Investors are flocking to gold, bitcoin, and other non-fiat assets amid rising doubts about the future of the US dollar and growing fears of currency debasement, according to The Wall Street Journal.
Gold futures recently broke above $4,000 per troy ounce for the first time, after Federal Reserve Chair Jerome Powell hinted at upcoming rate cuts despite stubborn inflation and strong employment data.
The move is part of a broader shift dubbed the “debasement trade”, where investors hedge against weakening major currencies by reallocating to hard assets. Silver, platinum, and bitcoin have also climbed sharply in recent weeks.
Why It’s Gaining Traction
Rising US fiscal deficits, political uncertainty, and strained trust in monetary policy are spurring flows into gold as a safe haven.
Analysts point to China and other central banks increasing gold reserves to diversify away from the dollar.
In Japan, the emergence of a pro-stimulus prime minister has spurred yen weakness, further boosting demand for dollar alternatives.
Risks and Watch Points
- Gold produces no income, making it vulnerable to rate or yield surprises.
- Some analysts warn the current rally may be running too far ahead of fundamentals and could see pullbacks.
- The dollar’s longer-term strength (e.g. driven by hawkish Fed surprises) could reverse flows out of non-fiat assets.
- Monitor bond markets and currency volatility: shrinking yield differentials could test the debasement thesis.
The “debasement trade” has become a dominant theme — investors are betting that gold, crypto, and durable real assets offer better protection than traditional cash or government bonds in a world of rising fiscal stress and currency risk.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
