The escalating global debt crisis, particularly within the United States, is prompting a significant reassessment of traditional store-of-value assets, with gold poised to regain prominence. As sovereign nations grapple with unsustainable fiscal trajectories and mounting liabilities, concerns over currency devaluation are intensifying, driving investors toward alternatives that offer greater stability and preservation of capital. This shift underscores a fundamental rebalancing in financial markets, influenced by the growing weight of public debt and its implications for monetary policy and investor confidence.
Ray Dalio, the esteemed founder of Bridgewater Associates, has publicly articulated this sentiment, identifying gold and non-fiduciary currencies as increasingly crucial components for wealth preservation in an environment characterized by persistent debt accumulation. Speaking at the FutureChina Global Forum 2025, Dalio characterized the fiscal situation in the United States as inherently unsustainable, warning that the prevailing global monetary order faces significant threats. His recommendations to investors emphasize diversifying portfolios to include at least 10% in gold, a strategic move predicated on the anticipated erosion of value in major fiat currencies. This perspective is rooted in the observation that when governments demonstrate an unwillingness to curb excessive spending and borrowing, the inherent trust placed in conventional currencies as a store of wealth begins to diminish.
Fiscal Pressures and Dollar Weakening
Dalio highlighted that the U.S. dollar has depreciated by over 10% year-to-date against other currencies. Compounding this, these other currencies have themselves depreciated relative to gold, which has now ascended to become the world’s second-largest reserve asset. The strategist emphasized that fiscal pressure is not an isolated U.S. phenomenon, noting similar challenges faced by nations such as France, Japan, and China. Ng Kok Song, Chairman of Avanda Investment Management, echoed these concerns, cautioning that U.S. debt has reached a “point of no return,” with no clear indication of when a crisis might materialize. These pronouncements, coupled with projections of widening deficits, reinforce the market’s perception that it may struggle to absorb the substantial volume of U.S. debt issuance without significant strain.
Debt Issuance and Policy Inertia
Dalio estimated that the U.S. Treasury might need to issue up to $12 trillion in new debt to cover an annual deficit of $2 trillion, $1 trillion in interest payments, and the refinancing of $9 trillion in maturing debt. This significant imbalance between debt supply and demand, he explained, poses a considerable risk to financial system stability. While Dalio proposed reducing the fiscal deficit to 3% of GDP, he acknowledged a lack of political will in Washington to address the issue effectively. For instance, the Trump administration’s fiscal policies, involving spending increases and tax cuts, are projected to add an additional $3.4 trillion to the national debt over the next decade.
Despite these cautionary notes, Dalio acknowledged that the dollar is likely to retain its position as the primary global reserve currency in the short to medium term. However, he also pointed to the increasing influence of China’s yuan in international trade as a factor that will gradually erode the dollar’s dominance. In this evolving landscape, Dalio’s outlook positions gold and non-fiduciary currencies as central to strategies aimed at protecting wealth against the backdrop of heightened fiscal risks in global markets.
Emily Carter has over eight years of experience covering global business trends. She specializes in technology startups, market innovations, and corporate strategy, turning complex developments into clear, actionable stories for our readers.