Dalio: U.S. Debt May Reach $55-60 Trillion; Hold Gold, Bitcoin

Bridgewater Associates founder Ray Dalio wrote on Aug. 21 that U.S. federal debt could reach $55 to $60 trillion within a decade and advised investors to hold 10 to 15 percent of portfolios in gold and a small position in bitcoin as protection against currency weakening. He set the views out in a LinkedIn post and in a summary of his book How Countries Go Broke: The Big Cycle.

Dalio pointed to recent fiscal trends to support his projection. Total public debt outstanding reached $40.05 trillion as of Aug. 18, and the debt stock had risen by nearly $1 trillion over the prior five months, Treasury figures show. After accounting for a recently passed budget reconciliation bill, Dalio cited independent assessments that project U.S. debt at roughly $55 to $60 trillion in 10 years. He added that a full debt crisis could occur “in three years, give or take two” if fiscal policy does not change.

Federal budget forecasts also feature in Dalio’s analysis. The Congressional Budget Office projects a $1.9 trillion deficit for fiscal 2026, with outlays of $7.4 trillion and revenues of $5.6 trillion. The agency expects debt held by the public to reach about 120 percent of gross domestic product by 2036. Dalio said those dynamics will require continued borrowing and higher interest payments that reduce room for other federal spending.

The U.S. Department of the Treasury expanded buybacks of long-term securities on Aug. 19, increasing the maximum purchase size for certain 10- to 30-year issues from $2 billion to at least $4 billion per operation for repurchase operations between Sept. 9 and Nov. 4. The announcement drew investor attention to dollar weakness and scarce assets. Dalio noted that Treasury repurchases are not the same as Federal Reserve quantitative easing and do not create money by themselves.

On stores of value, Dalio favors gold as the more established monetary asset but supports a small allocation to bitcoin. He highlighted bitcoin’s predetermined issuance schedule and a 21 million coin limit and listed attributes such as scarcity, portability and self-custody. At the same time, he said bitcoin’s “substantial volatility prevents it from providing consistent short-term stability.”

Dalio also identified potential limits on bitcoin’s use as money, including possible code vulnerabilities, government controls, issues around transaction transparency and the chance that central banks would not accept it as a reserve asset. He noted his view has shifted since 2020, when he questioned bitcoin’s usefulness as money and raised the prospect of government restrictions.

On portfolio construction, Dalio recommended broad diversification, reducing exposure to debt instruments and increasing allocations to scarce assets. He wrote: “As general advice, I suggest diversifying well in asset classes and countries that have strong income statements and balance sheets… underweighting debt assets like bonds, and overweighting gold and a bit of bitcoin.” He also wrote: “Having a small percentage-maybe 10-15%—of one’s money in gold can reduce a portfolio’s risk, and I think it would also raise its return.”

Following the Treasury buyback announcement and Dalio’s comments, bitcoin advanced as investors weighed the implications for the dollar and government bonds. Dalio has previously warned that bitcoin’s correlation with technology stocks in selloffs can reduce its appeal as a safe haven.