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The monetary issue negatively impacts the value of fiat money.
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In this context, gold and silver are emerging as stores of value.
The US dollar is going through one of its weakest moments in recent years. This is shown by the DXY, an index that measures its performance against six important currencies: euro, yen, pound, Canadian dollar, Swedish crown and Swiss franc.
In the last twelve months, the DXY index fell more than 10%. It is now located in 96.1 points, a level that has not been seen since February 2022.
Also in the last year, precious metals showed an opposite trend. Gold, measured in dollars, appreciated around 83% and silver 248%. Such assets recorded all-time high prices on Monday at $5,100 and $117 (USD), respectively.
The deterioration of the US currency accelerated amidst recent political and geopolitical factors. “When Donald Trump decided not only to launch an investigation into Jerome Powell – in relation to Federal Reserve (FED) spending – but also to threaten his historical allies with tariffs, what was considered a slow and progressive de-dollarization quickly became a catastrophe for the US dollar,” explained market analyst Elior Manie.
«Some European funds are selling their dollar-denominated debt assets out of concern about new aggressive policies from the current administration,» Manie noted. «By actively seeking alternatives, reducing demand for dollars, this is contributing, in part, to the current decline.»
In this context, he added that “this de-dollarization explains the continuous rise in gold and other metals” and linked it to “the devaluation trade”, an investment strategy in scarce assets as a refuge from the unlimited printing of fiat money.
For its part, bitcoin (BTC) is not accompanying the metals rally. Although it marked a new all-time high price of USD 126,000 in October, it subsequently went into decline due to macroeconomic uncertainty and the caution of operators, as reported by NoticiasVE. Currently, it registers a depreciation in the last twelve months of 14%.
Bullish expectations on bitcoin
Still, DXY’s weakness fuels bullish expectations for bitcoin among some analysts. Matthew Hyland recalled that “the last two times DXY fell below 96, bitcoin went from $2,000 to $20,000 in six months and went from $10,000 to $64,000 in nine months.” This can be seen in the following graph.
Beyond the projections, the «year of terror» that the dollar is going through highlights the devaluation of fiat money. Likewise, it shows the importance of taking refuge in other assets to avoid the loss of purchasing power.