Billionaire investor Ray Dalio warns that the swift surge in gold prices signals potential risks for both the markets and the broader economy

Ray Dalio Warns Investors Amid Gold’s Surge

• Ray Dalio believes last year’s impressive gold rally signals caution for investors.
• The precious metal experienced its strongest annual performance since the 1970s.
• Dalio interprets gold’s rise and the decline of fiat currencies as red flags for the market.

Throughout 2025, Ray Dalio consistently voiced concerns and advised prudence as the US economy entered a new year. The Bridgewater Associates founder repeatedly highlighted the growing risks of a global debt crisis and the diminishing strength of traditional currencies.

Dalio pointed out that gold’s remarkable gains—the largest since 1979—should be seen as a warning, especially in light of the ongoing erosion of fiat money’s value. He shared these views in a recent post.

According to Dalio, a combination of central bank purchases, geopolitical tensions, and strong demand from private investors drove gold prices to new highs throughout the year. However, he maintains that the primary driver was the declining real value of fiat currencies—a trend he considers the most significant market story of 2025.

“Gold delivered the highest returns among major investments last year, rising 65% in dollar terms and outperforming the S&P 500, which gained 18% in dollars, by 47%,” Dalio noted. “In other words, measured in gold, the S&P actually dropped by 28%.”

Dalio encouraged investors to carefully assess the underlying factors influencing markets in 2025. He cautioned that evaluating investment returns in a depreciating currency can give a misleading impression of performance, making gains appear larger than they truly are.

He emphasized that the stock market’s results last year looked very different depending on the currency used for measurement.

“When your own currency loses value, it can make assets priced in that currency seem to appreciate,” Dalio explained. “For example, the S&P 500 returned 18% for investors using dollars, 17% for those using yen, 13% for renminbi holders, just 4% for euro investors, 3% for those with Swiss francs, and for those measuring in gold, the return was actually negative 28%.”

Debate Over a Weaker Dollar

Former President Donald Trump has promoted the idea that a declining US dollar benefits American exports. However, organizations like the Cato Institute have challenged this view, arguing that it overlooks the negative consequences for US consumers.

Dalio appears to agree, pointing out that a weaker currency makes a country’s exports more affordable for foreign buyers but raises the cost of imports for domestic consumers.

“A falling currency diminishes wealth and purchasing power, lowers the price of domestic goods for foreigners, and increases the cost of imported goods and services,” he said.

Gold’s Rise as a Warning Signal

Dalio believes that the ongoing climb in gold prices is a sign of economic weakness and a declining national currency. He views the persistence of the so-called debasement trade as a cautionary indicator for the United States.

The recent bull market in stocks, Dalio warns, may be causing investors to overlook other troubling signals in the economy. He stresses that gold’s rally should prompt a broader reassessment of economic risks and a more defensive investment approach.

The billionaire investor also noted that both equities and gold benefited from looser monetary policy in 2025. However, with neither asset class remaining inexpensive, both could face declines if financial conditions change.

Dalio concluded, “Whether or not you hedge your currency exposure is extremely important. You should always be protected with a mix of currencies that carries the least risk, and only make tactical adjustments if you’re confident in your ability to do so.”