When times get tough, even some of the most prominent investors turn to safe alternatives. Now, Bridgewater Associates founder Ray Dalio has urged investors to consider picking up gold in light of heightening tensions between the U.S. and North Korea. Dalio, who manages the largest hedge fund by AUM in the world, posted his opinions in a LinkedIn blog post which was reported on by CNBC. The billionaire feels that the financials markets are at risk considering increasing geopolitical tensions both domestically and abroad, particularly in Asia.

Political Risks Rising

Dalio wrote that "prospective risks are now rising and do not appear appropriately priced in. The emerging risks appear more political than economic, which makes them especially challenging to price in." Because of this, the hedge fund leader suggested that investors allocate between 5 and 10% of their portfolios toward gold. He continued, "we can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit."

U.S. and North Korea Are Particular Concerns

Dalio cited the increasing tensions between the U.S. and North Korea as particularly troubling for the markets. "Two confrontational, nationalistic, and militaristic leaders playing chicken with each other, while the world is watching to see which one will be caught bluffing, or if there will be a hellacious war," he explained, indicating his feelings as to why the geopolitical heat could impact the markets. Dalio also suggested that Congress may not be able to increase the debt ceiling as part of its fight with President Donald Trump over his oft-cited border wall with Mexico. Raising the debt ceiling has become an increasingly common tactic used to avoid government shutdowns.

"When it comes to assessing political matters (especially global geopolitics like the North Korea matter), we are very humble. We know that we don't have a unique insight that we'd choose to bet on," Dalio explained. Because of that, "we aim to stay liquid, stay diversified, and not be overly exposed to any particular economic outcomes."

Bridgewater Associates manages approximately $160 billion in assets, making it the largest fund in the world. Dalio is widely respected as one of the most successful investors alive today. He will speak at the upcoming Delivering Alpha Conference in New York in mid-September, where it's likely that he will have further thoughts on how these political and economic matters will continue to play out. For the time being, though, his recommendation to investors seems to be one of caution and pragmatism.

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