Gold prices have adjusted, is gold still worth investing in? This is what Dalio said

For a long time, Bridgewater founder Ray Dalio has expressed concerns about the value of government bonds and fiat currencies—he has also written about how these concerns enhance the appeal of gold. Since Dalio first raised these points, gold prices have surged significantly. According to Zhitong Finance APP, Dalio recently published an article stating that gold is a form of currency, and it is undoubtedly the least likely currency to depreciate or be confiscated. For this reason, gold has been regarded as currency in almost all countries for thousands of years, while many other currencies have long since disappeared. As Dalio released this article, gold prices reached a historic high of $4,380 per ounce last Monday before sharply retreating, but still rose about 50% year-to-date. Factors driving the surge in gold prices include the continued buying of gold by global central banks and the so-called "currency depreciation trade," where investors avoid sovereign bonds and fiat currencies in response to expanding fiscal deficits. Here are Dalio's historical logic and current significance regarding gold's value retention: Throughout history, all currencies have either been backed by pegged/hard assets or been fiat currencies. Pegged currencies are anchored to precious metals with limited supply and global value (such as silver), allowing people to exchange paper money for physical assets at a fixed rate. In contrast, fiat currencies are not tied to any physical asset and have unlimited supply. From the historical perspective of various countries, when the gold standard faces massive debt, the currency system collapses. The reason is that if the rulers adhere to the promise of gold convertibility, it leads to debt defaults and deflationary depressions; if they violate the convertibility promise, they can massively increase the issuance of monetary credit, usually resulting in currency depreciation, soaring inflation, and rising gold prices. Before the advent of central banks (the U.S. established one in 1913), deflationary paths were more common; after central banks emerged, inflationary paths became mainstream. Both scenarios can trigger significant debt crises, ultimately reducing the debt-to-income ratio by raising price levels. Recent examples of the collapse of the gold standard occurred in 1933 and 1971. Since the shift to a pure fiat currency system in 1971, studying the performance of historical fiat currency systems during periods of excessive debt has become more relevant. In such cases, central banks always massively increase the issuance of monetary credit, usually pushing up inflation and gold prices. In all cases, gold has performed excellently as an alternative to paper money/debt currency, maintaining the best long-term record of purchasing power, thus becoming the second-largest reserve currency for central banks. This is not to assert that the wealth storage capacity of other currencies is always inferior to that of gold. Since paper money/debt currency generates interest while gold does not, when interest rates are sufficient to offset the risk of currency depreciation, holding paper money can yield higher returns. If participating in market timing games (which Dalio does not recommend), one should hold paper money when interest rates adequately compensate for depreciation risk; otherwise, one should hold gold. Another strategy is to always allocate to gold—both gold and cash have real return rates of about 1.2%, and the two are negatively correlated, making a combined holding adaptable to different liquidity environments The low confiscation risk of gold is also its advantage. It does not rely on third-party payment commitments, making it harder to be seized by individuals or governments. It is the only currency that can be fully self-custodied and is immune to cyber attacks. Therefore, during financial crises that lead to high taxation/confiscation policies and escalating international trade wars, gold is always the preferred asset. As a result, during periods of currency and debt crises and wars, the value of gold rises significantly due to increased confiscation risks. More accurately, the value of gold is essentially "refusing to depreciate." This is why gold can become the most fundamental currency: it has proven its value and synchronization with changes in living costs over thousands of years