Ray Dalio, founder of Bridgewater Associates, has issued a stark warning about rising debt levels in Western economies, singling out the UK as being trapped in a “debt doom loop”, and advising investors to allocate to gold or bitcoin, according to a report by The Times.

Speaking in a recent interview, Dalio said investors should brace for potential market turmoil by allocating at least 15% of their portfolios to the precious metal or the cryptocurrency, significantly more than most conventional advisers would recommend.

Dalio cited the UK’s soaring debt burden – now standing at £2.87tn, with £110bn in annual interest payments – as a symptom of broader fiscal instability. He urged governments to both raise taxes and cut spending to avoid further deterioration.

The hedge fund veteran emphasised the long-term value of gold as a hedge against currency devaluation, referencing historical precedents such as the collapse of the Dutch guilder and British pound. While he personally favours gold over bitcoin, he acknowledged both as “effective diversifiers” during periods of high debt and geopolitical risk.

The remarks come as bitcoin surpassed $120,000 and gold hit record highs in 2025, up 28% year-to-date to $3,335 an ounce. Dalio, who stepped down from Bridgewater in 2021, did not disclose his personal holdings in either asset.

He also voiced scepticism over AI-driven equity valuations, noting that the “Magnificent Seven” stocks – such as Apple, Nvidia, and Microsoft – may now be priced beyond even the most optimistic cash flow projections.