Ray Dalio’s Dollar Warning Suggests Gold Price Will Surge
Ray Dalio has warned that the U.S. dollar’s status as the global reserve currency is in danger, something that could benefit gold.
- Ray Dalio warns that the U.S. dollar is under threat as the world’s reserve currency, as the Federal Reserve’s unprecedented fiscal stimulus has weakened it.
- The price of gold will be one of the primary beneficiaries of the dollar’s decline, with some analysts predicting a near-term level of $2,500 or even $3,000.
- Dalio also warns the Fed could get locked into a debt-purchasing spiral, as it buys bonds abandoned by investors attracted by rising equity and gold prices.
Veteran fund manager Ray Dalio has warned the U.S. dollar’s status as global reserve currency is in danger due to steps taken to support the economy during the coronavirus pandemic. The founder of Bridgewater Associates flagged excessive money creation as the big risk for the U.S. dollar, whose weakness in recent months has helped push gold prices to record highs.
The price of gold rose above $2,000 for the first time in August. If the dollar’s status as global reserve currency is further eroded, then targets of $2,500 or $3,000 will seem increasingly credible. With the Federal Reserve relaxing its stance on inflation, the loss of its status may already be happening.
Ray Dalio Fears for the U.S. Dollar
Speaking in an interview on Tuesday, Ray Dalio said trillions of dollars in quantitative easing and fiscal stimulus is having the effect of weakening the dollar:
There is too much debt production and debt monetization.
Since the coronavirus pandemic gained momentum in March, the Federal Reserve has been on a spending spree. Its balance sheet has expanded from roughly $4 trillion at the end of February to just over $7 trillion today, as it bought up bonds and mortgage-backed securities.