Ray Dalio Drops Bombshell: U.S. May Return to Gold-Backed Currency—What It Means for Crypto

Billionaire investor Ray Dalio just fired a warning shot across the bow of fiat currencies—hinting at a potential gold-standard revival in the U.S.

Why it matters: When the founder of the world's largest hedge fund talks about monetary system collapse, markets listen. Especially when Bitcoin maximalists have been screaming 'I told you so' for years.

The crypto angle: A gold-backed dollar could send shockwaves through digital assets. Some see it as validation of hard money principles—others as a threat to crypto's anti-establishment ethos.

The cynical take: Wall Street would still find a way to paper-trade gold derivatives while lecturing retail about 'sound money.'

Bottom line: Whether this accelerates crypto adoption or triggers a gold rush, one thing's certain—the era of 'trust us, we're the Fed' money is looking shakier by the day.

Historical Cycle of Currency Devaluation

In a recent statement on social media, Dalio posited that currencies often depreciate due to excessive printing. Recalling past instances, he noted that governments faced with devalued currencies have often preferred settling their debts this way, eventually leading to a loss of trust in the system and a return to the gold standard.

“The U.S. dollar was once backed by gold, and it is not beyond the realm of possibility that we might see such a system again. History shows these cycles tend to repeat. Whether this pattern will materialize is uncertain, but it remains within the realm of possibility.” – RAY Dalio

Recently, Dalio suggested that President Donald TRUMP aimed to reduce the dollar’s value to manage U.S. debt sustainability, clashing with Federal Reserve Chair Jerome Powell’s goals of stable and low inflation. Dalio remarked that the common solution for high debt and credit levels involves lowering interest rates and devaluing the currency.

“As I have explained before, when it comes to excessive borrowing and credit, the classic solution is to lower interest rates and devalue the currency. This benefits debtors, but results in adverse outcomes for creditors. Trump desires this, whereas Powell opposes it.” – Ray Dalio

What Should Investors Do?

Dalio recommends diversification to safeguard against potential currency depreciation. He advises holding around 15% of investments in assets like gold or Bitcoin$113,506 as a prudent strategy. Such measures, according to Dalio, can be effective in protecting personal wealth.

Experts and investors following Dalio’s insights also underscore the significance of global economic dynamics. As debates over monetary policies and inflation persist in the U.S., investors are devising strategies to adapt to evolving scenarios.

The discussion surrounding the return to a gold-based monetary system raises questions regarding future policy directions in the U.S. Dalio’s statements have sparked differing evaluations among economic policymakers and investors alike.