Why Gold Could Cross $5,000 in 2026 – And How Much You Should Own, Inspired by Ray Dalio

Gold has delivered an extraordinary 67% gain in 2025, far outpacing its long-term average annual return of ~8%. With persistent inflation, ballooning government debt, and geopolitical uncertainty, I predict gold will cross the $5,000 per ounce milestone in 2026. Billionaire hedge fund legend Ray Dalio recently suggested an unusually high portfolio allocation to gold—here’s why his advice makes sense today.

(Sources: X)

Gold’s Timeless Role as a Store of Value

For thousands of years, gold has been humanity’s go-to hedge against inflation, political instability, and economic turmoil—all of which are prominently on display in 2025.

Scarcity underpins its enduring appeal: only ~216,265 tons have ever been mined, compared to billions of tons of commodities like iron ore or coal. No new gold can be “printed” at will.

Many nations once tied their currencies directly to gold reserves (the gold standard), which restrained money supply growth and kept inflation in check. The U.S. abandoned this system in 1971, unleashing decades of monetary expansion that has eroded the dollar’s purchasing power by ~90%.

The chart below illustrates the clear correlation: as U.S. money supply explodes, the dollar weakens—and gold rises.

Gold Price vs. U.S. Money Supply and Dollar Purchasing Power (Conceptual Trend)

The Perfect Storm Brewing for Higher Gold Prices

U.S. national debt hit a record $38.5 trillion in 2025, following a $1.8 trillion budget deficit. With little political appetite for spending cuts, many fear the only escape is further currency devaluation via money printing.

Persistent above-target inflation (CPI remains elevated) adds fuel to the fire. These conditions mirror the 1970s stagflation era, when gold delivered massive gains amid eroding faith in paper money.

Ray Dalio, founder of Bridgewater Associates—the world’s largest hedge fund—has studied such historical cycles extensively. In an October 2025 speech, he recommended an unusually high gold allocation of up to 15% of portfolios, well above the typical 5% suggested by many advisors.

Dalio views current fiscal recklessness as a classic precursor to currency debasement, making gold an essential diversifier when traditional assets falter.

My Prediction: Gold Crosses $5,000 in 2026

Gold is trading near $4,400 as of late December 2025—an all-time high. Crossing $5,000 next year would deliver ~14% returns from current levels.

While this is above gold’s historical average, the macro setup—trillion-dollar deficits, elevated inflation, and potential for further monetary easing—creates fertile ground for another strong year.

Gold’s 67% surge in 2025 may have borrowed some future returns, but ongoing structural drivers suggest the rally has room to run.

The Simplest Way to Own Gold

Physical bullion offers direct exposure but comes with storage, insurance, and liquidity challenges. For most investors, gold ETFs provide a far more convenient alternative—tradable instantly with no physical handling required.

The SPDR Gold Shares ETF (GLD) is the largest, with ~$146 billion in assets fully backed by physical gold vaults. It charges a modest 0.40% annual expense ratio ($40 on a $10,000 investment)—often cheaper than self-storing bullion.

GLD delivers pure price tracking without ownership hassles, making it ideal for portfolio allocation.

How Much Gold Should You Own?

Traditional advice caps gold at 5% of a portfolio due to its lack of yield compared to stocks. However, in today’s environment of fiscal strain and currency risk, Dalio’s 15% suggestion feels prudent rather than extreme.

A 10–15% allocation could provide meaningful diversification without overexposure. Investors comfortable with higher conviction might lean toward the upper end.

Gold won’t make you rich overnight, but in an era of eroding fiat purchasing power, it remains one of the most reliable ways to preserve wealth.

As 2026 approaches, the conditions that drove gold’s stellar 2025 performance show little sign of abating. If history is any guide, those who heed Dalio’s warning today could be well-positioned for when gold crosses $5,000—and potentially beyond.