Ray Dalio on the Debt Crisis and Falling Dollar: The Case for Gold
When billionaire investor Ray Dalio sat down with David Rubenstein at the 92nd Street Y on July 14, 2025, the conversation quickly turned to a subject that makes many Americans uneasy: what happens when a country borrows more than it can ever repay. The event, titled “How Countries Go Broke,” wasn’t a dry academic lecture. It was a warning drawn from history, delivered with the urgency of someone who has studied financial collapses across centuries and continents.
Dalio began with a blunt truth: countries rarely go bankrupt in the way individuals or businesses do. Instead, they slowly bleed their savers and lenders through a series of predictable moves. First comes the printing of money. Then interest rates are forced down, making it cheaper for governments to roll over debt but punishing anyone who relies on bonds or savings accounts for income. Finally, the currency itself loses value, quietly devalued so debts can be paid with cheaper dollars. Japan has followed this playbook for decades, Dalio noted, and the United States is increasingly walking down the same path.
Rubenstein, ever the optimist, suggested that perhaps these problems wouldn’t fully unfold until his grandchildren were grown. Dalio shook his head. “It’s going to happen faster than that,” he warned. The debt cycle, in his view, is already far along.
That raised the key question for investors: how do you protect your wealth when the very money it’s denominated in is under attack? Dalio’s answer pointed back to something timeless — physical gold bullion and gold coins.
Watching the Dollar Through the Lens of Gold
Dalio urged the audience not to think only in terms of dollars versus euros or yen. Those comparisons matter, but they miss the bigger picture. The true measure of the dollar’s health, he explained, is against gold.
Gold is more than a shiny metal dug from the earth. For thousands of years, it has been money — trusted across cultures, independent of any government, and universally recognized as a store of wealth. Even today, it is the second largest reserve asset held by central banks, behind only the U.S. dollar. When the dollar weakens, gold often rises. For investors, the relationship is clear: watching physical gold is a way to track the real value of the currency in your pocket.
Dalio believes the years ahead will be marked by artificially low interest rates, persistent budget deficits, and a weakening dollar. If those conditions collide with a recession, the political and social stresses could be intense. Tax hikes and spending cuts are rarely popular during downturns, so governments tend to lean harder on monetary tricks. That means more printing, more borrowing, and more pressure on the dollar — exactly the kind of environment where physical gold bars and gold coins shine as safe-haven assets.
How to Invest When the Rules Change
Rubenstein, half-joking but clearly unsettled, pressed Dalio for advice. If the dollar is heading lower and bonds yield little after inflation, what should an investor actually do?
Dalio cautioned against looking for hot tips or one perfect answer. Instead, he laid out a philosophy. First, measure your wealth in real terms — not the number of dollars you hold, but what those dollars can buy after inflation. Second, start with safety. Inflation-protected government bonds may not sound exciting, but they guarantee a modest return above the inflation rate and form a stable foundation. Third, consider adding physical gold and IRA-approved gold coins to a well-diversified portfolio.
“Think of gold as money,” Dalio explained, “a form of wealth that central banks themselves are buying as a diversifier.” Unlike stocks or real estate, it doesn’t depend on someone else’s promise to pay. Unlike bonds, it doesn’t get eroded by artificially low interest rates. Gold often rises when other assets fall, making it a natural hedge. That is why Dalio recommends that investors keep 10 to 15 percent of their portfolios in gold. Not as a gamble, but as insurance.
Gold as a Timeless Store of Wealth
Why does gold matter so much in times of stress? Dalio offered a sobering statistic: since 1750, about 80 percent of the world’s currencies have disappeared entirely, while the rest have lost most of their value. Empires rise and fall, governments default, and paper money comes and goes. But gold bullion remain.
It’s the only asset that is not someone else’s liability. A dollar is a promise from the U.S. government. A bond is a promise to pay interest in the future. A stock is a claim on a company’s earnings. Gold coins and gold bars, by contrast, simply exist. They are not dependent on a government honoring its commitments or a business staying solvent.
This independence is one reason central banks around the world are buying gold today. In a world of sanctions and geopolitical tensions, holding too many dollars or U.S. bonds feels risky. Gold, by contrast, cannot be frozen, canceled, or repudiated. That makes it a neutral reserve asset — and one that becomes more valuable as demand grows.
Lessons From the 1970s
Dalio has lived through one of the most dramatic shifts in modern financial history. On August 15, 1971, while working as a clerk on the New York Stock Exchange, he watched President Richard Nixon announce that the U.S. dollar would no longer be backed by gold. What had been considered “real money” — a dollar convertible into a fixed amount of gold — became just paper, backed only by trust.
The 1970s that followed were marked by “stagflation”: high inflation, weak growth, and a crisis of confidence in the dollar. Gold, however, surged. From 1971 to 1980, its price rose more than 1,500 percent, rewarding those who held it while protecting them from the eroding value of paper money.
Dalio sees parallels today. Deficits are large, currencies are under pressure worldwide, and the possibility of stagflation is real. The lesson from the past is straightforward: when faith in fiat money falters, gold bullion becomes the safe harbor.
The Dollar’s Slide in 2025
Already in 2025, the dollar has fallen over 10 percent against a basket of major currencies. Some argue this makes U.S. goods cheaper abroad and helps exports. But Dalio pointed out that the problem isn’t just the dollar; it’s global. Europe, Japan, and China all face similar debt challenges. When every major currency is being devalued, the issue isn’t which one wins the race — it’s whether any of them can hold their value.
That’s why Dalio insists gold is likely to be the “better performing currency.” Unlike euros, yen, or yuan, gold bars, American Eagle coins, and Canadian Maple Leaf coins cannot be printed at will. Their supply grows only slowly, while demand from investors and central banks is rising. In a world where paper money loses purchasing power together, gold stands apart.
Why Ordinary Investors Should Care
Dalio’s message wasn’t aimed only at billionaires or hedge fund managers. It applies to anyone trying to protect their savings in uncertain times. When inflation eats away at paychecks, when debt piles higher, when politics make tough decisions impossible, the value of paper money shrinks.
Gold, by contrast, offers stability. It may not pay interest or dividends, but it holds its worth when currencies do not. Even a modest allocation — ten to fifteen percent of a retirement account, whether through a gold IRA rollover or direct purchase of gold coins online — can make the difference between keeping up with inflation and falling behind.
Dalio’s point was not that gold will make you rich overnight. Rather, it ensures you will not be made poor by forces beyond your control. It is not speculation. It is protection.
Conclusion: A Safer Position
Ray Dalio has built a career studying how nations manage — and mismanage — their finances. His conclusion, shared at the 92nd Street Y, is sobering but practical. Countries that borrow too much will struggle to repay their debts without inflating, devaluing, and debasing. For investors, the challenge is clear: protect your wealth in a system designed to erode it.
The solution, Dalio argued, is not to place all your hopes in any single asset but to diversify wisely. Hold inflation-protected bonds. Spread investments across asset classes. And always include gold — not as a gamble, but as money, a timeless anchor that holds value when paper currencies fail.
“It’s no big bet,” he said. “It’s a reducing of your bet by putting you into a safer position.”
For anyone looking to protect their future in an age of rising debt and weakening currencies, that may be the most valuable piece of investment wisdom you’ll hear this year.
Citation
Ray Dalio with David Rubenstein: How Countries Go Broke. 92nd Street Y. June 26, 2025. Retrieved from The Young Men’s and Young Women’s Hebrew Association website: https://www.92ny.org/archives/ray-dalio-r933i0mcvz