The UK is in a “debt doom loop”, according to the founder of one of the world’s biggest hedge funds, who recommended people put at least 15 per cent of their savings into gold or bitcoin to help shield them from potential market turmoil.
Ray Dalio, the billionaire founder of Bridgewater Associates in the United States, said the bond markets were too complacent about the excessive borrowing by many western governments and the risks were not fully priced in.
Speaking on the The Master Investor Podcast with Wilfred Frost, he reserved some of his fiercest criticism for Britain. “The UK is in a debt doom loop,” he said, and warning signals were “beginning to flash and flicker”.
Wilfred Frost hosts The Master Investor Podcast, where Dalio singled out the UK for criticism
DAVID A. GROGAN/CNBC/GETTY IMAGES
He suggested investors should hold at least 15 per cent of their assets in the form of gold or bitcoin, which could act as a hedge in the event of a collapse of big currencies including the pound. His personal preference was for gold.
Holding 15 per cent of assets in gold or digital tokens is far higher than conventional advisers would recommend because they yield nothing and, in the case of bitcoin, have never been tested in a significant financial crisis.
He said governments including in the UK needed to both raise taxes and cut spending “equally” to bring down borrowing.
The price of bitcoin is notoriously volatile, but has vaulted past $120,000 for the first time in recent weeks. Gold also hit a record high this year: although it retreated last week, it remains 28 per cent higher than where it began in 2025 at $3,335 an ounce.
Dalio, 75, who retired from Bridgewater in 2021, did not tell Frost how much bitcoin or gold he owned, but suggested that others should have “about 15 per cent of your money” in gold and bitcoin. “I’m strongly preferring gold to bitcoin, but that’s up to you,” he said.
“The issue is the devaluation of money, [which has happened] in times of excess debt and geopolitical problems. Just go back and study history, study the British pound, study the Dutch guilder — you would find that in all such periods [of currency devaluation, gold] is an effective diversifier.”
The UK government’s debts stand at £2.87 trillion and the Treasury is forecast to have to find £110 billion this year just to pay the interest on past borrowing. Rachel Reeves is expected to have to raise taxes or find new spending cuts to meet her fiscal rules this autumn.
• The UK can’t keep muddling through a massive increase in debt
Dalio also discussed artificial intelligence in the interview. He believed that AI was “so revolutionary and so disruptive” that it could be hard to value companies in the sector appropriately.
His feeling, though, was that the big AI stocks such as the “Magnificent Seven”, which includes Apple, Nvidia and Microsoft, have become “rather expensive relative to what even optimists would say are the present value of the future cashflows”.