Bridgewater Associates founder Ray Dalio sat down with CNBC's Squawk Box at the World Economic Forum in Davos, Switzerland, on Tuesday.

Dalio said investors should ride the market melt-up but dump cash for a diversified portfolio as central bankers undergo unprecedented money printing.

"Cash is trash," Dalio said. "Get out of cash. There's still a lot of money in cash."

"You can't jump into cash. Cash is trash," says @RayDalio. "You have to have a well-diversified portfolio, you have to be global, and you have to have balance...and you have to have a certain amount of gold in your portfolio." pic.twitter.com/lZqCnvsqBh — Squawk Box (@SquawkCNBC) January 21, 2020

This is not the first time Dalio used Davos as a platform to accuse cash of being a terrible asset: back in 2018, he said that "if you're holding cash, you're going to feel pretty stupid." On Dec 31 of that year, cash would end up being the best-performing asset of the year. So perhaps just to hedge his call, this time Dalio also suggested diversifying into gold:

"You have to have balance ... and I think you have to have a certain amount of gold in your portfolio," Dalio said, adding that gold will be a top asset to own in the years ahead as central banks will fail to normalize in the next downturn, which could've already started.

Meanwhile, with the market melt-up accelerating at an unprecedented pace, and hitting new all-time highs day after day even as broad S&P valuations are now at nosebleed levels last seen during the dot com bubble, something else that Bridgewater's co-CIO warned last week is that stocks are at "frothy" levels and predicted gold would soar to $2,000 and higher because the Fed and other central banks would let inflation run hot for a while and "there will no longer be an attempt by any of the developed world's major central banks to normalize interest rates."

Gold to $2,000:

Jensen also said gold could rise 30% from its current price of $1,550 and should be considered as "a cornerstone of investors' portfolios."

Separately, when Dalio was asked if the economic downturn he's been speaking of for the last several years will arrive in 2020 - he said central bankers had kicked the can down the road through aggressive easing: "If you get a downturn – and there's a good probability in the next [presidential] term you'll get a downturn – and you don't have an effective monetary policy and you have people at each other's throats, I'm worried about that," Dalio said.

"I would say there's a 20% chance every year [of a downturn]," Dalio added.

Dalio also said the Federal Reserve is now stimulating the economy, and that's bad news for the dollar.

"We're going to have larger deficits which we're going to print money for," Dalio said. "At a point in the future, we still are going to think about what's a storeholder of wealth. Because when you get negative-yielding bonds or something, we are approaching a limit that will be a paradigm shift."

Dalio and Jensen are two of the biggest players in the investment community to predict that the Fed with cut rates back to zero (and perhaps lower) to avoid the next recession; neither is confident that would work.