Gold and Bitcoin are rallying in tandem as investors pile into what Wall Street has started calling the “debasement trade.” The logic is straightforward: when a government’s debt tab gets large enough, you park your money in things that can’t be inflated away.
The numbers behind the panic
US national debt crossed $40 trillion in August 2026. Annual interest payments on that debt are now approaching $1 trillion.
Gold has responded by climbing more than 15% month-to-date, pushing above $4,700 per ounce and hitting three-month highs. Bitcoin has recorded weekly gains north of 20% and is trading above $77,000.
Dalio’s playbook goes mainstream
Ray Dalio, the Bridgewater Associates founder, has been especially vocal about repositioning. His current recommendation: allocate 10-15% of investment portfolios to gold, with a modest holding in Bitcoin to improve risk-adjusted returns.
Research from Bitwise and JPMorgan has examined portfolios that combine gold and Bitcoin, finding that a 15% combined allocation to the two assets produced a Sharpe ratio nearly three times higher than the standard 60/40 portfolio over the period from 2018 to 2025. That outperformance was especially pronounced during significant market corrections.
Why gold and Bitcoin together
Gold’s supply grows by roughly 1-2% per year through mining. Bitcoin’s supply is capped at 21 million coins, with the issuance rate halving approximately every four years.
The correlation between gold and Bitcoin has historically been low. When one zigs and the other zags, the combined volatility drops. But in moments of genuine fiscal stress, both tend to move in the same direction: up.
Dalio has framed this not as a trade but as a regime change in how investors should think about risk, and his recommended 10-15% gold allocation may look conservative in hindsight if annual interest payments on US debt continue climbing toward $1 trillion and beyond.