Even as silver has outperformed gold in percentage terms over the past year, billionaire investor and Bridgewater Associates founder Ray Dalio remains firmly constructive on gold, calling it a structural allocation rather than a speculative trade as the global monetary system comes under strain.
After outperforming gold last year, silver's price momentum has continued into 2026, with the metal rising 37% month-to-date in India's domestic spot market in January, compared with a 16% gain in gold. In 2025, both precious metals delivered their strongest annual performance since 1979.
Gold's rise signals stress in the monetary order
Dalio argues that gold's rally reflects deepening stress in the global monetary order, where fiat currencies and debt are no longer being relied upon as stores of value in the same way. He said central banks, sovereign wealth funds and other large institutions are increasingly turning to gold as a diversifier.
Speaking to CNBC at Davos 2026, Dalio said both holders of US dollar–denominated debt and the United States are increasingly wary of each other. With trade wars under US President Donald Trump, he warned that the risk of capital wars cannot be ignored.
“In other words, maybe there's not the same inclination to buy US debt,” Dalio cautioned.
This shift, he said, helps explain why gold has quietly emerged as one of the best-performing major asset classes over the past year, outperforming even technology stocks and contributing to the relative underperformance of US markets versus global peers.
“Gold is not a metal to speculate on,” Dalio said. “It is the second-largest reserve currency.”
Dalio added that history shows during periods of conflict and geopolitical stress, even allied nations tend to avoid holding each other's debt, preferring hard assets instead — a pattern that has repeated itself for centuries.
Why Dalio still prefers gold over silver
While silver's sharper price moves have captured investor attention, Dalio believes gold's rally is more significant because of the nature of its buyers. Central banks, sovereign wealth funds and official institutions, particularly outside the US, have been steadily increasing their gold reserves.
How much gold should investors hold?
Dalio has long maintained that gold is a powerful portfolio diversifier, recommending an allocation of 5% to 15%, regardless of price levels.
He believes gold tends to perform well when other asset classes struggle, making it an effective hedge. “It's an effective diversifier. So if you had no views of the markets, that's what you would have,” Dalio said.
Dalio also noted that central banks, on average, still hold less gold than they ideally should, even after recent accumulation. Despite the rally, official holdings remain below historical norms, leaving global institutions “short of gold,” he says.
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