Ray Dalio, manager of the world's largest hedge fund, says buy gold on rising North Korea risk

  • Bridgewater Associates founder Ray Dalio says in a LinkedIn blog post "risks are now rising" in the market and recommends gold as a hedge.
  • He cited increasing geopolitical tensions between the U.S. and North Korea.
  • The firm manages about $160 billion, according to its website.

Bridgewater Associates founder Ray Dalio said Thursday that he is concerned about the financials markets given increasing political risks in Asia and domestically.

"Prospective risks are now rising and do not appear appropriately priced in," Dalio wrote in a LinkedIn blog post. "The emerging risks appear more political than economic, which makes them especially challenging to price in."

As a result, the hedge fund manager recommended investors allocate 5 to 10 percent of their portfolios to gold.

"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," he wrote.

Dalio cited the rising geopolitical tensions between the U.S. and North Korea in recent days.

"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," Dalio wrote.

He also noted the potential of Congress not being able to increase the debt ceiling in a fight with President Donald Trump over his border wall and the risk of a government shutdown later this year.

"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," he wrote. "We aim to stay liquid, stay diversified, and not be overly exposed to any particular economic outcomes."

Bridgewater is the world's largest hedge fund, managing about $160 billion, according to its website. The firm did not immediately respond to a request for comment.

—Ray Dalio will be one of the headline speakers at the 7th Annual Delivering Alpha Conference in New York on Sept. 12.

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