Dalio urges selling bonds for gold, Bitcoin as PCE hits 3.3%

Ray Dalio advised investors to sell bonds and buy gold and Bitcoin on Aug. 21, citing US debt crisis concerns and eroding fixed-income returns.

Dalio, founder of Bridgewater Associates, the world's largest hedge fund, said the US fiscal trajectory makes bonds an increasingly risky holding, according to his public remarks. He has repeatedly warned that the country's debt burden could undermine the dollar and traditional fixed-income assets.

The advice comes as core PCE inflation holds at 3.3 percent, keeping Treasury yields elevated and pressuring bond prices. Dalio has also compared today's AI-driven market rally to 1929 and 2000, warning that valuations may be stretched. He previously flagged that a major asset class held by millions of Americans would deliver the "worst return" guaranteed.

Dalio's endorsement could drive capital inflows into Bitcoin and gold as hedge assets, potentially accelerating bond selling. Institutional investors may shift allocations away from fixed income toward alternative assets as US debt concerns persist.

The Bridgewater founder's latest guidance extends a pattern of warnings about the US fiscal position. In recent months, he has cautioned that the government's borrowing trajectory is unsustainable, with interest payments consuming an increasing share of federal revenue.

For Bitcoin, Dalio's endorsement carries particular weight given his history of skepticism toward the asset class. He previously described Bitcoin as a potential hedge against currency debasement but questioned its utility as a medium of exchange. His current advice marks a notable shift toward embracing digital assets as part of a diversified portfolio.

Gold, meanwhile, has historically served as the primary hedge against fiscal instability. Dalio's recommendation to buy gold alongside Bitcoin suggests he views both assets as complementary hedges against the same underlying risk: the erosion of fiat currency purchasing power.

The broader market context supports this view. With core PCE inflation at 3.3 percent and the Federal Reserve indicating it may hold rates higher for longer, real yields on bonds remain negative or near zero in many cases. This dynamic makes fixed-income assets less attractive relative to hard assets.

Dalio's advice also aligns with warnings from other prominent investors. Robert Kiyosaki has predicted an "everything bubble" that could lead to the "worst crash in history," while former Treasury Secretary Larry Summers has cautioned that investors have become complacent about risk.

For Bitcoin specifically, the endorsement could provide a trigger for institutional allocations. If major allocators follow Dalio's guidance, the resulting capital flows could support Bitcoin prices and potentially drive new highs. However, the exact price impact remains uncertain, as Bitcoin's correlation with traditional markets has varied significantly in recent years.

This article is for informational purposes only and does not constitute investment advice.