Losing Confidence in the U.S. Economy

Investors are increasingly rethinking their relationship with American assets. What began as enthusiasm for President Trump’s business-friendly tax cuts has morphed into a wave of skepticism, fear, and retreat. International investors are rattled by policy whiplash, tariff threats, and mounting debt. They are embracing what’s now being called the “Sell America” trade. The result? A dollar in decline, bond market volatility, and an upswing in demand for gold.

At the center of the trend is growing unease about the long-term direction of U.S. economic policy. Early in the year, American equities surged on hopes of tax reform and deregulation. But by April, investors had begun selling off U.S. stocks, bonds, and even the dollar itself. A combination of high valuations, policy volatility, and inflation fears pushed the S&P 500 down nearly 20% from its peak in February to April 9. That’s when President Trump hit pause on newly announced tariffs.¹

But the temporary postponement of duties has not calmed investor anxiety. According to JPMorgan, the risk of retaliation from the EU remains high. Especially if negotiations fail. The European Central Bank warned that U.S. tariff policies are putting the global financial system at risk.

Shifting Investor Sentiment

The shifting investor sentiment is evident in hard numbers. At the recent JPMorgan Global Markets Conference, 700 investors from 45 countries overwhelmingly preferred European equities. Thirty-six percent expected Europe to outperform in 2025. Compared to just 17% who favored U.S. stocks. This comes as the Stoxx Europe 600 climbs 7% for the year, while the S&P 500 has declined about 1%.²

America’s economic outlook hasn’t been helped by the recent debt downgrade. Moody’s downgraded the U.S. credit rating for the first time since 1917. They cited the ballooning debt burden. As well as a lack of political will to address budget deficits. That announcement triggered a sell-off in U.S. Treasuries.  Ten-year yields fell near 4.5% and 30-year yields just below 5%. The dollar, meanwhile, fell 0.6% against a basket of currencies.⁴

Selling America, Buying Gold

Perhaps most telling is what investors are doing with their money: pouring it into gold. Long seen as a traditional safe haven, gold has reasserted itself in the face of rising volatility. Spot gold surged 1.5% following the downgrade, climbing to $3,232 a troy ounce. Citi has raised its gold forecast to as high as $3,500 per ounce in the next three months. They cited “escalating tariffs and heightened geopolitical risk.”⁵

And the demand isn’t just short-term. JPMorgan notes that a mere 0.5% shift of foreign-held U.S. assets into gold could generate annual returns of 18%. It could send prices toward $6,000 by early 2029.⁶

Why is gold performing so well? The answer lies in growing doubt about U.S. “exceptionalism.” For years, the U.S. attracted massive foreign investment. That was thanks to strong markets and political stability. But now, there are erratic trade policies, a weakened dollar, and questions about the nation’s creditworthiness. Investors are seeing more risk than reward.

The Dropping Dollar

That shift has affected everything from government borrowing to consumer interest rates. The U.S. Treasury has found it increasingly expensive to finance its debt. A recent $20 billion bond auction drew tepid interest. The government was forced to pay higher yields. That means higher rates not only on Treasury bonds but also on mortgages, loans, and other consumer debt tied to those yields.

This isn’t just a U.S. issue, it’s a global one. Treasury bonds form the backbone of the international financial system. When their stability is questioned, it sends shockwaves around the world. Winnie Cisar is global head of strategy at CreditSights. She said the “Sell America” trade reflects a “whole change in narrative around U.S. economic exceptionalism.” Investors now view the U.S. as “a riskier place to park your cash than it was six months ago.”⁷

As investor confidence in U.S. assets erodes, foreign markets, particularly in Europe, have reaped the benefits. But even those bullish on Europe recognize the uncertainty of the global landscape. High debt, unclear fiscal policy, and constant shifts in trade negotiations leave investors guessing about what comes next.

Conclusion

As the “Sell America” sentiment grows, investors are signaling that they want off the roller coaster. If you’re concerned about what comes next, now may be the right time to secure your future with a tangible asset that has stood the test of time. Physical precious metals held in a Gold IRA offer long term protection from economic volatility. Call us today at 800-462-0071 to learn how you can diversify your portfolio and prepare for whatever lies ahead.

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