Billionaires Ray Dalio and Paul Tudor Jones are in an elite group of investors. Dalio founded Bridgewater Associates in 1975 and has grown the hedge fund into one of the largest in the world. His net worth is an estimated $14 billion, according to Forbes.
Jones founded his fund, Tudor Investment, in 1980 and it now manages about $13 billion in assets. Jones' net worth is an estimated $8.1 billion, according to Forbes.
When you've been investing as long as Dalio and Jones have, you learn to look at the big picture and the factors driving the economy and stock market. Both investors have expressed some serious concerns on this front. As a result, they are piling into a hard asset that has trounced the artificial intelligence chip king Nvidia so far in 2025.
Concerns about the country's finances
In the 21st century, the U.S. government has quickly amassed a staggering pile of debt that has now surpassed $36 trillion. The U.S. is also operating on an annual fiscal deficit, meaning it's spending more money than the revenue it takes in. In fiscal 2024, the government had a $1.83 trillion deficit.
While the numbers are hard to conceptualize, the government makes annual interest payments on the debt, and these payments have started to consume an enormous portion of the budget. So far in fiscal 2025, they have amounted to 13% of government spending.
Dalio and Jones are concerned and have been sounding the alarm for several years now. Dalio recently told CNBC that the situation is not sustainable and could create serious budgetary financial issues sooner than people might think: "The first thing is the debt issue, we have a very severe supply demand problem... [The U.S. has] to sell a quantity of debt that the world is not going to want to buy."
The U.S. sells its debt in the form of U.S. Treasury bills at various auctions throughout the year. If investors begin to think that the backing of the U.S. government no longer passes muster the way it once did, they might demand additional compensation for taking on that debt in the form of higher yields on Treasury bills, an event that could cause yields to soar, which has a range of implications for the U.S. economy and therefore the stock market.
One of these implications is higher consumer prices. In a CNBC interview last October, Jones said the current fiscal situation means "all roads lead to inflation."
He thinks the U.S. is going to run out of money quickly if it doesn't attempt to fix these financial issues. The only way Jones sees the U.S. escaping is by essentially inflating itself out of the debt by having economic growth outpace inflation.
The surefire hedge against inflation
Because Dalio and Jones see a long-lasting higher inflationary environment, they are buying and recommending a hard asset that has always been considered an inflation hedge: gold. For months, Dalio has been recommending the asset due to concerns about the debt situation and the inflationary impact it could have.
Meanwhile, in the fourth quarter, Tudor's fund piled into a number of gold exchange-traded funds and gold miners. The precious metal has risen more than 36% in the past year and has also outperformed this year, trouncing market stalwarts like Nvidia. Below is a comparison with the SPDR Gold Shares ETF (GLD +1.58%).
It's been interesting to watch the price of gold soar, given that it has historically had an inverse relationship with the U.S. dollar and the dollar was trading at historically high levels before 2025.
The dollar is now having its worse year since 2008, according to Investopedia. Gold doesn't always follow historical trends, but it's long been viewed as an inflation hedge and a flight to safety, which is perhaps the big reason for its outperformance in today's market.
With no end to the country's debt issues in sight, geopolitical concerns, and questions about President Donald Trump's tariffs and trade wars, I think gold can continue to outperform. It's certainly not a bad area to stash some in your portfolio.
