A new wave of definitions from President Donald Trump – despite a temporary stop on many – has launched chaos throughout global markets, distorting commercial tensions and calming investors. But Ray Dalio, director of the billionaire hedge fund, says the real storm is still coming.
On April 7, in a long social media publication, Dalio argued that the recent tariff drama is just symptoms of deeper structural problems.
“We are witnessing a classic collapse of the main monetary, political and geographical orders,” he wrote.
Dalio explained five forces, which he described as reshaping the global scene.
1. The global monetary system
Dalio said that the global economic system is collapsing due to unusual debts and deep imbalances between the states of the debtor, such as the countries of the United States and creditors such as China. Since these imbalances relax, Dalio warned that the current monetary matter will have to change in “major sabotage methods”, with great consequences on capital markets and the wider economy.
2. Political system
Dalio sees the political system of democracy collapses under the weight of what he calls “huge gaps” in the levels of teaching people, their income and their chances, as well as values. He said that history indicates that this type of environment often leads to “strong, strong leaders” – especially when it paired with economic turmoil and the market.
3. Global Energy Temple
Dalio was explicit at this point: “The international political geopolitical system is collapsing because the era of the dominant power (the United States) dictating the system followed by other countries.” He said that he is replaced by the “monochrome, rules of power.” While the United States is still the most powerful country, Dalio said it is now working under the framework of “America first”.
4, 5. Nature and technology
Dalio added that “the works of nature” – like floods and epidemics – have become more annoying, while rapid progress in technology – such as artificial intelligence – affects “all aspects of life, including money/religion/economic system, political system, international order, and the costs of nature’s actions.”
Looking at the size of these forces, Dalio warns of readers of only focus on definitions.
“I urge you not to allow the dramatic changes that attract news such as the customs tariff that caught your attention from these five large forces and their mutual relationships, which are the real engines of the changes of the comprehensive large cycle.”
This does not mean ignoring the definitions completely. Instead, Dalio urged readers to consider how events such as Trump Trip extension through all the five – monetary, political, geopolitical, environmental and technological systems extend.
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Dalio did not give specific investment advice in his position. But in an interview with CNBC in February, he noticed the importance of diversification-and pointed to the role of assets that were tested once.
He said: “People usually do not have a sufficient amount of gold in their wallet.” “When bad times come, gold is very effective.”
Gold is a safe haven. It cannot be printed from thin air such as Fiat funds, and because it is not related to any currency or one economy, investors flow to it during periods of economic turmoil or geopolitical uncertainty, which leads to a high value. During the past 12 months, gold prices have risen about 35 %.
Today, there are many ways to gain exposure to gold. Investors can buy Gold Bullion – some online platforms offer a selection of bars, silver and silver – the shares of gold mining companies, investment in gold -traded investment funds and even benefit from potential tax benefits through the Irish Golden Republican Army.
Several experts – including Federal Reserve Chairman Jerome Powell and CEO of JPMorgan, Jimmy Damon – warned that Trump’s tariff could lead to a significant increase in inflation.
While gold remains a classic hedge, real estate provides an alternative to time-with an additional benefit of generating a negative income.
When inflation rises, property values are often increased, which reflects the high cost of materials, employment and land. This makes real estate a convincing store of value for investors looking to protect their wealth.
Moreover, real estate depends not only on the estimate of returns. Rental properties, for example, can provide a fixed flow of negative income. With the high inflation to the high cost of living, the rental revenue usually rises besides it, which helps the owners compensate for the corrosion of purchasing power.
These days, you do not need to buy a property directly to invest in real estate. For example, collective financing platforms allow ordinary investors to own real estate shares without large payments or a traditional administrative headache associated with real estate ownership.
Instead, the real estate investment funds (Reits) provides another way for those looking to exposure to this asset category.
This article only provides information and should not be explained as advice. It is provided without guarantee of any kind.
