Billionaire investor Ray Dalio warned that the world is getting very close to what he calls a “capital war,” which is where countries use money and financial systems as weapons. Speaking at the World Governments Summit in Dubai, he explained that this can include actions like sanctions, trade bans, blocking access to capital markets, or using debt holdings as leverage. While he said the world is not in a capital war yet, he stated that tensions are high enough that it would be easy to cross that line. According to Dalio, the growing fear and mistrust between countries are what make the situation so unstable.
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He pointed to rising tensions between the United States and Europe as a clear example. Dalio said that some European investors are worried that their U.S.-based assets could be sanctioned, while the U.S. may fear losing access to European capital. This matters because European investors made up about 80% of foreign buyers of U.S. Treasuries last year. He also noted that capital controls are becoming more common globally and that institutions, such as central banks and sovereign wealth funds, are preparing for the possibility of tighter financial restrictions.
In this environment, Dalio said that gold (GLD) remains one of the safest places to store wealth. He also warned against focusing too much on short-term price moves and pointed out that gold is still up sharply over the past year despite recent declines. Rather than trying to time gold’s ups and downs, he suggested that investors decide what percentage of their portfolio should be in gold and stick with it. Dalio explained that gold works well as a diversifier, as it often performs best during periods of stress and helps balance portfolios when other assets struggle.
Is Gold a Good Buy?
Using TipRanks’ technical analysis tool, the indicators seem to point to a positive outlook for gold. Indeed, the summary section pictured below shows that 10 indicators are Bullish, compared to six Neutral and six Bearish indicators.
