Ray Dalio, the founder of Bridgewater Associates, is sounding alarms about a potential shift away from fiat currencies by banks and other major financial institutions, highlighting gold's surge as a key indicator of this change. In a recent statement, Dalio pointed to gold's outperformance compared to technology stocks and other assets in 2025 as evidence that the global monetary order is undergoing a significant transformation.
Dalio argues that central banks and sovereign wealth funds are increasingly viewing gold not as a speculative asset, but as a reliable store of value and a crucial diversifier in their reserves. He noted a growing wariness between holders of U.S. dollar-denominated debt and the United States itself, further fueling the demand for hard currencies like gold. Geopolitical conflicts are also accelerating this trend, as even allies are hesitant to hold each other's debt and prefer to invest in gold.
This skepticism towards fiat currencies stems from concerns about excessive money printing and rising debt levels, which are eroding the real value of paper currencies. Dalio has long warned about the vulnerabilities of fiat currencies due to this structural imbalance, advocating for a portfolio allocation of 5% to 15% in gold as a safeguard against financial instability. He emphasizes that gold cannot be printed, is recognized across borders, and has historically served as a reliable store of wealth during times of uncertainty.
Dalio's concerns are echoed by other analysts who note that central banks are indeed reducing their dollar holdings. A 2025 World Gold Council survey revealed that 73% of central banks plan to decrease their dollar reserves over the next five years. This shift is further supported by the development of dollar alternatives and multi-currency transition scenarios by various financial institutions.
The price of gold has surged in recent years, reaching record highs. On January 20, 2026, gold rose to $4,740.86 USD/t.oz, a 1.35% increase from the previous day and a 72.76% increase compared to the same time last year. Its impressive performance in 2025, with returns of approximately 65% in dollar terms, significantly outperformed the S&P 500, which rose roughly 18%. Some analysts predict that gold prices will continue to rise, potentially reaching $5,000 per ounce by the end of 2026. Goldman Sachs Research forecasts a 6% increase through mid-2026, driven by central bank demand and easing by the U.S. Federal Reserve. J.P. Morgan Global Research is even more bullish, forecasting an average price of $5,055/oz by the final quarter of 2026 and rising to $5,400/oz by the end of 2027.
While the long-term outlook for gold remains positive, some analysts caution that the factors that drove gold to record highs in 2025 may become less dominant in 2026. Central bank buying, bond yields, and the extent of future easing cycles will be crucial factors to watch. Geopolitical risks, aside from specific situations like Venezuela, appear to be stabilizing, and real yields remain elevated, potentially requiring fresh catalysts to extend gold's rally.
Despite these potential headwinds, Ray Dalio's warning about banks shying away from fiat currencies and his praise for gold's surge highlight a significant shift in the global financial landscape. Investors are advised to carefully consider their portfolio allocations and the potential benefits of diversifying into gold and other hard assets.
