Middle-aged couple
Elon Musk made headlines earlier this year with a blunt prediction: without a productivity miracle from artificial intelligence and robotics, the U.S. is headed for economic ruin. “We are 1,000% going to go bankrupt and fail as a country,” he said during a Feb. 5 appearance on the Dwarkesh Podcast (1).
Musk was talking about America. But Canadians have plenty of reasons to pay attention — and to take stock of their own situation.
Canada is carrying its own heavy fiscal load. The federal debt stood at $1,266.5 billion at the end of fiscal year 2024-25 (2). According to the Montreal Economic Institute, the Carney government is now projecting a deficit of $78.3 billion for 2025-2026, up from $48.3 billion the year before — and that would mark the 10th consecutive year without a balanced federal budget. Perhaps most striking: every baby born in Canada enters the world carrying more than $33,000 in federal debt.
Interest payments alone are a growing burden. Further data analysis from the Montreal Economic Institute shows the government’s debt charges are projected to rise to $55.6 billion this fiscal year — and to $76.1 billion by 2030, a 37% spike. To put that in perspective, those debt charges already exceed what Ottawa transfers to provinces for health care ($54 billion annually).
This isn’t just an abstract number problem. When governments borrow beyond their means, the purchasing power of your money quietly shrinks.
The numbers make that viscerally clear. According to Statistics Canada’s Consumer Price Index (CPI), $100 in 1970 is equivalent in purchasing power to about $813 today (4). In other words, a dollar now buys roughly 12 cents of what it did back then.
Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, has warned repeatedly that we are in the late stages of a major debt cycle — and that the next shock is more likely to come from governments than from Wall Street. At the World Government Summit, Dalio described a scenario in which governments must borrow simply to pay interest — a vicious cycle he calls a “debt death spiral.” His prescription? Diversify. “There won’t be a default,” he said in remarks about central-bank dynamics. “The central bank will come in and we’ll print the money and buy it. And that’s where there’s the depreciation of money” (5).
Dalio’s framework applies to Canada, too. Viewed through his “Big Cycle” lens — which examines how nations rise and decline through patterns of debt expansion, productivity growth and geopolitical pressure — Canada shows late-cycle characteristics: rising debt, modest productivity growth and growing social tension tied to the housing affordability crisis (6).
The good news? Savvy investors have long found ways to protect their wealth, even when government fiscal math stops adding up.
To insulate investments from the effects of currency erosion and government debt, Dalio has consistently emphasized the value of diversification — and singled out one time-tested asset in particular.
“People don’t have, typically, an adequate amount of gold in their portfolio,” he said. “When bad times come, gold is a very effective diversifier (5).”
Gold has long served as a store of value. Unlike fiat currency, it can’t be printed. Because it isn’t tied to any single economy, investors have historically flocked to it during periods of economic turmoil or geopolitical uncertainty.
Gold in Canadian dollars (CAD) rose more than 57% in 2025 alone (7). Other prominent voices see further upside ahead: JPMorgan chief executive Jamie Dimon recently said gold could “easily” reach US$10,000 (C$14,100) an ounce in the current environment.
For Canadian investors, one of the most tax-efficient ways to add gold exposure is through a tax-tree savings account (TFSA) or a registered retirement savings plan (RRSP). Both registered accounts can hold gold exchange-traded funds (ETFs) listed on Canadian stock exchanges — such as the iShares Gold Bullion ETF (TSX: CGL) or the Sprott Physical Gold Trust (TSX: PHYS) — which offer liquid, low-cost exposure without the complexities of storing physical metal (8). Physical gold bullion that meets the Canada Revenue Agency’s (CRA) purity requirements (at least 99.5% pure) may also be held in self-directed RRSPs and TFSAs through approved custodians.
Read more: The ultra-rich are bailing on volatile stocks right now — these 4 shockproof assets are their new safe havens
Gold isn’t the only asset that has historically held its value during inflationary periods. Real estate has also proven to be a powerful hedge.
When inflation rises, property values often rise with it, reflecting higher costs for materials, labour and land. At the same time, rental income tends to increase, giving landlords a revenue stream that adjusts for inflation.
That said, Canada’s real estate picture is nuanced right now. The national average home price sat at $658,300 in January 2026, which is about 22% below the $841,900 peak reached in early 2022 (9). While the market has cooled significantly from its pandemic-era highs, the Canadian Real Estate Association (CREA) forecasts the national average price will rise 2.8% in 2026, reaching $698,881 (9).
The challenges of property ownership are also real — elevated purchase prices, large down payments and the hands-on demands of being a landlord. But you no longer need to buy a property outright to gain exposure to real estate.
Canadian fractional real estate platforms have emerged as an accessible alternative. Platforms such as Willow — Canada’s first licensed real estate exchange — allow investors to buy fractional shares in income-generating properties starting at $100 per share, earning rental income and capital appreciation without the responsibility of managing tenants or making repairs (10). Other platforms, such as BuyProperly and addy, offer similar low-barrier entry points, with minimums as low as $1 per share (10).
As with any investment, these platforms carry risk: investments may be illiquid and returns are not guaranteed. Investors should research each platform carefully, confirm it is registered with the relevant provincial securities regulator and consider whether the investment aligns with their risk tolerance and time horizon.
Alternatively, Canadian real estate investment trusts (REITs) — publicly traded vehicles that own and operate income-generating properties — offer broad real estate exposure with high liquidity, and they can be held inside a TFSA, RRSP or First Home Savings Account (FHSA).
Prominent investors like Dalio often stress the importance of diversification — and for good reason. Many traditional assets tend to move in tandem, especially during periods of market stress.
That message feels particularly relevant today. Alternative assets — everything from real estate and precious metals to private equity and collectibles — have gained more mainstream attention as a result.
One store of value that often flies under the radar is art. Post-war and contemporary art has outpaced the S&P 500 with low correlation since 1995. The supply of the most sought-after works is inherently limited, and much of it is already held by museums and private collectors — a scarcity that can make art an attractive option for investors looking to diversify and preserve wealth during inflationary periods.
Platforms like Masterworks have democratized access to this asset class, allowing investors to buy fractional shares in blue-chip artwork by artists including Pablo Picasso, Jean-Michel Basquiat and Banksy. With 25 successful exits to date, the platform has distributed more than US$65 million (C$92 million) in total proceeds, including principal. (Note: past performance is not indicative of future returns. Investing involves risk.)
Canadian investors should be aware that Masterworks is a U.S.-based platform, and gains realized through it would be subject to Canadian capital gains tax rules. Consult a qualified tax adviser before investing.
The signals from global investors and domestic fiscal data point in the same direction: the time to build a more resilient portfolio is before a crisis, not after. Here are practical steps to consider:
Diversify beyond stocks and bonds. A portfolio concentrated in Canadian equities and fixed income leaves you exposed if a broad market correction coincides with continued currency erosion. Consider adding allocations in assets with low correlation to traditional markets — such as gold, real estate investment trusts and, if appropriate, alternative assets.
Use your registered accounts strategically. Your TFSA and RRSP are among the most powerful tools available to Canadian investors. A TFSA shelters growth and withdrawals from tax entirely; an RRSP provides an upfront deduction and tax-deferred growth. Both can hold gold ETFs, REITs and other diversifying assets.
Understand the cost of inflation on savings. Keeping large amounts of cash in a low-interest savings account may feel safe, but the data tells a different story. With inflation averaging roughly 3.8% per year since 1970 in Canada, money sitting idle is quietly losing purchasing power every year.
Check your debt charges versus your savings rate. Just as rising government interest payments crowd out other spending, high personal debt can crowd out saving and investing. Prioritize paying down high-interest debt before building out alternative investments.
Speak with a qualified financial adviser. The strategies outlined here — from gold ETFs to fractional real estate platforms — carry risks unique to each investor’s situation. A licensed financial adviser or certified financial planner (CFP) can help tailor an approach to your goals, tax situation and risk tolerance.
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Dwarkesh Podcast (1); Government of Canada (2); Montreal Economic Institute (3); CPI Inflation Calculator (4); World Government Summit – Ray Dalio (5); Weekly Voice (6); Exchange-rates.org (7); Questrade (8); True North Mortgage (9)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.