Gold prices have declined, is gold still worth investing in? This is what Dalio has to say.

For a long time, Bridgewater founder Dalio has been concerned about the value of government bonds and fiat currency - and has written about how these concerns enhance the attractiveness of gold. Since Dalio first raised these views, the price of gold has risen significantly. Recently, Dalio wrote again that gold is a currency, and it is the currency that is least likely to depreciate or be confiscated, this is beyond doubt. For this reason, for thousands of years, gold has been considered a currency in almost all countries, while many other currencies have long disappeared. At the time Dalio released this article, gold hit a historic high of $4380 per ounce last week, then sharply retreated, but still rose about 50% this year. Factors driving the rise in gold prices include global central banks continuing to buy gold, and the so-called "currency devaluation trade", where investors hedge against expanding fiscal deficits by avoiding sovereign bonds and fiat currency. The following are Dalio's historical and current significance on why gold maintains its value: Throughout history, all currencies are either pegged/hard asset-backed currencies or fiat currencies. The value of pegged currencies is anchored in limited supply of global precious metals (such as gold and silver), allowing people to exchange paper currency for physical assets at a fixed exchange rate. Fiat currencies are not tied to any physical assets, and their supply is not limited. In the history of various countries, when the gold standard encounters huge debts, the currency system collapses. This is because: if the rulers adhere to the gold exchange commitment, it will lead to debt defaults and deflationary recessions; if they violate the exchange commitment, they can issue a large amount of currency credit, usually causing currency devaluation, soaring inflation, and rising gold prices. Before the central banks were established (the United States in 1913), the path to deflation was more common; after the central banks appeared, the inflation path became mainstream. Both situations will cause major debt crises, ultimately reducing the debt-to-income ratio by raising the price level. Recent collapses of the gold standard occurred in 1933 and 1971. Since the transition to a pure fiat currency system in 1971, the research on the performance of historical fiat currency systems in times of excessive debt is more practical. In such cases, central banks always issue a large amount of currency credit, usually pushing up inflation and gold prices. In all cases, gold performs well as an alternative to paper/debt currency, maintaining the best record of purchasing power in the long term, thus becoming the second-largest reserve currency for central banks. This is not to say that the wealth storage ability of other currencies is always inferior to gold. Since paper/debt currencies generate interest and gold does not, holding paper currency can actually yield higher returns when interest rates are sufficient to offset the risk of currency devaluation. If participating in the market timing game (not recommended by Dalio), one should hold paper currency when interest rates sufficiently compensate for devaluation risks, otherwise, one should hold gold. Another strategy is to always allocate gold - the actual return rates of gold and cash are both around 1.2%, and they are negatively correlated, holding a portfolio can adapt to different liquidity environments. The low risk of confiscation of gold is also its advantage. It does not rely on third-party payment promises, is more difficult to be deprived by individuals or governments, is the only currency that can be completely self-safeguarded, and is immune to cyber attacks. Therefore, in financial crises leading to high taxes/confiscation policies and escalating international trade and economic wars, gold is always the preferred asset. Therefore, in times of currency, debt crises, and wars, due to an increased risk of confiscation, the value of gold rises significantly. More accurately, the value of gold is actually "refusing depreciation". This is the reason why gold can become the most basic currency: it has proven over thousands of years the synchronicity of its value with changes in the cost of living.