Factors including geopolitical tensions, expectations of lower interest rates, and expansive government spending are catalyzing a significant “currency debasement” trend that has propelled risky asset classes to record highs. In 2025, gold prices soared over 50%, driven by its dual role as an inflation hedge and a safe haven. Precious and industrial metals, alongside cryptocurrencies like Bitcoin—now surpassing $120,000—are also benefiting as investors seek alternatives amid a declining U.S. dollar.
Alex Kuptsikevich, chief market analyst at FxPro, explained that growing distrust in fiat currencies has sparked this surge. Investors are moving away from the U.S. dollar, motivated by factors such as a looming government shutdown in the U.S., political instability in France, and concerns over increasing U.S. Treasury issuance linked to potential tariff refunds. Additionally, Japan is anticipated to adopt higher deficit spending and lower interest rates to stimulate its economy.
This flight from the U.S. dollar and other currencies is further intensified by global central banks increasing their gold reserves, with Kuptsikevich noting a shift away from the traditional investment model of 60% stocks and 40% bonds. He recommends allocating around 20% to alternative assets like precious metals and cryptocurrencies in the current economic climate.
Market statistics reflect dramatic shifts: while the U.S. dollar index has declined over 8%, gold prices have soared more than 50%, silver has increased over 60%, and copper, a key industrial commodity, is up 26%. Bitcoin’s gains approach 30%, and stock market indices have also gained traction—with the Nasdaq Composite rising 19% and the Dow Jones Industrial Average up 9% year to date.
Peter Boockvar, chief investment officer at One Point BFG Wealth Partners, emphasized that a historical trend of currency debasement is playing out, leading to increased gold ownership and hedging against dollar exposure. The changing dynamics have prompted foreign investors to diversify away from U.S. dollar assets, favoring gold and similar investments instead.
Despite the momentum behind the debasement trade, some analysts caution against attributing the entire equity rally to this phenomenon. They point to the resurgence of AI tech stocks and the favorable conditions created by lower interest rates as additional drivers of market performance. Tony Pasquariello from Goldman Sachs noted that increased government spending has bolstered the economy and stock market resilience.
Central banks worldwide are now holding more gold than U.S. Treasuries for the first time in nearly three decades, signifying a growing trend towards asset diversification. Ed Egilinsky from Direxion highlighted gold’s attractiveness in times of inflation and ballooning national debt, further bolstered by potential future interest rate cuts from the Federal Reserve. Bitcoin remains a more speculative option but is perceived as a potentially lucrative risk-on asset.
As the landscape evolves, Wall Street is closely monitoring the implications of currency debasement and adjusting its strategies accordingly. Citigroup has raised its price targets for copper and tin, projecting a significant impact from currency debasement concerns. Jeff Currie, chief strategy officer at Carlyle Energy Pathways, suggests the de-dollarization narrative is gaining traction and will continue to drive gold prices upward, with substantial upside potential across hard metal assets.
