The Munich conference ended the post-war order, says Ray Dalio. How to invest if great powers collide.

By Jules Rimmer

Dalio says post-war older was declared dead by most leaders

Munich, Bavaria, Germany. The conference took place February 13-15 and featured dire warnings about a breakdown in previous economic and military alliances.

The Munich Security Conference marked the official end of world order, according to hedge-fund legend Ray Dalio, who says investors should prepare for a clash of world powers.

The annual event this weekend feared a more diplomatic tone from U.S. Secretary of State Marco Rubio than the one offered last year by Vice President JD Vance but a stark warning to Europe that it needs to beef up its military strength to respond to the rising threat of superpower competitors. President Emmanuel Macron of France and Chancellor Friedrich Merz of Germany echoed these sentiments in speeches that referred to "a world order that no longer exists."

"At the Munich Security Conference, the post-1945 world order was pronounced dead by most leaders," said Dalio, the founder of hedge-fund giant Bridgewater Associates.

For Dalio, geopolitical trends indicate "a clash of great powers" is looming and in the scenario he imagines, investors should "sell out of all debt and buy gold."

Dalio articulated his warnings in a long posting on X Saturday in which he repeatedly referenced his book "Principles for Dealing with the Changing World Order," and in particular, his assessment of where we stand in terms of what he calls "the big cycle of external order and disorder." This involves superpower competition and conflict that can manifest itself as trade disputes, technology conflicts, geopolitical jostling, the weaponization of capital and ultimately, if these are exhausted, hot, military wars.

During periods of military conflict, Dalio notes "gold - or in some cases, silver or barter - is the coin of the realm," partly because currencies cannot be trusted and asset prices and capital flows are "typically controlled."

Gold (GC00) and silver (SI00) each have surged in value over the last 12 months, though both precious metals have moved off their peaks.

Equity markets, Dalio observes, tend to adjust according to the probability of victory on the battlefield and he cites the example of how in 1945, the German and Japanese stock markets were virtually wiped out while U.S. stocks were extremely strong.

Victors in World War II saw their stock markets fare far better than losers

Dalio believes that protecting one's wealth in times of war is difficult, as "normal activities are curtailed, traditionally safe investments aren't safe, capital mobility is limited and high taxes are imposed."

Wars are financed by borrowing and printing money which devalues debt and fiat currency. Given there's a reluctance to to accept credit, the straightforward advice is to buy gold.

-Jules Rimmer

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02-16-26 0545ET