Billionaire Dalio sends 2-word warning as stocks sell-off

Billionaire Dalio sends 2-word warning as stocks sell-off

Todd Campbell

Tue, January 20, 2026 at 9:26 PM EST

6 min read

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If you're an investor like me, you can't be faulted for looking at the returns since last April and thinking things are all roses and daisies. After a scary, tariff-induced 19% drop in the S&P 500, stocks rallied sharply from April's lows. The Nasdaq Comp and S&P 500 gained 50% and 36%, respectively, in less than a year.

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That's impressive by any measure, but it's arguably created a problem.

Stocks are arguably priced to perfection even as trade wars have ignited over the weekend amid new tariffs on Europe. The escalation of tensions over the past year isn't surprising to billionaire Ray Dalio, founder of Bridgewater Associates, which manages $112 billion in assets and is among the most successful hedge funds of all time.

Dalio has been pounding the drum over the past year (I wrote about it more here), arguing that the U.S. mountain of debt is forcing a seismic shift in the global monetary order, prompting central banks to rethink their exposure to US debt relative to gold, the second-largest reserve currency worldwide.

His concerns suggest an increasingly fragmented and distrustful global order, which he summed up in two words: "capital wars."

Those capital wars pose real risks and consequences for investors.

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Ray Dalio says global 'capital wars' favor gold over US bonds

The U.S. Dollar's reign as the world's favored reserve currency is under increasing pressure as trade wars discourage foreign central banks from buying U.S. debt, pushing Treasury yields higher.

"The monetary order is breaking down," said Dalio in an interview with CNBC today. "Fiat currencies and debt as a store of wealth is not being held by central banks in the same way."

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Instead, central banks are rethinking their exposure as tensions and risks rise, leading even our allies to rethink their relationship with U.S. bonds and the Dollar.

"The biggest market to move last year was the gold market," continued Dalio. "On the other end of trade wars are capital wars."

Gold prices surged in 2025, returning 66.2%, according to NYU Stern, far outpacing the S&P 500's full-year 17.8% return, including dividends. The trend has carried over into 2026. The SPDR Gold Shares (GLD) ETF is up 10.3% year-to-date, including a 3.8% surge today following President Trump's announcement of a new 10% tariff on European allies in a bid to force support for his Greenland plans with NATO.

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"The holders of U.S. dollar-denominated debt, and those who need it -- the United States -- are worried about each other," said Dalio. "That's a big issue... maybe there's not the same inclination to buy U.S. debt."

If so, then gold is the most likely beneficiary. We've already seen a major uptick in central bank gold buying last year, and that's unlikely to change in 2026 if uncertainty continues to weigh on financing for U.S. debt.

Central banks and sovereign wealth funds are buying gold as a diversifier," said Dalio.

Gold returns by year (since 2020):

2025: 66.22%
2024: 25.96%
2023: 13.26%
2022: 0.55%
2021: -3.75%
2020: 24.17% Source: NYU/Stern.

As U.S. debt climbs, gold gets more attractive

The U.S. debt pile has climbed above $38 trillion, and it isn't showing signs of slowing.

"When you have a certain amount of debt... and you have to sell a lot more, there's a supply-demand issue," said Dalio. "When you have conflicts, international geopolitical conflicts, even allies do not want to hold each other's debt. They prefer to go to a hard currency."

Dalio calls it a logical reality that has repeated time and again over history.

U.S. Debt over time (select years):

2026: $38 trillion.
2022: $31 trillion.
2020: $27 trillion
2015: $18 trillion
2010: $14 trillion. Source: Treasury.gov.

He thinks gold has become attractive enough that Main Street investors should consider owning it as part of a diversified portfolio. Everyone's situation is different, but Dalio generally suggests a 5% to 15% allocation to a 'normal' portfolio because it "does very well when other assets don't do well."

He believes that central banks should hold a higher percentage of gold than they currently do—Dalio's personal positioning tilts toward gold rather than bonds, with holdings above his typical level.

Clearly, Dalio is a fan of gold, and I agree. His gold allocation is reasonable to me, and his arguments are similar to those that convinced me to make gold part of my own personal portfolio last November (for full disclosure, it represents 5.5% of my portfolio, the largest allocation I've had since I started investing in the early 1990s).

In short, owning gold doesn't mean avoiding stocks. It simply means Dalio is balancing them less with bonds and more with gold than in the past.

Wall Street gold forecasts point higher

Dalio isn't the only person on Wall Street who thinks gold ought to be in portfolios because of the geopolitical and monetary backdrop. TheStreet's Charley Blaine recently surveyed major banks, and most said they expect gold to gain more ground in 2026.

Goldman Sachs, for example, sees a pathway to gold reaching $4,900 per ounce this year.

"We still see upside risk to our base case that the gold price rises 14% to $4,900 by Dec 26 from a potential broadening of diversification to private investors," wrote Goldman Sachs in a research note shared with me. "Central banks will continue to diversify further into gold to hedge geopolitical and financial risks."

According to Goldman Sachs' number crunching, gold ETFs represent just 0.17% of private financial portfolios, about six basis points, or 0.06%, below 2012's high. For every basis point that retail investors increase their allocation to gold, Goldman Sachs estimates that gold prices can increase by 1.4%.

If more individual investors increase their exposure to gold, like I did last year, then it could help underpin additional gains this year, particularly if global unrest continues to push central banks further away from U.S. Treasury bonds.

Analysts’ gold price forecasts for 2026:

Change from 2025 close of $4,341.10 per troy ounce

Jefferies Group: $6,600, up 52.04%
Yardeni Group: $6,000, up 38.21%
UBS: $5,400, up 24.39%
JPMorgan Chase: $5,055, up 16.45%
Charles Schwab: $5,055, up 16.45%
Bank of America: $5,000, up 15.18%
ANZ Bank (Australia): $5,000, up 15.18%
Deutsche Bank: $4,950, up 14.03%
Goldman Sachs: $4,900, up 12.57%
Morgan Stanley: $4,800, up 10.57%
Standard Chartered Bank (UK): $4,800, up 10.57%
Wells Fargo: $4,500 to $4,700, up 3.65% to 8.26% Note: Average is $4,600, a gain of 5.3%.
Average: $5,180, up 19.3% Source: Wall Street research firms/TheStreet

Todd Campbell owns shares in the SPDR Gold ETF (GLD)

This story was originally published by TheStreet on Jan 20, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.

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