The former Spurs midfielder is hoping that the Welsh winger follows in his footsteps to join him at the Bernabeu, saying he is the most dangerous player in the Premier League.
The Croatian international said he had spoken to Bale, who told him he wants to play in the Champions League every season, something that is more or less guaranteed at Madrid.
"We used to talk and I know he wants to play Champions League football every season and has a big dream of winning the Champions League," Modric told The Sun. "Madrid would be a great club for him to achieve his dreams. I play with [Cristiano] Ronaldo here at Madrid and the way he just runs with the ball with such confidence and defenders back off him is exactly the same as Gareth.
"To have the both in the same team would be unstoppable."
Having seen his own future at Tottenham become unstable during his time at White Hart Lane, Modric knows Spurs will not want to sell one of their key players.
"Of course Spurs want to keep Bale — he is loved by the fans and it is easy to see why," Modric said. "But they must make Champions League football this season if he is to stay. If he decides to leave Spurs then every top club in Europe will want him.
"He is an intelligent guy and is open to new experiences. I know he sees the value in playing abroad, so when the time comes he will have a big decision to make. There is not a club in the world that would not want Gareth in their team. The way he plays scares defenders — and when he is in full flow there is no stopping him.
"It is not just that he has pace but he has the goals and creates goals to go with it. Already he is one of the best players in the world and he will only get better. There are some great players in the Premier League, but for me Gareth is now the best and most dangerous."