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The world is "on the brink" of a capital war, according to billionaire investor Ray Dalio.

Speaking at the World Government Summit, Dalio said that the five "big forces" that have historically signaled the collapse of world orders are shifting. The multilateral system established in 1945—defined by the United Nations, World Trade Organization and a U.S.-dominated monetary framework—is rapidly fracturing. For investors, that raises uncomfortable questions about how much of their wealth is tied to paper systems that can be frozen, devalued or restructured in a hurry.

"The monetary order is changing, breaking down in a certain way," Dalio said.

Dailio said the transition from a multilateral to a unilateral, power-based world order is well underway, blaming the massive accumulation of debt and the proliferation of fiat systems as primary catalysts for the instability. It's the kind of backdrop that has more investors revisiting hard assets and, in some cases, reallocating a slice of their savings into physical gold and silver through specialists like Preserve Gold.

While much of the current market anxiety focuses on trade tariffs and manufacturing protectionism, Dalio warned that the next phase of conflict involves the flow of money itself.

"The reverse of a trade deficit … is capital," Dalio said. "There is a capital imbalance, and capital could be used as war."

Dalio cited historic precedents, such as the U.S. defaulting on gold conversion in 1971 and the sanctioning of Japan before World War II, as evidence that "capital controls" and "foreign exchange controls" are normal occurrences during such periods of friction. For savers who watched similar playbooks unfold elsewhere, that's part of the appeal of owning some metal outright rather than keeping every dollar exposed to a system that can change by policy decision.

Dalio is steadfast in his support for gold. Despite its price fluctuations, he said it is a critical diversifier and an alternative to debt-based assets.

"Gold is the second-largest reserve currency," he said. "Gold is the safest money in this kind of an environment."

Dalio said investors should not trade gold speculatively but rather maintain a strategic percentage of it in a well-diversified portfolio to protect against the "bad times." Investors who want to put that idea into practice can work with Preserve Gold to move a portion of an existing 401(k), 403(b) or traditional IRA into IRS-approved physical gold, silver, platinum and palladium held in secure depositories and designed for long-term protection instead of short-term trading.

Amid the rising tensions in regions like the Middle East—specifically in Iran—Dalio said the most successful nations in history are often those that remain neutral. He said "winners" of wars often emerge burdened by massive debt and "losers" are wiped out, so neutral countries tend to prosper.

His advice to governments in emerging hubs like the UAE is simple—focus on education, maintain civility, and "stay out of the wars."

"We are quite close to a capital war," Dalio said. "How that is done … is really down to who's got the cards."

Image: Shutterstock

This article Billionaire Investor Says We're 'Quite Close' to a Capital War Where Money Itself Could Be Used as 'War' originally appeared on Benzinga.com

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