Billionaire Ray Dalio (Ray Dalio), the founder of Bridgewater Fund, one of the world's largest hedge funds, said he holds gold to hedge against risks to the economy from higher inflation and potential debt crises.

Dalio pointed out that global debt continues to rise, and the US debt reached 34 trillion US dollars for the first time this year. He also said that the debt problem also plagues Japan and European countries, and poses a major risk to the currencies of these countries.

He said on Thursday, “History and logic show that when a country has huge risks, the debt is either unrepayable or repaid with depreciated currency, but the corresponding country's treasury bonds and currencies become unattractive.” He pointed out that when the national debt is high, the central bank is likely to print money to repay the debt, and this itself is a problem.

“Debt pressure can be reduced in this way, but it will also cause inflation to soar,” Dalio warned. “By contrast, gold is a form of money that is not backed by debt. It's like cash, but unlike cash and bonds, which depreciate due to the risk of default or inflation, gold can be supported by the risk of debt default and inflation.”

He added that this is the main reason he holds gold in his personal portfolio, adding that gold is a “good diversification tool” against the backdrop of high levels of debt in major global economies.

Foreign media pointed out that investors are actively buying precious metals amid concerns about the risk of economic recession, continued high inflation, and broader geopolitical turmoil in the Middle East.

Dario had previously issued a warning about US debt. He said that the market is about to experience a debt crisis, which may trigger a balance sheet recession — after the large-scale asset price bubble bursts, a large number of private sector balance sheets will become insolvent, thereby curbing economic activity on a large scale, causing the economy to continue to decline. The most typical balance sheet recessions in history include the “Great Depression” in Europe and America in the 30s, Japan's economic recession in the 90s, and Germany's economic recession in 2000.

Analyst DavidScutt said that in the past 20 days, the relationship between gold and the US 5-year and 10-year inflation break-even shows that the role of gold as an inflation hedge may be being re-established, and that a moderate correction in gold can be viewed as a “healthy development” during its bull market.

Analyst LoboTiggre pointed out that neither geographical conflict nor economic uncertainty should be viewed as the root cause of the recent rise in gold prices. “If inflation adjustments are taken into account, the real value of gold is much higher than its nominal value; the real value will exceed $3,400 or $3,500.” In the future, the price of gold will not only be driven by economic indicators, but will also be supported by its wider recognition as a safe-haven asset. “Even if investors add a few safe-haven assets to their portfolios, this is enough to double the demand for safe-haven assets.”

Legend Egon von Greyerz, who has successfully predicted quantitative easing policies and historical currency fluctuations, said earlier that currently, gold and silver are not growing at the same time as inflation; they are seriously underestimated. If adjusted for inflation, the high level of gold of 850 US dollars per ounce in 1980 is equivalent to 3,590 US dollars today; however, if adjusted according to the real inflation rate calculated by shadow government statistics, the high level of gold in 1980 is equivalent to the current level of 29,200 US dollars.