Bridgewater's Ray Dalio on 'capital war' fears: The monetary order is breaking down

I want to kick things off this hour with Bridgewater's founder, Ray Dalio, author of multiple books, the latest of which is How Countries Go Broke. We've been having this conversation here at Davos now for many, many years. Great to have you here. I want to actually just launch into the same conversation we were having basically during commercial break, which is you've been talking for a long time about a breakdown in the world, a breakdown in societies. Joe had asked you, are we there yet? And you said, yeah, we're here. It's happening. Let's step back from the sensational and be clear about what I mean. The monetary order is breaking down. OK, what I mean by the monetary order is that fiat currencies and debt as a storehold of wealth is not being held by central banks in the same way and that there was a change. The biggest market to move last year was the gold market, far better than the tech markets and so on. And the U.S. markets underperformed foreign markets because of the fact you could see it in the numbers of the central banks and so on. So let's just look at the fact that on the other side of trade deficits and trade wars, there are capital and capital wars. And so as we're looking at that and you reported what the stock market and so on, but you didn't report that the gold market is also up three. We did say that earlier this morning. It's up to record levels again. And if you look at what is happening and why it's happening and who's buying it. So let's let's just take a moment on that capital war issue. We know that both the holders of U.S. dollar denominated debt, which is money and the those who need it, the United States, are worried about each other. Right. So if you have other countries who are holding it and they're worried about each other and we're producing a lot of it, that's a big issue. Right. So you have to explain what is going on with fiat currencies, generally speaking. And now, if you take the conflicts, you can't ignore the possibility that capital wars. In other words, maybe there's not the same inclination to buy U.S. debt and so on. We at least need to talk about those possibilities and find out who is buying and selling what that is behind these market movements. And what do you who do you think is behind it? Well, it's known it's it's very clear you're seeing both the central banks. I can take you down to the specific central banks and what they're doing. OK, they are because they're what is money? What we're increasingly buying our own money. That's that's that's the lesson of all this. And and the other country, central banks and sovereign wealth funds and others are bought are buying gold on buying these assets as a diversifier. Think of it. It's gold is not a metal to speculate on. It's the second largest reserve currency. It has been the reserve currency. OK, so there's a money and we're talking about it's common conversation about what is money. Is it Bitcoin? Is it digital? How does it work? Right. So we need to talk about the value of money. But are there forces at play which where this is just predestined to happen, given sort of the way you look at cycles? Or do you say there are things that the administration is doing or that others are doing that are creating this moment, whether it be tariffs? We just had Sergio Armadi from UBS on. He said, you know, you can do a lot of things, but at some point there is a tipping point. You can't do too many. And maybe we're there. There is certain there are circumstances that have happened repeatedly that are analogous in history that you can look to. When you have a certain amount of debt. OK. And that means others are holding it as debt assets such as bonds. OK. And you have to sell a lot more. There's a supply demand issue. OK. Also, when they're holding that, they have to believe in that in terms of the supply demand. And 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. This is logical and it's factual and it's repeated throughout history. So what would Ray Dalio do with his money right now? Well, I have had let me answer it this way. If you don't have any views on markets and you say, what should be my strategic asset allocation mix, you would have a diversified portfolio of certain assets that would diversify each other. And then the question is, what would gold play? When you ask me what gold, it would represent between 5 and 15 percent of a normal portfolio because it does very well when the other assets don't do well. It's an effective diversifier. So if you had no views of the markets, that's what you would have. And central banks would have a higher percentage than they currently have. OK. So I would start with that view. Now, do I have then you make tactical tilts from right. OK, now in my tactical tilts, I have been clear for quite a while that I would tilt away from bonds and bonds and I would be tilting toward gold and have a greater than normal amount of that. I'm also believe that we're in a despite the run up already. You always keep what is my amount that I'm going to keep. OK, so don't pay so much attention. If I look at the run up and I take the mag, what are the positions held by the entities that should hold what positions? They're still short of gold. OK, so. But still, I'm not saying that it's what amount should I hold? OK, don't be overly active. And I don't think most people should be overly active. But do they hold the right amount to diversify? And the other part of the answer to the question is that I believe that they're in a wonderful we are in a wonderful technological revolution in which there's going to be new tech creating great disruptions and not so much from there are the hyperscalers and so on. But there's the impact of those on companies that are going to use that and so on. So I want a part of my portfolio to be in those cuts. So I'm kind of in a mixture of new tech and diversified with an element of gold. That's where my biases are. I'm not forget my conclusion. Just know what neutral is, what you know, what if you're if you are a China, a Japan, Europe. OK, what do you do with your portfolio? What do you have? This is basic.