Billionaire Ray Dalio says that fiat currencies like the US dollar are entering a classic devaluation period, making gold more attractive.
In a new interview with the Master Investor podcast host Wilfred Frost, the co-chief investment officer of hedge fund Bridgewater Associates says that the US dollar will likely continue to weaken amid worsening economic conditions, while gold will rally as investors use the precious metal as a hedge.
He compares the US dollar’s current weakening to other periods in US history when the greenback plummeted in value, including the 1930s during the Great Depression, and the 1970s, a period of high inflation.
“There are different types of currencies. All of the ones that we’re talking about are fiat currencies. That’s the ones you’re used to. Just like in the Seventies or just like in the Thirties, they will all tend to go down together, and we will pay attention to the relative movements, but they will all go down in relationship to not fiat currency, hard currencies, and that is gold. Gold is now the second largest reserve currency. It’s the dollar, gold, Euros, Yen and so on.
I think we’re looking at something like a very classic devaluation, somewhat similar to the Seventies or the Thirties in which they all devalued together in relationship to non-fiat currencies.”
Gold is hovering around $3,740 per ounce at time of writing, up more than 40% in the past year.
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