UK Debt Doom Loop Ray Dalio Urges Investors To Pivot To Gold And Bitcoin

Ray Dalio, the billionaire founder of Bridgewater Associates, has sounded the alarm on Britain’s mounting debt, warning that the country has entered a “debt doom loop”. Dalio’s comments come as concern grows over the UK’s soaring borrowing and the complacency he perceives in the government bond markets. In Dalio’s view, investors should act swiftly to shield their savings from potential currency devaluation and market instability.

Speaking on The Master Investor Podcast with Wilfred Frost, Dalio offered a stark assessment of Britain’s financial outlook. He highlighted that warning signals are already “beginning to flash and flicker”, cautioning that traditional markets may not fully reflect the risks associated with excessive government borrowing. Dalio singled out Britain in particular, where government debt has surged to £2.87 trillion, leaving the Treasury with the challenge of securing £110 billion this year solely to service interest payments.

Dalio’s advice for prudent investors is to hold at least 15 per cent of their portfolio in gold or bitcoin, describing these as essential diversifiers in times of fiscal stress and geopolitical uncertainty. His preference lies with gold, a traditional safe haven, but he acknowledged growing interest in bitcoin, which has recently exceeded $120,000 for the first time. Notably, Dalio’s suggested allocation far surpasses the recommendations of most conventional financial advisers, who often cite the lack of yield and bitcoin’s limited track record in major crises as drawbacks.

Delving into historical patterns, Dalio pointed to the repeated devaluation of major currencies such as the British pound and the Dutch guilder during periods of excessive debt. He emphasised that gold, in particular, has served as a reliable hedge in turbulent times. The metal has also reached fresh peaks in 2025, surging to $3,335 an ounce before settling back slightly, representing a significant rise of 28 per cent since the start of the year.

Dalio stopped short of disclosing his own holdings in bitcoin or gold but urged a diversified approach for others. In his estimation, governments need to balance fiscal sustainability by increasing taxes and curbing spending to avoid further entrenching the debt cycle. With public finances under strain, policymakers such as Chancellor Rachel Reeves face difficult decisions to adhere to fiscal rules without undermining growth.

During the interview, Dalio also touched on the transformative impact of artificial intelligence on markets, suggesting that high-profile technology shares, particularly the so-called “Magnificent Seven” which includes Apple, Nvidia, and Microsoft, may currently be overpriced given the uncertainty around future cashflows. His comments underscore the complex landscape facing investors, with structural risks in both sovereign debt and advanced technology sectors weighing on sentiment in 2025.