO Brian Armstrong is also in Switzerland, meeting with world leaders to explain “how crypto can update their financial systems.” Armstrong is promoting “tokenization,” which he believes can “democratize access to capital markets.” He is also set to talk with bank executives about new U.S. laws that could change how digital assets are regulated and traded.
Gold Outperforms Traditional Tech Markets
The massive move into the gold market is the clearest sign that investors are looking for safety. Dalio noted that the move into gold has been “far better than the tech markets and so on.” As fiat currencies face pressure from inflation and trade wars, central banks are returning to the oldest form of money. This shift indicates that the global economy is moving away from a system built on debt and toward one backed by hard assets.
At the time of writing, gold is sitting at $4,749.47.
