(CNBC) - Legendary investor Ray Dalio warned on Tuesday that the world is “on the brink” of a capital war, amid simmering geopolitical tensions and volatile capital markets.
Speaking to CNBC’s Dan Murphy on stage at the World Governments Summit in Dubai, Dalio said we are close to teetering into capital war territory — when money is weaponized using measures like trade embargoes, blocking access to capital markets, or using ownership of debt as leverage.
“We are on the brink,” Dalio said. “That means not in, but it means we are quite close to [capital war], and it would be very easy to go over the brink into a capital war, because there are mutual fears.”
He pointed to recent escalating tensions over the Trump administration’s push to bring Greenland — a Danish territory — under Washington’s control.
He warned of a “fear” among European holders of U.S.-denominated assets that they could be sanctioned, and that “there could be a reciprocal fear on the part of the United States that it could not get the capital, or not get the buy [from Europe],” he said.
European investors accounted for 80% of foreign purchases of U.S. Treasurys between April and November, according to Citi research cited by Reuters.
“Capital, money, matters,” Dalio said on Tuesday. “We’re seeing capital controls … taking place all over the world today, and who will experience that is questionable. So, we are on the brink — that doesn’t mean we are in [a capital war now], but it means that it’s a logical concern.”
Since returning to the White House last year, U.S. President Donald Trump has imposed — and walked back from — a swathe of punitive tariffs on trading partners and political adversaries. Those decisions have sparked volatility in financial markets.
Dalio added that historically, capital wars have seen measures such as foreign exchange and capital controls being implemented — and said that institutions like sovereign wealth funds and central banks were already making “provisions” to prepare for such controls.
Historically, Dalio noted, capital wars have developed around “great conflicts.” In the run-up to the U.S. entering the Second World War, he said, the U.S. imposed sanctions on Japan in an escalation of the two countries’ “contentious relationship.”
“One could imagine an analogous situation here, in this world today, between China and the United States, or even it’s been conjectured and talked about by leaders in different countries about U.S. and European dependency — because the reverse of a trade deficit … is capital, that there’s a capital imbalance, and capital could be used as war.”
Gold remains a top hedge
Amid these tensions, gold is still the best place to store money, Dalio said — after a historic sell-off that dragged precious metals lower across the board. By Tuesday, gold and silver were showing tentative signs of recovery.
“It doesn’t change by the day,” he said, when asked if recent price action should raise questions about gold being the safest place to park capital.
“Gold is up about 65% from a year ago, and down about 16% from its high, and I think people make the mistake of thinking, is it going to go up and down, and should I buy it?” Dalio said.
“Instead, … perhaps central banks or governments or sovereign wealth funds should say, what percentage of my portfolio should I have in gold [and] keep a certain percentage, because it’s a very effective diversifier to other poor parts of the portfolio.”
“Because gold is a diversifier, when the bad times come along it does uniquely well, and when the good times are prosperous, less so, [but] it’s an effective diversifier,” Dalio added. “I’d say the most important thing is have a well-diversified portfolio.”
By Chloe Taylor
February 3, 2026
