Author: Gold News Club

The dollar has tumbled to multi-year lows since President Trump rattled the world economy with a sweeping tariff regime. This decline bucks the historical trend of a strong US dollar during trade tensions, suggesting that something might be structurally different this time.

Now, a growing number of trusted economists and major financial institutions are warning of the greenback’s foundational weakness and the country’s bleak future as an investing haven.

The Dollar’s Fledgling Performance

The dollar performed well in 2024, buoyed by the sharp post-pandemic recovery. The US Dollar Index, which tracks the dollar’s value against a basket of major foreign currencies, rose to its highest level since November 2022. Meanwhile, the dollar’s real effective exchange rate (REER) reached a 55-year high by year’s end, underscoring its strength in inflation-adjusted terms.

This dollar rally stretched into the early stages of 2025, extending to an annual high of 109.96 in mid-January. This uptrend hit a stark reversal following Trump’s “Liberation Day” announcement of tariffs on virtually all trading partners–seen as a much more aggressive policy than previously anticipated.

Within a handful of weeks, the DXY fell to a relative low of 98.28, marking a nearly 11% contraction from recent highs. At the same time, the greenback’s REER has stumbled by 2%, highlighting a broader decay in global purchasing power and competitiveness. This trend was reinforced by the relative strength of foreign currencies, which tend to falter during trade disputes.

Why is the dollar weak?

Although economists of all political stripes cautioned of various consequences of far-reaching tariffs, these warnings didn’t extend to the dollar. The consensus on Wall Street and in the administration was that tariffs would be a boon to the greenback.

Even US Treasury Secretary Scott Bessent didn’t anticipate the negative impact, suggesting in a private email that “tariffs are inflationary and would strengthen the dollar.”

Understanding why the US dollar is falling right now requires examining some of the deeper structural and geopolitical forces that have converged in the wake of tariff negotiations and shifting global alliances.

Tariffs Are an Effective Tax Hike

Despite the admin’s insistence to the contrary, tariffs place a tax on imports. As a result, American businesses and consumers could bear the cost.

The nearly $70 billion the US has collected so far in 2025, along with the Tax Foundation’s projected total of over $156 billion by year’s end, amounts to one of the largest effective tax increases in 30 years.

Stock Indices Tanked Heavily

As the importers of foreign goods, US companies experience the first wave of price hikes from tariffs. Whether these additional costs eat into profits or get passed onto consumers, they negatively impact corporate earnings.

This anticipation was reflected in a sharp marketwide downturn with the S&P 500 and Dow Jones losing around 10% each following the April 2nd announcement. Although these indices have mostly recovered, instability persists.

Additionally, Bank of America reported that foreign investors dumped $6.5 billion in US equities in just five trading days ending April 9, 2025.

China Kept the Yuan Strong

During Trump’s first US-led trade war with China, the People’s Bank of China (PBOC) allowed the Yuan to weaken, which softened the economic gut punch to US importers. As in other trade wars, this helped bolster the dollar.

This time around, China kept the Yuan strong, causing the dollar to falter in relative strength.

Foreign Currencies Entered the Void

The dollar’s reserve currency status is the backbone of its strength during trade wars, as the comparative weakness of foreign currencies tends to boost USD demand.

Instead of flowing to the dollar, investors redirected investments to other currencies following the tariff rollout, resulting in a broad elevation for foreign reserves:

• The Euro spiked over 5% to reach a three-year record, sparking chatter about its rising role as a reserve currency.
• The Canadian Dollar rose 4.3% in April 2025, representing its largest monthly increase in over 10 years.
• The Japanese Yen & Swiss Franc have both gained nearly 10% so far in 2025.
• The Taiwan Dollar notched a three-year high against the dollar.

As capital flows out of the dollar and into other assets, both the USD and the broader dollar-based investment ecosystem can be strained.

As former Morgan Stanley banker David Roche explains, “The [dollar’s] underperformance relative to other economies means they take part of that money out again, which weighs on the dollar, and of course weighs on the performance of assets.”

“America First” Scares Away Investments

According to the Council on Foreign Relations, the administration’s tariff negotiations may “have potentially introduced a bit of a risk premium into dollar assets.”

The pursuit of increased domestic manufacturing necessarily reduces trading. This makes the dollar worth less in a globalized economy where value is derived from frequency of use and widespread adoption.

The “America first” approach also increases the dollar’s risk profile as the president could pressure foreign countries to fall in line by taxing their holdings.

This concern is made manifest in Trump’s looming One Big Beautiful Bill Act, which includes a provision to penalize foreign investors from countries the admin judges to have “unfair” tax practices.

In an interview with the Financial Times, one senior banking executive described the tax policy as “one of the more worrisome ideas to have come out of DC this year. If it goes forward, it will definitely cool foreign investment in the US.”

The Dollar Was Overstretched

Goldman Sachs sees the dollar’s tariff-induced dip as the beginning of a long-anticipated correction. Between the Great Financial Crisis and the beginning of 2025, the dollar had surged by 50%. This overvaluation, similar to peaks in the mid-80s and early-00s, set the stage for a downturn.

Historically, the greenback entered a 25% to 30% devaluation following these strong rallies, suggesting the depreciation has around 15% to 20% to go. “I believe that the recent dollar depreciation…has considerably further to go,” explains Sach’s Jan Hatzius.

This fear is echoed by Roche, who anticipates a 15% to 20% plunge in the dollar’s value within the next decade.

De-Dollarization Had Momentum

The de-dollarization story is decades in the making as allies and enemies alike actively detether from the USD, which has increasingly been labeled as a liability instead of an asset. While this movement picked up serious momentum following Western-led sanctions against Russia, the US national debt crisis offered the initial nudge.

Trump’s trade war poured accelerant on this global shunning of the dollar by punishing the holding of US assets, calling decades-old trade relationships into question, and bolstering the case against the dollar’s reliability.

As a Grayscale analyst notes, “Disruptions to the dollar-centric international trade and financial system could result in more reserve diversification by central banks.”

The US Faces a “Confidence Crisis”

The USD’s current weakness is more than a temporary setback or a reflection of short-term market instability. The dollar is experiencing a “confidence crisis in full force,” as ING’s Francesco Pesole bluntly describes. The dollar’s uncharacteristic fragility wasn’t the only troubling signal during the tariff fallout.

US Treasury yields rose sharply, suggesting that investors were demanding greater compensation to hold US debt—a sign of fading confidence rather than flight to safety. The yield on the 10-Year Treasury climbed to 4.5%, defying historical norms where yields typically fall during periods of economic uncertainty.

Altogether, the dollar is falling right now because of systemic weakness, declining trust among investors, and a long arc of divestment. The greenback is failing to navigate a perfect storm of economic, geopolitical, and psychological waves, threatening to capsize the very foundation of its dominance in the global financial order.

Gold is staging a strong rally today, surging over $50 an ounce on renewed safe-haven demand. However, while gold is grabbing headlines today, silver has broken through a key resistance level, drawing growing interest from investors. Could this be the start of an epic silver rally?

In this week’s The Gold Spot, Scottsdale Bullion & Coin Precious Metals Advisors Steve Rand and Joe Elkjer discuss the extended gold-to-silver ratio, why price suppression could lead to explosive growth, and the bullish cup-and-handle pattern.

Gold-to-Silver Ratio Shines on Gold

Silver spot prices recently crossed the $35 an ounce resistance level for the first time since 2011, signaling renewed strength after months of muted performance. This spike has led many experts to predict a massive incoming rally, as the shiny metal has plenty of room to run before catching up to gold’s tremendous rise. The gold-to-silver ratio, which measures how many ounces of silver equal one ounce of gold, is a common indicator used to determine their relative value.

The yellow metal’s ongoing rally has extended this ratio closer and closer to record levels, recently reaching over 100:1. Generally, anything over 80:1 suggests silver is “underbought” or “cheap” compared to gold. Notably, the gold-to-silver ratio has been steadily hovering above this critical point for months, indicating a significant build-up of upward pressure.

1 Year Gold Silver Ratio History. Source: goldprice.org

“Silver has huge, huge amounts of catching up to do to get to where its value really is.”

Joe Elkjer

Precious Metals Advisor

👉 Suggested Reading: Silver’s Time to Shine? The Hidden Market Signal Investors Can’t Ignore
 
 

Price Suppression Breakout?

For decades, investors and experts have speculated about the impact of price manipulation in the silver market. The federal conviction of two JP Morgan precious metals traders vindicated these concerns and exposed one of the world’s largest investment banks.

With silver’s dual role as a precious and industrial metal, there’s growing concern that major financial institutions and other big players will continue driving down the silver price to scoop up the high-demand metal at lower costs. The recent jump over $35 an ounce, which silver prices have traded under for nearly 13 years, could indicate the surging silver demand is simply too much for price suppression to handle.

Silver’s Bullish Cup-and-Handle Pattern

It’s not only silver’s spot price reaching relative highs that has experts optimistic. The metal’s price action is upbeat from a technical perspective, too. A closer look at the charts reveals a long-term cup-and-handle pattern and an attempted breakout.

In this bullish chart formation, price action forms a rounded ‘cup’ followed by a smaller sideways or downward-sloping ‘handle,’ signaling building buying momentum and the potential for a breakout above resistance. The gold market exhibited this same cup-and-handle pattern before exploding to the upside. Following the completion of the “cup” consolidation, prices surged from $2,000 to $3,500 an ounce in a little over a year.

“We’re definitely seeing a big sentiment change when it comes to silver. There’s huge upside potential.”

Joe Elkjer

Precious Metals Advisor

Experts Raise Silver Price Predictions

Analysts had made bullish 2025 silver price predictions at the beginning of the year. However, this strong setup is leading to many price forecast increases.

• The author of Rich Dad, Poor Dad, Robert Kiyosaki, thinks silver prices could triple from where they are right now within the year
• Gold Seek and Silver Seek’s Peter Spina predicts $50 in the short term and sets a $100 target in the event of a short squeeze.
• Peter Krauth, the author of Silver Stock Investor, sees silver prices rising to $40 in 2025, $50 in 2026, and even $300 an ounce silver under the right conditions.

Don’t Sleep on Gold

The spotlight might be shining on silver right now, but investors shouldn’t be overlooking gold. Central banks continue scooping up gold bullion despite near-record prices. This elevated consumption is the primary fuel of the gold rally, indicating gold prices could still move higher. At its roots, this global transition into physical gold is sparked by a disintegrating global economy, as the dollar’s world reserve status is eroding and geopolitical instability is on the rise.

“Central banks see huge problems with the world economy and they’re accumulating gold for that reason. They don’t want to be in paper.”

Steve Rand

General Manager / Sr. Precious Metals Advisor

👉 Suggested Reading: $5,000 Gold?! Why It Might Be Coming Faster Than You Think

A Crucial Time for Silver

With the US dollar losing value, governments shifting focus from fiat currencies, and uncertainty reaching new peaks, it’s a crucial time for investors to understand how physical gold and silver can protect their wealth.

Our Silver Investor Report: Silver, A Sleeping Giant? goes in-depth about silver’s unique role in a portfolio, what drives its price movement, and how it can secure your financial future. Grab your FREE copy today.

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