Why investors are seeking refuge from the US dollar as ‘debasement trade’ returns to Wall Street
The term captures the idea of investors seeking refuge from the greenback due to fear that it is being devalued
Investors are increasingly seeking refuge from the US dollar due to concerns about its devaluation, a trend known as the "debasement trade." This practice, reminiscent of historical rulers who diluted currency, sees investors shifting funds into assets like gold and Bitcoin, which are believed to be less susceptible to monetary and fiscal policy impacts.
The phenomenon gained traction in 2025 after US political and fiscal uncertainty led to a significant downturn in the dollar's value, with the greenback falling by nearly 10% that year. In contrast, gold experienced a remarkable 65% increase. Despite some skepticism, those advocating for the debasement trade point to mounting pressure on investors' holdings in US assets, driven by the nation's escalating debt.
Recent actions by US Treasury Secretary Scott Bessent, including interventions to support the Japanese yen and buybacks of government bonds, have further heightened fears of a weakening US dollar. While some argue that not every decline in the dollar warrants alarm, the growing trend suggests growing unease among investors about the stability of the US dollar, potentially leading to a wider currency crisis.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
