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00:00 Intro 00:23 Current view on the cycle 03:44 Discuss why the U.S debt situation is making gold attractive? 07:12 Critique the Fed's money printing policy 09.04 Why is gold your preferred investment? ----- In his latest interview, Ray Dalio emphasizes that central banks are actively purchasing gold as the third-largest reserve currency, reflecting growing concerns about government debt and money printing. He warns against holding debt assets like bonds, suggesting that gold should comprise 10-15% of investment portfolios as a reliable diversifier, particularly given his skepticism that governments can be trusted not to print money to manage their debt obligations. ----- We own commercial licenses for all the content used in this video except parts about the topic that have been used under fair use and it was fully edited by us. Anything displayed on this channel should not be seen as financial advice. Each person has a unique experience, and there is no guarantee of future profitability or success. ---- 🎥 The information provided on this channel should not be construed or relied on as professional advice for any specific fact or circumstance. This channel and its content are designed for entertainment and information purposes only. The content available is created to provide a general overview of a topic and is not a substitute for professional services. Always seek the advice of a finance or a legal professional that would take into account your specific circumstances. #raydalio #gold #silver #raydalioprinciples
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Ray Dalio argues that five cyclical forces—credit/debt cycles, internal conflict, great power competition, acts of nature, and technological innovation—are repeating in patterns similar to the 1930-45 period, and current policy responses (protectionism, money printing) are creating debt and inflation dynamics that make alternative stores of value like gold and crypto increasingly necessary portfolio hedges.
- Five forces operate in predictable cycles, with current conditions analogous to 1930s dynamics
- Excessive stimulus and money printing from COVID and redistribution policies created inflation without corresponding productivity gains
- Central banks face a structural dilemma between keeping rates high enough for creditors while low enough for debtors, leading to money printing and currency devaluation concerns
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The fourth major force is acts of nature including droughts, floods, pandemics, and particularly climate change, which have historically killed more people and toppled more orders than wars.
“I discovered fourth acts of nature droughts floods and pandemics have killed more people than Wars and toppled more orders so number four certainly and certainly now climate change the cost of climate change the impacts are very large”
Crypto lacks the privacy advantage it once had because everyone can see exactly what it is and governments can easily tax it, unlike gold which maintains privacy characteristics.
“there's um not the Privacy element of crypto everybody can understand um exactly what it is you can tax it easily so governments can easily tax it it doesn't have the the same element of that privacy”
Gold is unique as 'the only asset you can own that's not somebody else's liability'—you have full possession and do not depend on someone else's creditworthiness or integrity, unlike bonds, stocks, or other claims on third parties.
“there's a saying that gold is the only asset you can that you can own that's not somebody else's liability meaning you have to depend on somebody else you can own it”
Federal government cannot print money; instead it borrows money from the Fed, which then distributes it to the government, which sends checks to people. This distinction is important because it clarifies the role of central bank financing of government spending.
“remember federal government can't print money what they do is they but they can uh distribute money so what they do is they borrow money so the FED lent money to the central government that send out checks”
The second major force is internal conflict driven by wealth and values differences, manifesting as left and right populism and extremism that become irreconcilable and produce internal disorder resembling internal warfare.
“second force is the force of internal order and disorder particularly internal conflict particularly when there are large wealth and values differences that there is there become irreconcilable differences in which there's populism of the right and populism of the left another extremism of the right and left and they are irreconcilable forces that produce a con conflict internally that's basically a type of War of one side to win over the other”
Central banks are currently acquiring significant amounts of gold, which serves as a reserve currency and store of value that cannot be easily taxed or controlled by governments, unlike crypto which can be tracked and taxed by authorities.
“right now we're seeing a lot of central banks acquire gold and that's not the same as crypto because crypto is different that way because still who controls it is it controlled behind the scenes or do you have possession of it”
Gold is uniquely valuable as an asset because it is 'not somebody else's liability'—meaning you own it outright without dependence on another party's solvency or promises, unlike bonds or bank deposits.
“it doesn't have the the same element of that privacy there's a saying that gold is the only asset you can that you can own that's not somebody else's liability meaning you have to depend on somebody else you can own it and so on”
The third major force is great power conflict, where rising powers challenge existing dominant powers over rules and world order, with current China and other nations competing against the United States which is no longer the single dominant power.
“the third force is the great power conflict of one country competing with another country classically the rise of a great power to challenging an existing great power and when you challenge existing great power you would challenge that power's rules and that means you challenge the order and so we seeing that now as the China and other countries are particularly rising to become competitive and then what is the dominant power the United States is no longer the single dominant power”
Increased military spending and the shift to 'America First' policies reflect a fundamental change in world order where the United States is no longer managing a globally-designed order but instead prioritizes self-sufficiency within a fragmented international system.
“and then there'll be more in military spending and the like and so we're going to deal with this imbalance and we're going and that part of that is also the changing of the world order where no longer the United States is taking care of the world order as it designed it but it is instead taking care of itself America First in a world order in which then there is that conflict”
Cryptocurrencies lack privacy advantages because all transactions are visible and easily taxable by governments, eliminating a key advantage they might have over other assets like gold.
“there's kind of uh the old man's gold and then younger man's uh crypto but the important thing first of all is to represent whether one or the other and really ideally some of both should be in the portfolio don't be so fanatical that you're just having one and not the other and do worry about the value of money and what is your alternative money that can't be printed okay so now when I look at um gold and it's and it's evolved over I mean crypto when it's evolved over time they there have been a few things first of all there's um not the Privacy element of crypto everybody can understand um exactly what it is you can tax it easily so governments can easily tax it”
The first major cyclical force driving economies is the credit-debt-money cycle, where credit creation produces buying power but simultaneously creates debt obligations that must be repaid, forming the basis of economic and market cycles.
“the first force is the credit debt money economy force in other words you give credit you're giving buying power but buying power that that credit produces debt debt means you have to pay it back then it becomes a cycle and it becomes what the economic and market Cycles are driven by that's one force”
One man's debt is another man's asset; when debts rise quickly, someone must purchase that debt based on expected returns, creating a balancing act for central banks between keeping interest rates high enough for creditors without being so high they harm debtors.
“one man's debts are another man's assets and when debts rise quickly that means you have to sell that debt so that somebody has to buy that debt and they when they want to buy that debt they are buying it based on the return that they're going to get and when there's a lot of debt relative to GDP there's it's a difficult Balancing Act for central banks because they don't want to keep you have to be careful to keep interest rates high enough that they're good for the Creditor without being them so high that they're bad for the debtor”
One man's debt is another man's asset, so when debts rise quickly someone must buy that debt, and they buy based on expected returns. When debt relative to GDP is high, central banks face a difficult balancing act: they must keep interest rates high enough to be attractive to creditors but not so high that they harm debtors, and when they cannot maintain this balance they resort to printing money.
“one man's debts are another man's assets and when debts rise quickly that means you have to sell that debt so that somebody has to buy that debt and they when they want to buy that debt they are buying it based on the return that they're going to get”
People are increasingly focused on absolute prices rather than inflation rate: they are paying attention to the fact that prices of almost everything are up significantly depending on where they are, not just the abstract inflation metric.
“I'm I think people are paying attention not just to the word inflation which is the rate of change but looking at prices and so if you look at the prices of everything almost every place depending where they are they're up significantly prices of most everything”
Alternative money (gold and crypto) should comprise only a portion of a portfolio—not carried away or excessive—as part of a diversification strategy against currency devaluation risk.
“I would say that should just be um um a portion of the portfolio I don't want to get carried away with that”
Gold is an effective portfolio diversifier because most assets (stocks, bonds, real estate) tend to perform well during good times together, while gold behaves differently and thus reduces overall portfolio risk when allocated between 10-15%.
“so but if you look at that it's an effective diversifier of the portfolio if you take most other assets um stocks bonds real estate and so on they will generally be have good times and they will do well the gold and and that is a diversifier so you actually reduce your risk by in by having some in the portfolio somewhere between 10 and 15% of the portfolio”
Money serves two functions: medium of exchange and store of wealth. The current shift toward gold and Bitcoin reflects concern that fiat currency is failing at the store-of-wealth function, prompting movement toward alternative money forms.
“a money is both a medium of exchange but a stor hold of wealth and so now you're seeing more movement in that direction because it's precarious”
The fifth major force is human learning and technological innovation, which is the most powerful force in creating evolution, with AI and other technology developments currently driving major operational and economic changes.
“and that through all history the biggest Force most most powerful force in creating the evolution is man's learning particularly of Technologies the invention of new technologies and ways of operating and certainly that's the case now with AI and other Force um other technology developments that are going to change how we're operating”
Gold has always been a reserve currency throughout history; currently it is the third largest reserve currency after the dollar and euro, followed by the yen, demonstrating its enduring status.
“um gold is also has always been a reserve currency in all times it's a third large lest Reserve currency in other words the largest is the dollar second is the Euro third is gold and fourth is the yet so it's and it's always the the currency that's being gone to”
Current global conditions repeat patterns from 1930-45: the five forces are operating in similar cyclical ways, making historical parallels to that period essential for understanding what is happening now and what will happen in the future.
“what's happening now is very similar to the 1930 to 45 period and that's the nature of the dynamic”
Gold is preferable to crypto as a store of value because central banks are acquiring gold as a reserve currency, crypto lacks the privacy advantage it once had due to tax transparency, gold is owned outright rather than being someone else's liability, and gold has been consistently used as a reserve currency across all historical periods whereas crypto's control structure remains unclear.
“right now we're seeing a lot of central banks acquire gold and that's not the same as crypto because crypto is different that way because still who controls it is it controlled behind the scenes or do you have possession of it um and so for those reasons um I you know prefer uh gold to crypto”
Central banks are currently acquiring gold significantly, and this represents a major distinction from crypto, as it signals institutional confidence in gold as a store of value and reserve asset while crypto's control structure remains unclear.
“right now we're seeing a lot of central banks acquire gold”
The current global conditions, particularly regarding the five forces, are very similar to the 1930-1945 period, meaning the cyclical patterns of that era are repeating today with comparable dynamics and implications.
“I watch these five forces move in Cycles in great Cycles what's happening now is very similar to the 1930 to 45 period and that's the nature of the dynamic”
Central banks acquiring gold differentiates gold from crypto, because with crypto the question of control remains uncertain—whether it is truly controlled independently or 'behind the scenes,' and whether individuals have actual possession.
“right now we're seeing a lot of central banks acquire gold and that's not the same as crypto because crypto is different that way because still who controls it is it controlled behind the scenes or do you have possession of it um and so for those reasons um I you know prefer uh gold to crypto”
When central banks reach an imbalance where they cannot maintain the interest rate equilibrium between creditor and debtor interests, they respond by printing money, which causes inflationary pressure—the mechanism of how economic cycles work.
“and that Balancing Act becomes progressively difficult and what they do when they reach an INB balance is they print money and so we've seen the the creating of large debts and the printing of a lot of money causing an inflationary pressure and that's the way the machine works”
Public attention has shifted from watching inflation rates to watching actual prices across almost all goods and places, which are significantly elevated, making inflation a political issue affecting electoral outcomes.
“I'm I think people are paying attention not just to the word inflation which is the rate of change but looking at prices and so if you look at the prices of everything almost every place depending where they are they're up significantly prices of most everything and that's then was a political issue”
Gold effectively reduces portfolio risk when combined with traditional assets (stocks, bonds, real estate) because those assets do well in similar conditions while gold behaves countercyclically, and optimal allocation is approximately 10-15% of total portfolio.
“so but if you look at that it's an effective diversifier of the portfolio if you take most other assets um stocks bonds real estate and so on they will generally be have good times and they will do well the gold and and that is a diversifier so you actually reduce your risk by in by having some in the portfolio somewhere between 10 and 15% of the portfolio”
Gold has been and remains the third-largest reserve currency globally, after the dollar (first) and euro (second), and fourth is yuan, demonstrating gold's historical and ongoing role as ultimate reserve currency that all times and places have turned to.
“gold is also has always been a reserve currency in all times it's a third large lest Reserve currency in other words the largest is the dollar second is the Euro third is gold and fourth is the yet”
There is a supply-demand imbalance in bond markets driven not only by new supply but also by declining demand as investors increasingly question whether bonds represent good currency and reliable stores of wealth, explaining why gold and Bitcoin valuations are rising.
“I that's for for that reason I think that uh there's a supply demand imbalance ISS is that not only will come from the new Supply but also the lack of Desire of holding bonds because there's a lot of debt which is held and when you start to think is that a good currency is that a good storeold of wealth um increasingly there's the risk that that will be sold and that's one of the reasons that you're seeing gold and you're seeing Bitcoin go up because we're talking about what is an alternative money”
The first stimulus round was excessive because authorities did not want to be 'stingy' and wanted to ensure more than enough support, while the second round (under Biden/Democrats) was motivated by redistribution of wealth and universal basic income ideology, both combinations producing price inflation.
“yes I believe that they were for for two reasons they were too stimulative they were stimulative uh the first go around because of covid and maybe they would say I didn't want to be stingy I want to make sure we had more than enough they were around um there was the second time around when the Democrats um and Biden got elected and they're talking about the redistribution of wealth Universal basic income that was past the first go around and there was another big wave of money and that combination of that big wave and the printing of money produce the price changes we're seeing now”
A supply-demand imbalance in bonds will result from both new debt supply and reduced demand to hold bonds, as investors increasingly question whether the dollar is a good currency and store of wealth, leading to increased movement toward alternative assets like gold and Bitcoin.
“there's a supply demand imbalance ISS is that not only will come from the new Supply but also the lack of Desire of holding bonds because there's a lot of debt which is held and when you start to think is that a good currency is that a good storeold of wealth um increasingly there's the risk that that will be sold”
The Federal Reserve mishandled COVID stimulus: two large stimulations sent out checks exceeding twice the negative economic impact from COVID itself, which created excess buying power and caused the inflation experienced, rather than just replacing lost income.
“I don't think the FED handled it in the right way there were two big stimulations and um the amount of checks that went out to people from the federal government”
The key concern with government-issued currency is whether to trust governments not to print money to make debt service easier, and maintaining that trust is not a reliable bet, making anti-debt assets like bonds unattractive.
“I would say that the recognition of the issue of of do you trust um the governments and I think that to trust the governments that they won't print the money to make The Debt Service easier um is not the best move so I'm um you know sort of anti- debt assets like bonds”
Money serves two functions: medium of exchange and store of wealth; current financial instability is driving movement toward gold and crypto as investors seek alternatives that preserve value better than traditional debt assets.
“a money is both a medium of exchange but a stor hold of wealth and so now you're seeing more movement in that direction because it's precarious”
The Trump Administration's policy approach will follow right-of-center 1930s-style protectionism, including raising tariffs significantly to generate government income and protect domestic industry, combined with an industrial policy model that is top-down and directed rather than free market capitalism.
“the Trump Administration is more going to follow a policy very similar to the policy that existed in the right of Center governments in the 30s they're going to become protectionist they're going to raise uh tariffs a lot and that tariff will be uh taxes essentially it'll give income so there's an element of income that's going to come from that and then that protectionism is to try to build up the American uh industry not just for an economic reason but because there's a sense of self-sufficiency is needed in case we get into to a war and that and you're going to see that in chips you're going to see that in electricity you we need power you're going to see a plan an industrial plan not capitalism as we ordinarily think of it we think of capitalism as a free market and so if you want to buy something luxurious and you want to no no this is much more top down and directed”
There were two justifications for excess stimulus: the first COVID stimulus was potentially justifiable as precautionary (not wanting to be stingy), and the second stimulus under Biden was motivated by Democratic/Biden administration goals of wealth redistribution and universal basic income, which together created the price changes experienced.
“that combination of that big wave and the printing of money produce the price changes we're seeing now”
Gold behaves in a more understandable way relative to inflation and interest rates compared to Bitcoin, which is more speculative and driven by limited supply dynamics rather than fundamental inflation/rate relationships.
“if you look at it as a diversifier I think particularly uh gold is something that if you look at how it behaves in relationship to FR uh to inflation and also um interest rates it behaves in a way that's more understandable than Bitcoin Bitcoin is more of a speculative element with this limited Supply aspect to it”
Trust in governments to not print money to make debt service easier is unreliable, making Dalio skeptical of debt assets like bonds and preferring alternative stores of wealth as part of portfolio diversification.
“but I think the important thing is the recognition of the issue of of do you trust um the governments and I think that to trust the governments that they won't print the money to make The Debt Service easier um is not the best move so I'm um you know sort of anti- debt assets like bonds and so on and I prefer the other but I I would say that should just be um um a portion of the portfolio I don't want to get carried away with that”
The Federal Reserve handling of stimulus was incorrect; there were two major stimulus rounds in which the federal government distributed more than twice the negative economic impact from COVID, causing inflation through excess purchasing power.
“I don't think the FED handled it in the right way there were two big stimulations and um the amount of checks that went out to people from the federal government again remember federal government can't print money what they do is they but they can uh distribute money so what they do is they borrow money so the FED lent money to the central government that send out checks and they sent out more than twice as much money as the negative impact from the uh covid was in other words you incomes were set back but they sent out twice in two big waves and of course if you send out more money with buying power then you create more prices going up you create the inflation that we've experienced”
The five forces framework explains historical and contemporary cycles: (1) credit-debt-money economy cycles driven by debt creation and repayment that generate market cycles, (2) internal order and disorder driven by wealth and values differences creating irreconcilable conflict between populist and extremist movements, (3) great power competition between rising powers challenging existing powers' rules and order, (4) acts of nature like droughts, floods, pandemics, and climate change that have killed more people and toppled more orders than wars, and (5) technological innovation and human learning as the most powerful force in evolution.
“the first force is the credit debt money economy force in other words you give credit you're giving buying power but buying power that that credit produces debt debt means you have to pay it back then it becomes a cycle and it becomes what the economic and market Cycles are driven by”
Gold is a more effective portfolio diversifier than Bitcoin because gold's behavior relative to inflation and interest rates is more understandable and predictable, whereas Bitcoin is primarily a speculative asset with limited supply characteristics.
“I would say that if you look at it as a diversifier I think particularly uh gold is something that if you look at how it behaves in relationship to Fr uh to inflation and also um interest rates it behaves in a way that's more understandable than Bitcoin Bitcoin is more of a speculative element with this limited Supply aspect to it”
Dalio owns Bitcoin but views the amount held and its attractiveness relative to gold as an open question, and recommends holding both rather than being fanatical about either one, while ensuring portfolio exposure to alternative money that cannot be printed.
“my my view on cryptos remain pretty much the same and I and I'll I'll articulate it first of all I think that and I own crypto I own some Bitcoin um the question is the amount and how attractive it is relative to Gold”
The Trump Administration's policy approach is similar to right-of-center governments in the 1930s: it will be protectionist, raise tariffs significantly as a form of taxation to generate income, build up American industry for both economic reasons and national security/self-sufficiency in case of war, follow a top-down directed industrial policy rather than free-market capitalism, and increase military spending.
“the Trump Administration is more going to follow a policy very similar to the policy that existed in the right of Center governments in the 30s they're going to become protectionist they're going to raise uh tariffs a lot and that tariff will be uh taxes essentially it'll give income”
The shift to protectionism and domestic-first policies represents a change in the world order: the United States is no longer taking care of the global world order it designed, but instead taking care of itself through an 'America First' policy within a world order characterized by conflict as other powers challenge American dominance.
“part of that is also the changing of the world order where no longer the United States is taking care of the world order as it designed it but it is instead taking care of itself America First in a world order in which then there is that conflict”
Dalio owns Bitcoin but his view is that the relative attraction of Bitcoin versus gold is the key question, and he prefers a balanced portfolio with both rather than fanatic adherence to one asset class.
“my my view on cryptos remain pretty much the same and I and I'll I'll articulate it first of all I think that and I own crypto I own some Bitcoin um the question is the amount and how attractive it is relative to Gold okay um I I think that there's kind of uh the old man's gold and then younger man's uh crypto but the important thing first of all is to represent whether one or the other and really ideally some of both should be in the portfolio don't be so fanatical that you're just having one and not the other”
Dalio studied the 1930s Great Depression and this historical study allowed him to anticipate the 2008 financial crisis and perform well while others had trouble, demonstrating that studying historical patterns before they repeat helps predict future crises.
“I found that by studying history before it helped me for example I studied the 1930s and the Great Depression and that allowed me to anticipate the 2008 financial crisis and do well when others had some trouble”
Dalio has been a global macro investor for about 50 years, establishing his expertise and long track record in observing economic and market cycles.
“I've been in a global macro investor for about 50 years”
There are surprising things that happened that or did not happen in Dalio's lifetime but happened before, which motivated his turn to studying history as a predictive tool.
“some of the times that I've been surprised I was surprised because things happened that or didn't happen in my lifetime but happened before”
Dalio has been a global macro investor for approximately 50 years and has used historical study, particularly of the 1930s Great Depression, to anticipate major financial crises like 2008, which he profited from while others experienced losses.
“I've been in a global macro investor for about 50 years and some of the times that I've been surprised I was surprised because things happened that or didn't happen in my lifetime but happened before so I found that by studying history before it helped me for example I studied the 1930s and the Great Depression and that allowed me to anticipate the 2008 financial crisis and do well when others had some trouble”