Ray Dalio’s Warning: The Dollar Flipped — Here’s What He’s Buying

Ray Dalio's 2025 Economic Outlook and Dollar Concerns [0:00]

• Ray Dalio's 2025 economic summary highlights significant concerns, with the potential collapse of the United States dollar being his primary worry, overshadowing the AI stock bubble.
• In 2025, the US dollar experienced notable depreciation against other currencies: approximately 0.3% against the Japanese yen, 4% against the Chinese yuan, 12% against the euro, 13% against the Swiss franc, and a substantial 39% against gold.
• Gold is identified as the second-largest reserve currency globally and the largest non-fiat-based currency, indicating its growing importance as a hedge against dollar devaluation.

  "The United States dollar is losing value not just to other currencies but to gold which is the second largest reserve currency in the world and is the largest nonfiatbased currency in the world."

Investment Strategy in a Changing Economic Landscape [1:00]

• The evolving economic landscape in 2026 necessitates a strategic approach to investing, influenced by changes in Federal Reserve policy, President Trump's economic directives, and the rapid advancement of AI and technology.
• A live, free virtual workshop is scheduled for January 13, 2026, to discuss how these changes create unique investment opportunities.
• In 2025, the S&P 500, representing the 500 largest companies, grew by approximately 16%. However, this growth pales in comparison to gold, whose prices surged by around 65% in the same year.
• Gold's value is driven by a lack of confidence in the dollar, serving as a hedge or insurance against declining currency value, a pattern observed during historical economic downturns like the Great Depression, the 1970s stagflation, the dot-com bubble burst, the 2008 financial crisis, and the 2020 pandemic.

  "And now we're seeing it happen again. So every time we've seen gold prices outpace the stock market in the last 100 years, it generally meant something was not good."

The Devaluation of the Dollar and its Impact on Investments [3:55]

• When the dollar drops in value, investments such as the stock market can appear to perform better than they would in a stable currency environment.
• The S&P 500's 16% growth against the US dollar translates to significantly lower growth when measured against other currencies: 15% against the Japanese yen, 11% against the Chinese yuan, 4% against the euro, and 3% against the Swiss franc.
• When measured against gold, the S&P 500 actually resulted in a 23% loss, underscoring the impact of currency devaluation on investment performance.
• Dalio suggests that a significant portion of the US stock market's rise in 2025 is attributable to the dollar's weakening, a factor often overlooked.

  "The stock market can only grow based off of the currency that you're investing in it with. And in the United States, yes, we saw the stock market rise, but what Ray Dalio is saying is part of the reason why the stock market rose so much isn't just that stocks are making more money, but it's because that dollar was losing money."

International Stock Market Performance and the AI Bubble Debate [5:00]

• International stock markets, according to Dalio, significantly outpaced the US stock market in 2025. European stocks led with a 23% outperformance, followed by Chinese stocks (21%), UK stocks (19%), Japanese stocks (10%), and emerging markets (34%).
• While the media has focused on AI stocks entering a bubble, with valuations ahead of reality, Dalio intends to discuss his specific bubble indicators separately.
• Dalio's primary concern is the weakening of the US dollar relative to other currencies and gold.

  "I will soon send out an explanation of what my bubble indicators are showing, so I won't get into that subject."

Five Key Factors for Investment Thesis Development [6:20]

• Dalio advises investors to pay attention to five critical areas when formulating their investment thesis:
  1. Debt, Money, and the Economy: Understanding the value of money and the role of debt, particularly the US's approximately $38 trillion national debt, is crucial. The reliance on a credit-based economy and the potential consequences of losing reserve currency status are significant concerns.
  2. Internal Domestic Politics: Growing divides between political factions can weaken a country internally, making it vulnerable to external exploitation and potentially leading to unfavorable economic policies.
  3. Geopolitics: Global events, such as those involving Venezuela, Russia, and China, can impact economies, trigger wars, and consequently shift monetary flows and investment opportunities.
  4. Acts of Nature: Factors like climate change can influence economic spending, particularly in sectors like energy, thereby altering investment landscapes.
  5. Technology: The rapid evolution of technology, especially AI, presents immense opportunities but also the risk of significant financial losses if not navigated wisely.

     "Because if we live in an economic system where we're constantly borrowing money to pay out our bills and not just that we're growing our debt faster than our economy, that's going to create problems. Not just for the economy, but also for the currency."

Investment Opportunities in a Shifting Market [10:10]

• Based on Dalio's outlook, potential investment opportunities include:
  • Gold: Investing in physical gold or gold-related ETFs (e.g., GLD, IAU) is suggested due to the dollar's expected depreciation.
  • Broad International Exposure: ETFs such as VEU (Vanguard FTSE All-World ex-US ETF) and VXUS (Vanguard Total International Stock ETF) can provide diversification across global markets outside the US.
  • Niche Global Investments: Specific country or regional ETFs like VGK (Vanguard FTSE Europe ETF), EWJ (iShares MSCI Japan ETF), and MCHI (iShares MSCI China ETF) are options for those targeting particular international markets.
• On December 1, 2025, the Federal Reserve Bank ended Quantitative Tightening (QT), shifting from removing money to injecting it into the economy, evidenced by a significant injection of funds on December 2nd.

  "So, these are the things you want to pay attention to. Now, based off of what Redalio says, let me talk about a couple of different potential investment opportunities that you may want to consider if you agree with what he's saying."