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.
A recent spate of alarming market patterns indicates investors at home and abroad are shifting away from the United States. The President of the Minneapolis Federal Reserve, Neel Kashkari, points to a fledgling US dollar and rising Treasury yields as signs of America’s waning hegemony.
These developments defy traditional trade war trends, signaling that capital is shifting away from USD-linked assets. The Fed leader warns that the tariff gamble to usher in the “Golden Age of America” might just be her economic unraveling.
What usually happens in a trade war?
Historically, trade wars have boosted demand for US assets, as waves of global uncertainty push investors into the relative safety of the American economy, often seen as the world’s most stable. This pattern has held even when the US itself initiates the conflict.
For instance, during the 2018-2019 US-China trade war, global investors flocked to dollar-denominated assets. The US Dollar Index (DXY)–which measures the greenback against a basket of foreign currencies–climbed from around 89 in early 2018 to 98 by mid-2019. In the same period, the 10-year Treasury yield dropped sharply from nearly 3.2% to 1.5% as demand surged for government bonds.
What’s happening now?
Since the tariff regime was announced on April 2nd, so-called “Liberation Day”, US assets have seen outflows and weakness across the board:
US Dollar
The US dollar has seen a sharp decline in recent weeks, with the DXY falling from 107 to 99 and losing ground to the euro, yen, and pound. The greenback recently touched a three-year low, approaching levels last seen during the worst of the Great Financial Crisis.
Notably, these losses began even before the latest tariff announcement, down around 10% since Trump took office. “The fact that the dollar is going down at the same time [as the trade war] lends some more credibility to the story of investor preferences shifting,” says Kashkari.
US Treasuries
Between April 4th and April 11th, the 10-year Treasury yield jumped from less than 4% to around 4.5%. While that may not sound dramatic, it was one of the biggest short-term spikes in decades for this highly sensitive market.
This surge in Treasury yields was driven by a swift sell-off of these traditionally safe-haven assets. Calvin Yeoh, a portfolio manager at Blue Edge Advisors, described the slump as “a fire sale of Treasuries.”
The Broader De-Dollarization Movement
For years, economists and geopolitical experts have cautioned about the decline of the US dollar on the world stage. The de-dollarization movement is picking up steam as countries increasingly seek to offload the heavily weaponized and debt-burdened USD. These aggressive tariff moves might be the proverbial straw to break the dollar’s back, but systemic issues have lingered for a while.
Kashkari’s warning that America may lose its standing as “the most attractive place in the world to invest” is shared by many analysts. Deutsche Bank sees the dollar completely losing its safe-haven status in the long run.
RSM’s chief economist, Joseph Brusuelas, says, “There’s been a loss of credibility and confidence in the US regime.”
Gold is the Ultimate Winner
Investors aren’t just pulling money out of the dollar, bonds, and other USD-linked assets; they’re redirecting it into gold. This shift is reflected in gold’s recent surge to all-time highs above $3,400.
With fundamental issues surrounding the dollar expected to persist, demand for gold is likely to keep rising. Many investors have already raised their gold price forecasts for 2025, with some even predicting it could reach $4,000.