Bridgewater Associates' Dalio Warns: The World Is on the "Edge" of a Capital War! Gold Remains the Best Safe Haven

The world’s largest hedge fund, Bridgewater Associates founder Ray Dalio, warns that the world is approaching the brink of a capital war. Geopolitical tensions and market volatility are intensifying, and gold remains the top safe-haven asset for investors.
(Previous context: Bridgewater Dalio: Selling AI stocks now is still too early! Because the “needle piercing the bubble” hasn’t played out yet)
(Additional background: Dialogue with Bridgewater founder Dalio: Asset allocation to wealth transfer, 10 financial principles for Chinese friends)

Table of Contents

• Rising Risks of Global Capital War
• Historical Experience and Preparations for Capital Controls
• Gold: The First Choice for Capital Hedging

Legendary investor and founder of the world’s largest hedge fund, Ray Dalio, warned at the Dubai World Government Summit that the world is on the “edge” of a capital war. Investors should pay attention to geopolitical tensions and potential risks in capital markets, while also considering gold as an important tool for capital hedging.

Rising Risks of Global Capital War

Dalio pointed out that a capital war refers to countries or organizations using capital as a weapon, such as trade sanctions, restrictions on capital entering markets, or exerting pressure through debt holdings. He stated that the world is currently “very close” to a critical point of entering a capital war, as mutual fears exist among parties. Once out of control, it could easily escalate into a full-scale capital war.

He specifically mentioned recent U.S. attempts to gain control of Greenland, which has triggered tensions between the U.S. and Europe. At the same time, he warned that European investors holding U.S. dollar assets are worried about potential sanctions, while the U.S. may also fear losing access to European funds and buying power, creating a “mutual fear” scenario.

Historical Experience and Preparations for Capital Controls

Dalio reviewed history, noting that capital wars often occur during major international conflicts, such as the U.S. sanctions against Japan before World War II, in response to tense relations. He indicated that today, similar situations could arise between China and the U.S., and even the dependence of Europe and the U.S. on capital could become a potential risk.

He pointed out that historically, capital wars have often been accompanied by foreign exchange controls and capital restrictions. Institutions including sovereign wealth funds and central banks have already begun making preparations to respond to possible capital control measures.

Gold: The First Choice for Capital Hedging

In the face of global geopolitical risks and market volatility, Dalio recommends investors include gold in their asset allocation. He stated that gold provides good diversification for investment portfolios, performing well during market downturns and remaining relatively stable during economic booms. Dalio bluntly said:

“Gold has risen about 65% since last year, down about 16% from its peak. Investors should not only focus on short-term gains or losses but also consider how much gold to allocate in their portfolios to diversify risk.”

He emphasized that the most important thing is to build a well-diversified investment portfolio to cope with global uncertainties and potential capital war risks.