On February 3, legendary investor Ray Dalio issued a warning about the world teetering on the brink of capital warfare due to escalating geopolitical tensions and increased market volatility. According to BlockBeats, capital warfare involves the weaponization of funds, where countries engage in strategic maneuvers such as trade embargoes, restricting access to capital markets, and leveraging debt ownership.
Despite a historic sell-off in precious metals leading to a broad decline, Dalio emphasized that gold remains the optimal choice for storing wealth in the current climate. He suggested that central banks, governments, or sovereign wealth funds should consider the proportion of gold in their investment portfolios and maintain a fixed allocation. Gold serves as an effective tool for diversifying risk against other underperforming asset classes.
Dalio further explained that gold's ability to diversify risk makes it particularly valuable during economic downturns and crises, while its performance may be subdued during periods of economic growth. Nonetheless, it remains a reliable risk diversification tool. He stressed the importance of building a well-diversified investment portfolio.