Dalio Warns of 'Capital Wars' as Gold Targets $5,000

Bridgewater Associates founder Ray Dalio has issued a stark warning that the global economy is entering a dangerous new phase where trade disputes escalate into “capital wars.” With Gold (XAU/USD) already testing all-time highs above $4,800, the macro landscape suggests a profound repricing of fiat risk.

The End of Dollar Hegemony?

Dalio argues that the weaponization of tariffs and sanctions is eroding trust in the US Dollar as the world's reserve currency. “When geopolitical conflicts arise, even allies are reluctant to hold each other's debt,” Dalio observed, noting that the twin deficits of the US make it uniquely vulnerable to a buyer's strike.

He highlights a pivotal shift: nations are moving from holding US Treasuries to holding “hard currency” assets like Gold. This de-dollarization trend is accelerated by concerns over US fiscal sustainability and the potential lack of political independence at the Federal Reserve.

BNP Paribas: $5,000 is 'Within Reach'

Institutional forecasts are catching up to the bullish reality. BNP Paribas Commodity Strategy Head David Wilson confirmed the bank is revising its targets, viewing $5,000 for gold not as a distant possibility but an imminent reality.

“Uncertainty is Gold's best driver,” Wilson noted. The confluence of a potential US-EU trade war, questioned Fed independence, and fiscal profligacy provides the perfect storm for precious metals.

Investment Implications

• Portfolio Allocation: Dalio recommends a 5-15% allocation to Gold as a critical hedge.
• Currency: The “Capital War” thesis is structurally bearish for USD over the medium term, particularly against hard assets and currencies of nations with trade surpluses.
• Silver Risk: Analysts warn that unlike Gold, Silver is driven by industrial constraints which are easing, making it susceptible to a sharp short-term correction.