Ray Dalio says today is like the early 1970s and investors should hold more gold than usual

Bridgewater Associates founder Ray Dalio said investors should allocate as much as 15% of their portfolios to gold, even as the metal reached an all-time high above $4,000 an ounce. Speaking Tuesday at the Greenwich Economic Forum in Greenwich, Connecticut, Dalio described gold as "a very excellent diversifier" and argued that it is one asset that performs well when the conventional components of a portfolio decline. According to CNBC, gold futures were last trading at $4,005.80 per ounce, with prices up more than 50% this year amid a flight to safety driven by mounting fiscal deficits and rising global tensions.

Dalio compared the current environment to the early 1970s, a period marked by inflation, heavy government spending and high debt loads that eroded confidence in paper assets and fiat currencies. He argued that when investors hold cash and place it in debt instruments amid a large supply of debt, those instruments are not an effective store of wealth. He also said gold stands apart as a hedge during periods of monetary debasement and geopolitical uncertainty, noting, "Gold is the only asset that somebody can hold and you don't have to depend on somebody else to pay you money for." CNBC issued a correction clarifying the wording of this quote.

Dalio's recommendation diverges materially from conventional portfolio guidance. Financial advisors typically recommend a 60-40 split between stocks and bonds, and suggest that alternatives such as gold and other commodities represent a low single-digit percentage of a portfolio because they generate no income. DoubleLine Capital CEO Jeffrey Gundlach has also recommended a high gold weighting, as much as 25% of a portfolio, on the expectation that gold will continue to benefit from inflationary pressures and a weaker dollar.