Legendary investor Ray Dalio, the founder of Bridgewater Associates, one of the world’s largest hedge funds, recently issued a stark warning about global financial risks. Speaking on February 3, 2026, at the World Governments Summit in Dubai, United Arab Emirates, Dalio told CNBC’s Dan Murphy that the world stands “on the brink” of a capital war. This term describes a dangerous situation where countries weaponize money and financial systems against each other, rather than relying only on traditional military conflict.
Dalio explained that a capital war happens when nations use tools like trade embargoes, blocking access to capital markets, imposing foreign exchange controls, or leveraging ownership of debt to gain advantage. He stressed that while the world is not yet in full capital war mode, it is very close—”quite close”—and it would take little to push it over the edge. The main driver? Mutual fears between major powers.
He pointed to rising geopolitical tensions as a key factor. For example, he mentioned the Trump administration’s recent push to gain control over Greenland, a territory belonging to Denmark. This has heightened worries in Europe about potential U.S. sanctions on European-held American assets, like U.S. Treasury bonds. European investors have been major buyers of U.S. Treasurys—accounting for about 80% of foreign purchases in recent months, according to Citi research. At the same time, the U.S. fears losing access to foreign capital if relations sour further.
Dalio noted that these imbalances mirror historical patterns. He drew a parallel to the period before the United States entered World War II, when America imposed sanctions on Japan amid growing conflict. Today, similar dynamics could play out between the United States and China, or even between the U.S. and Europe, where trade deficits create reverse capital flows that might be exploited as economic weapons.
Signs of preparation are already visible. Central banks and sovereign wealth funds around the world are making “provisions”—in other words, planning and adjusting strategies—to handle possible capital controls and restrictions on money movement. Dalio said capital controls are already happening in various places, making it unclear who will be most affected.
Adding to market uncertainty, President Donald Trump’s return to the White House has brought waves of tariffs on trading partners and adversaries—some imposed, then later walked back—leading to volatility in financial markets.
In the face of these risks, Dalio recommended a classic safe-haven asset: gold. Despite a recent sharp sell-off in precious metals that dragged prices lower, he insisted gold remains one of the best places to store value. By February 3, gold and silver showed early signs of rebounding.
Dalio cautioned against judging gold based on short-term price swings. “Gold is up about 65% from a year ago, and down about 16% from its high,” he said. People often ask if they should buy or sell based on daily movements, but that’s the wrong approach. Instead, he advised investors—including central banks, governments, and sovereign wealth funds—to decide on a fixed percentage of their portfolio to hold in gold as a permanent diversifier.
Why? Gold performs especially well during bad economic times, such as periods of conflict, inflation, or financial disruption, while it may underperform in strong, prosperous periods. This makes it an effective hedge against weaknesses in other investments. “When the bad times come along, it does uniquely well,” Dalio explained.
His final advice was straightforward: Build a well-diversified portfolio. In an era of geopolitical friction and potential economic weaponization, spreading risk—including through assets like gold—offers the best protection against uncertainty.
As global leaders and investors watch these developments closely, Dalio’s warning serves as a reminder that economic stability can be fragile when politics and money collide.
