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Hedge fund billionaire Ray Dalio recently grabbed headlines when he recommended all investors allocate 5-10% of their portfolio to gold.

In his recent LinkedIn post, the founder and CIO of Bridgewater Associates expressed concern about a clash with North Korea and the backlash related to Congress failing to raise the debt ceiling.

Gold, “more than other safe haven assets,” Dalio writes, “would benefit” if these geopolitical risks “go badly.”

In response to a subscriber’s question about Dalio’s article on The Macro Show, Hedgeye CEO Keith McCullough cut through the noise and offered subscribers a simple formula. If bond yields are falling, gold will outperform:

“If rates are falling, you can buy as much as you want. It could be 25% and you’d be doing fine. It doesn’t have to be 5-10%. You don’t have to have someone tell you what the perfect allocation is because it’s not perfect. What you’ve got to get is the prevailing conditions right. You’re going to get an opportunity to buy gold when rates are rising, and you’re going to get an opportunity to sell some of that gold when rates are falling.”

In other words, to better trade gold, use our risk ranges.