Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
According to a BlackRock executive, gold outshines US Treasuries as the safest asset in today’s volatile economic and geopolitical environment.
The trade war is revealing deeper cracks in confidence toward dollar-backed assets, with the dollar falling and bond yields rising–exactly the opposite of their typical behavior in times of stress.
Meanwhile, gold continues its steady climb to new highs. Wei Li, global chief investment strategist at the world’s largest asset manager, sees this as evidence of a broader, long-term shift in where investors turn for safety.
The Safe-Haven Playbook Is Shifting
As economic indicators signal distress, investors are making defensive investments to protect their wealth. However, they’re not following the traditional playbook. Instead of pouring into the dollar and US Treasuries–assets that tend to perform well during global upheaval–the world is diving into gold.
Since Trump’s sweeping tariff proclamation on “Liberation Day,” dollar-linked instruments have slipped as the yellow metal explodes to fresh highs. Gold is sitting comfortably above $3,300, after a slight retreat from an all-time high of $3,500.
Historically, trade wars have forced global investors into the USD and US Treasuries, often viewed as the steadiest value-preservers in a sea of volatility.
Yet, the lackluster performance of these traditional safe-haven assets tells a different story:
The Dollar Dump
The greenback’s decades-long role as the world’s reserve currency usually acts as a magnet for investments during trade wars and other worldwide economic shakeups. That’s not happening this time around.
The US Dollar Index (DXY), which measures the dollar’s performance against a basket of foreign currencies, dipped sharply following the April 2nd surprise. The year-to-date decline stands at 7.44% as the greenback struggles to claw back those losses.
Alarmingly, foreign currencies are faring better than the mighty dollar. The USD is now at a three-year low versus the euro and a decade low against the Swiss franc. This weakness has led Deutsche Bank to issue a stark warning about the dollar losing its safe-haven status.
The Bond Sell-Off
US Treasuries have a strong history as a standalone asset in economic turmoil, regardless of the benchmark. Trump’s war on trade deficits shattered that long-standing trend, thrusting the concept of US assets as steady, reliable assets into doubt.
The 10-year yield, often used as a gauge of broader market health, spiked to 4.5% shortly after the blanket tariffs were laid. A higher Treasury yield indicates waning confidence in US fiscal credibility, as investors demand higher returns for offsetting a perception of higher risk.
A New Macro Regime Is Taking Hold
According to Li, the changing dynamics in safe-haven flows reflect deeper concerns about the long-term stability of US-backed assets. Most notably:
- Sticky Inflation: Despite falling month-over-month relative lows, inflation remains above the Federal Reserve’s target level of 2%. Experts believe long-term trade conflicts could reignite rates in the long run, driving more investors to the inflation-hedge properties of precious metals.
- Exorbitant Debt: The $36 trillion (and counting) national debt is testing the world’s confidence in the greenback’s future. The government’s failure at domestic fiscal policy places question marks on the dollar’s future. With Trump projected to add $10 trillion to the debt, the debt fiasco only appears to be getting worse.
Gold Is the New Baseline Hedge
Gold’s historic rally is the flipside of the downspiral of US Treasuries and the dollar. The recent trade war fallout has shone a spotlight on a much longer trend. For years, countries have embraced a policy of de-dollarization by offloading cash USD and Treasuries.
We’re witnessing a shift toward diversification as countries incorporate more gold into their reserves, moving away from dependence on the US dollar.Scottsdale Bullion & Coin’s Precious Metals Advisor Joe Elkjer
Gold has been the go-to replacement with central banks buying more than 1,000 tons for the past three years. Li boiled down the analysis, saying, “Gold is a better diversifier than Treasuries in this environment.”
Experts Raise Price Targets
The global shift into gold reflects both a hedge against long-term instability and a rush to seize potential upside. Many major financial institutions have raised their 2025 gold forecasts (some multiple times) in response to gold’s powerful momentum and the macroeconomic forces driving it. A growing number of analysts now say $4,000 could be on the table in 2025, or not long after. These increasingly bullish forecasts underscore the global transition from USD-linked assets to physical gold.