If you’re an investor like me, you can’t be blamed for looking at the earnings from last April and thinking things are all roses and daisies. After a terrifying 19% tariff-induced drop in the S&P 500, stocks rallied from April’s lows. The Nasdaq Comp and S&P 500 gained 50% and 36%respectively, in less than a year.
That’s impressive by any measure, but it undoubtedly created a problem.
Stocks are undoubtedly priced to perfection even as trade wars flared over the weekend amid new tariffs on Europe. The escalation of tension over the past year is no surprise to the billionaire Ray Galiofounder of Bridgewater Associates, which manages $112 billion in assets and is among the most successful hedge funds of all time.
Dalio has been beating the drum for the past year (I wrote about it more here), arguing that the U.S. a 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 world’s second largest reserve currency.
His concerns suggest an increasingly fragmented and mistrustful global order, which he summed up in two words: “capital wars.”
Those capital wars pose real risks and consequences for investors.
The US Dollar’s reign as the world’s favorite reserve currency is under increasing pressure as trade wars discourage foreign central banks from buying US debt, pushing Treasury yields higher.
“The monetary order is breaking down,” Dalio said in an interview with CNBC today. “Fiat currencies and debt as a store of wealth are not being held by central banks in the same way.”
The fund manager buys and sells
Instead, central banks are rethinking their exposure as tensions and risks mount, leading even our allies to rethink their relationship with US bonds and the Dollar.
“The biggest market that moved last year was the gold market,” continued Dalio. “On the other end of trade wars are capital wars.”
Gold prices rose in 2025, returning 66.2%, according to NYU Stern, far outpacing the S&P 500’s 17.8% full-year gain, including dividends. The trend carried over into 2026. the SPDR Gold Shares (GLD) ETF it’s up 10.3% year to dateincluding a Up 3.8% today after President Trump announced a new 10% fee. on European allies in an effort to force support for his Greenland plans with NATO.
“The holders of debt denominated in US dollars, and those who need it — the United States — are concerned about each other,” Dalio said. “That’s a big issue … maybe there’s not the same inclination to buy US debt.”
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If so, then gold is the most likely beneficiary. We have already seen a large increase in central bank gold purchases last year, and this is unlikely to change in 2026 if uncertainty continues to weigh on US debt financing.
Central banks and sovereign wealth funds are buying gold as a diversifier,” Dalio said.
The US debt pile went up $38 trillionand it is showing no signs of slowing down.
“When you have a certain amount of debt … and you have to sell a lot more, there is a supply-demand issue,” said Dalio. “When you have conflicts, international geopolitical conflicts, even the allies don’t want to keep each other’s debt. They prefer to go to a hard currency.”
Dalio calls it a logical reality that has repeated time and time again throughout history.
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 for 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 leans toward gold rather than bonds, with holdings higher than his typical level.
Of course, 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 does not mean avoiding stocks. It simply means that Dalio is balancing them less with bonds and more with gold than in the past.
Dalio isn’t the only person on Wall Street who thinks gold should be in portfolios given the geopolitical and monetary backdrop. TheStreet’s Charlie Blaine recently surveyed major banks, and most said they expect gold to gain more ground in 2026.
Goldman Sachsfor example, he sees a path to gold reaching $4,900 per ounce this year.
“We still see upside risk to our base case that the price of gold rises 14% to $4,900 by December 26 from a potential broadening of diversification for private investors,” Goldman Sachs wrote 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 the 2012 peak. For every basis point that retail investors increase their allocation to gold, Goldman Sachs estimates that gold prices could increase by 1.4%.
If more individual investors increase their exposure to gold, as 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 US Treasuries.
Change from 2025 close to $4,341.10 per troy ounce
Jefferies Group: $6,600, a 52.04% increase
Yardeni Group: $6,000, a 38.21% increase
UBS: $5,400, an increase of 24.39%
JPMorgan Chase: $5,055, a 16.45% increase
Charles Schwab: $5,055, a 16.45% increase
Bank of America: $5,000, a 15.18% increase
ANZ Bank (Australia): $5,000, a 15.18% increase
Deutsche Bank: $4,950, up 14.03%
Goldman Sachs: $4,900, a 12.57% increase
Morgan Stanley: $4,800, a 10.57% increase
Standard Chartered Bank (UK): $4,800, an increase of 10.57%
Wells Fargo: $4,500 to $4,700, up 3.65% to 8.26% Note: The average is $4,600, a gain of 5.3%.
Average: $5,180, up 19.3% Source: Wall Street research firms/TheStreet
Todd Campbell holds shares in the SPDR Gold ETF (GLD)
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This story was originally published by TheStreet on January 20, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.