Is the World Leaving the Dollar Behind?

The U.S. dollar’s value rests on the full faith and credit of the government, but what happens when that faith begins to waver? In 2025, investors and institutions around the world are starting to ask that very question. Confidence in paper currencies is slipping, and gold is emerging as a trusted alternative. As the dollar weakens and the risks to fiat assets grow, these shifts aren’t just affecting global markets. They are beginning to touch every American’s savings and long-term financial planning.

The Dollar’s Worst Start in Over 50 Years

Rather than strengthening, the dollar has stumbled in 2025. The Bloomberg Dollar Spot Index, which tracks the dollar against 10 leading global currencies, fell nearly 11% in the first half of the year. It marks the worst six-month performance since 1973. U.S. trade policies, fiscal risks, and political uncertainty have shaken America’s status as a financial safe haven. Meanwhile conversations about reducing global reliance on the dollar are gaining momentum.¹

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What De-Dollarization Means

The U.S. dollar is still the world’s primary reserve currency, but its dominance is showing cracks. “The world has become long on the dollar in recent years, but as U.S. exceptionalism erodes, it should be reasonable to expect the overhang in USD longs to diminish as well,” said Luis Oganes, head of Global Macro Research at J.P. Morgan.³

This structural shift, known as de-dollarization, is already visible across multiple markets:

• Central bank reserves: The dollar’s share in foreign exchange reserves has slipped to a two-decade low. At the same time, the share of gold in reserves has more than doubled compared to a decade ago.
• Bond markets: Foreign ownership of U.S. Treasuries has fallen from over 50% during the Global Financial Crisis to about 30% in early 2025.
• Commodities: Energy and trade contracts are increasingly priced in non-dollar currencies, with the Chinese yuan gaining traction.

These moves point toward a world that is less dependent on the dollar and more open to alternatives like gold.

Gold Benefits

Gold has been one of the biggest beneficiaries of de-dollarization. Demand from emerging market central banks has helped fuel a long-term bull market. Analysts are forecasting prices could approach $4,000 per ounce by mid-2026.⁴

Already, gold is holding steady above $3,300 an ounce. It is reaching record highs against currencies such as the Japanese yen and nearing records against the British pound, euro, and Canadian dollar.

Thorsten Polleit, Honorary Professor of Economics at the University of Bayreuth, explained: “People are becoming skeptical of the purchasing power of all fiat currencies, and we can see this in the global gold market.”⁵

This shift is not just about fear. It is about recognizing gold’s unique role as a store of value in an era of monetary uncertainty.

Debt, Inflation, and Dollar Doubts

The weakness of the dollar also reflects the heavy burden of U.S. debt and persistent inflation. The Consumer Price Index rose 3.1% in July, underscoring the erosion of the dollar’s purchasing power.

Running deficits of 6% to 7% of GDP, much of it due to interest payments, has raised concerns that the U.S. may ultimately need to print more money to finance its obligations. As Polleit noted, “Once you get to the point where interest is basically overwhelming growth, that to me is an obvious signal that the debt cannot be repaid.”⁶

This environment makes it nearly impossible for central banks to raise interest rates aggressively without slowing growth. While markets anticipate rate cuts in the months ahead, lower yields are likely to push gold prices even higher.

Investor Sentiment Shifts Away from the Dollar

As confidence in the U.S. dollar wanes, global investors are reducing their exposure to the greenback. A Bank of America survey in August 2025 showed allocations to the dollar at their lowest since 2005, with fund managers favoring gold, Eurozone equities, the Swiss franc, and the Japanese yen instead. Bloomberg likewise reported that portfolios are being positioned for continued dollar weakness, as the greenback trades near levels last seen in the early 1970s.

These shifts are a clear sign of growing concerns about the longevity of the dollar’s dominance in global markets and the stability of fiat currencies overall. They are driving more investors to turn toward gold as a reliable store of value.

All Roads Lead to Gold

Ryan McIntyre is managing partner at Sprott Inc. He summed up the trend: “Gold obviously has great history as a safe-haven asset, and people have gravitated towards it. That’s why ultimately, I think all roads lead to gold for people looking for a safe haven.”⁷

This sentiment reflects a broader reality. Americans, like global investors, are looking for stability amid uncertainty. Political turmoil, fiscal imbalances, and weakening confidence in fiat currencies are steering capital toward assets that cannot be printed or inflated away.

Conclusion

The dollar’s recent performance signals more than just a cyclical dip. It reflects a deeper structural shift in global markets. A new financial order is emerging where the dollar no longer holds unrivaled supremacy. Alternative stores of value, particularly gold, are taking center stage. With dollar-denominated assets increasingly at risk, gold continues to rise as a reliable long-term store of value.

A Gold IRA can provide a long-term safeguard against these risks. It can help preserve wealth and maintain purchasing power over time. Call American Hartford Gold today at 800-462-0071 to learn more about securing a Gold IRA and protecting your financial future.

Notes:
1. https://www.kitco.com/news/article/2025-08-14/us-debt-risk-not-priced-and-gold-prices-could-skyrocket-once-investors-do
2. https://www.stopsaving.com/gold-vs-us-dollar-index-dxy/
3. https://www.jpmorgan.com/insights/global-research/currencies/de-dollarization
4. https://www.jpmorgan.com/insights/global-research/currencies/de-dollarization
5. https://www.kitco.com/news/article/2025-08-13/gold-price-could-double-5-10-years-investors-become-skeptical-fiat
6. https://www.kitco.com/news/article/2025-08-14/us-debt-risk-not-priced-and-gold-prices-could-skyrocket-once-investors-do
7. https://www.kitco.com/news/article/2025-08-14/us-debt-risk-not-priced-and-gold-prices-could-skyrocket-once-investors-do

 

 

 

• Core inflation is rising despite stable overall CPI.
• Potential Fed rate cuts could drive gold prices to record levels.
• Hedge against inflation with physical gold held in a Gold IRA.

Navigating Inflation in Today’s Market

Inflation in the United States is showing a complex picture. Core CPI, excluding volatile food and energy, accelerated in July at the fastest pace in six months, pushing the annual rate to 3.1%. Higher prices for services and tariff-affected goods, particularly in shelter and medical care, drove the increase. Meanwhile, overall CPI stayed mostly unchanged due to lower food and energy prices. These contrasting trends raise a key question. If underlying inflation keeps climbing, how can you protect the purchasing power of your savings?

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Gold Prices and Rate Cuts

The divergence between core and overall inflation has influenced the gold market. Prices surged on concerns about rising inflation and uncertainty over Federal Reserve policy. Persistent increases in core costs are fueling renewed demand for gold as a safe-haven asset. Gold has risen to $3,354 per ounce.

The latest CPI report has intensified speculation about potential Fed rate cuts. Current odds for a September cut exceed 80% amid slow economic growth and low overall inflation. The Fed’s stance has helped drive gold’s rally. Further expected cuts enhance the appeal of non-yielding assets like gold.²

Right now, gold remains above $3,300 per ounce. ING projects an average of $3,400 in Q3 and $3,450 in Q4, up from $3,200 earlier. They see prices climbing above $3,500 next year, over nine percent above prior forecasts. These predictions are tied to their anticipation of rate cuts.

“With U.S. rate cut bets intensifying, gold could reach fresh highs,” ING said. “Our economist now expects three cuts this year and two in early 2026, more aggressive than markets price. Lower rates typically boost gold, which pays no interest.”³

According to the CME FedWatch Tool, markets assign a 90% chance of a cut next month and a 50/50 chance of three by year-end.⁴

Political Pressure Adds Uncertainty

Political dynamics are influencing rate expectations. President Trump has advocated for lower rates to stimulate growth and benefit exports. Traders had been pricing in a 25-basis-point cut. But political pressure suggests the Fed may act more aggressively, pushing gold higher and testing the $3,500 level.

Risks of Aggressive Rate Cuts

Not all experts favor deep cuts. David Kelly, Chief Global Strategist at J.P. Morgan, thinks the Fed should avoid cuts amid persistent inflation. But “given political pressure, we now expect a 50-basis-point cut this year and 75 next year.”

Kelly points out the low interest rates over the past two decades have driven home prices to unaffordable levels and generated asset bubbles. If investors believe the Fed will tolerate higher inflation to support spending, long-term rates could rise. Kelly warns against the Fed straying from its mission of controlling inflation and maximizing employment. It risks eroding trust in the U.S. financial system and the dollar. Underscoring the need to diversify into alternative assets like gold.⁵

Inflation Pressures Could Persist

Several factors suggest inflation may stay elevated. The dollar has declined about seven percent this year, raising import costs. Falling fuel prices help offset some pressures, but the weaker dollar keeps non-energy imports elevated. Wage growth remains around 3.9%, and stricter immigration rules may limit labor supply. Rising wages and a tighter labor pool may force businesses to raise prices, driving inflation higher. New tax breaks in 2025 could yield larger refunds in early 2026, boosting spending. And additional fiscal stimulus before midterms could further elevate inflation.

Why Gold Remains a Strong Hedge

Gold continues to offer a reliable hedge against inflation and economic uncertainty. J.P. Morgan projects gold could reach $4,000 per ounce by Q1 2026. Grace Peters is global head of investment strategy at JPMorgan. When asked how JP Morgan is looking at gold in this environment, Peters said, “We still like it.”⁶

Conclusion

Inflation remains a persistent concern, even as the Fed prepares to cut rates. Rising inflation increases the need for assets that preserve purchasing power. While lower rates enhance the appeal of non-interest-bearing gold. For long-term protection, a Gold IRA provides a secure option. Contact American Hartford Gold today at 800-462-0071 to safeguard your wealth.

Notes
1. https://static.seekingalpha.com/uploads/2025/8/13/7375661-17550860517222052_origin.jpeg
2. https://www.kitco.com/opinion/2025-08-12/gold-price-moves-higher-cpi-data-and-fed-rate-cut-expectations-drive-market
3. https://www.kitco.com/news/article/2025-08-12/aggressive-fed-rate-cuts-drive-gold-back-record-highs-year-end-ings-manthe
4. https://www.kitco.com/news/article/2025-08-12/aggressive-fed-rate-cuts-drive-gold-back-record-highs-year-end-ings-manthe
5. https://www.kitco.com/news/article/2025-08-11/fed-rate-cuts-will-stoke-inflation-so-invest-alternative-and-non-us-assets
6. https://www.kitco.com/news/article/2025-08-11/fed-rate-cuts-will-stoke-inflation-so-invest-alternative-and-non-us-assets

 

Gold Drawn into Trade Wars

Gold has staged a blistering rally this year, rising almost 30%. Fears over inflation and government debt have boosted its appeal as a safe-haven asset. Now, a new development is raising the stakes, and uncertainty, in the global gold trade.

Recently, gold futures climbed to record highs after reports that the United States had imposed tariffs on imports of one-kilogram gold bars. The U.S. Customs and Border Protection (CBP) determined that one-kilogram and 100-ounce gold bars should be classified under a customs code subject to duties. This marks the first-ever U.S. tariff on bullion. The metal is traditionally excluded from such measures because of its role in the financial system.

Gold Prices Surge to Records

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Following the news, December U.S. gold futures rose to $3,476.70 per ounce, after briefly touching an all-time high of $3,534.10. Spot gold prices also surged, breaking through $3,400 per ounce. They stayed on track for a second straight weekly gain.²

U.S. gold futures on New York’s COMEX exchange began trading at a premium of more than $100 per ounce compared to spot prices. This price difference can signal that investors are expecting higher gold prices in the future. Analysts warn that this gap could also signal deep shifts in the structure of the gold market and global trade patterns.

Switzerland Caught in the Middle

Switzerland is the world’s largest gold refining hub and a major exporter to the United States. They are directly impacted by tariffs. The Swiss Association of Manufacturers and Traders in Precious Metals warned that the ruling would “negatively impact” the flow of physical gold worldwide.

The group described the move as a “gold tax” disguised as a customs ruling. The levy targets kilo bars, the most common format in U.S. markets and for jewelers. They note that the change could alter the global perception of gold as a neutral store of value. Making gold less of a purely financial asset and more of a geopolitical commodity. Particularly at a time when central banks are buying gold to reduce reliance on the U.S. dollar.

In their view, the U.S. is adding new “toll booths” to the global gold trade. It’s creating wider premiums, encouraging arbitrage, and prompting increased buying by traders.

Short Sellers Squeezed by Tariffs

Gold short-sellers could spark more market chaos. Those holding short exchange-for-physical (EFP) positions may be forced to liquidate. In these deals, they sell gold futures and agree to deliver physical gold later. The new tariffs make that delivery much more expensive. Many may close out their contracts early instead. Closing out requires buying gold to settle the deal. This rush to buy can trigger a sudden cash crunch in London’s bullion market and send demand soaring. The result could be even higher gold prices.

Tariffs Apply Only to Bars, Not Coins

Based on official reports, the new U.S. gold tariff applies only to one-kilogram and 100-ounce bars. There is no indication that gold coins are included in these measures. Gold coins remain regulated under separate customs codes. They are exempt under the current rules.

A Policy Reversal?

The White House had previously said in an April factsheet that gold would be exempt from sweeping import levies. However, the new ruling from CBP has changed that, at least for certain gold bars.

A White House official commented, “The White House intends to issue an executive order in the near future clarifying misinformation about the tariffing of gold bars and other specialty products.” Some market participants believe the CBP may have made an error and hope the ruling will be amended.³

If tariffs remain in place, analysts expect spot prices to rise.

What Happens Next

For now, gold prices have begun to pull back as investors await clarification from Washington. Some traders are betting the tariff will be revised or reversed, while others are positioning for a prolonged impact.

If tariffs stay in place, global supply chains may need to be restructured. Switzerland and other refining hubs will look for new export markets, while U.S. buyers may seek alternative sources or formats of gold.

Conclusion

While tariffs can cause short-term disruptions, gold’s role as a hedge against inflation, geopolitical tension, and currency risk remains intact. In fact, disruptions like this can reinforce gold’s appeal as a safe-haven asset.

As the old saying goes, opportunity lies in chaos. While the situation unfolds, now could be an ideal time to learn if precious metals are right for you. Especially since market signals point to higher prices ahead. Held in a Gold IRA, physical precious metals can protect the value of your portfolio from the impact of trade volatility. To find out more, call American Hartford Gold today at 800-462-0071.

Notes
1. https://www.bloomberg.com/news/articles/2025-08-08/us-hits-gold-bars-with-tariffs-in-blow-to-switzerland-ft-report
2. https://www.cnbc.com/2025/08/08/gold-futures-hit-record-high-after-report-of-us-tariffs-on-gold-bars.html
3. https://www.ft.com/content/c2868087-9951-4f04-818f-5082437f603a