Fiat Currency Debasement Driving Central Banks to Gold

Well, during this holiday shortened week the metals are having decent success. Gold is up about $60 or 1.7% to come in at $3,342 an ounce. Turning to silver, the white metal is performing slightly better, up nearly 90 cents or 2.4% to check in at $37.05.

As for the PGMs, platinum again is falling off a bit here late in the week, just like it did a week ago, but, like last week, is still in positive territory despite giving back some of the early week gains. The industrial metal currently trades at $1,389, good for a 2.7% weekly advance. Palladium meanwhile is also giving back some gains from the first half of the week and is up just 0.5% since last Friday’s close to come in at $1,163 an ounce as of this Thursday afternoon recording.

Meanwhile, there's been more talk about the weak dollar in recent weeks, given it has already slid 10% lower this year when compared to other fiat currencies.

In fact, we've seen the biggest dollar decline through the first half of any year since 1973. That was just two years after President Richard Nixon severed the last tie between the dollar and gold.

Lots more financial powers seem to be catching on to the trend, and taking action. Swiss investment bank UBS just said it is time to “reduce and hedge exposure to USD before further dollar declines.”

UBS analysts say they expect further dollar weakness, and the U.S. economy to slow, and the firm worries about the rapidly deteriorating fiscal situation in Washington, D.C.

Meanwhile, Bloomberg recently reported that many exporters “no longer want dollars,” explaining that foreign vendors are asking U.S. importers to settle invoices in euros, pesos, and yuan to avoid currency swings.

But UBS forgot, meaning they left out, the most stable currency in its analysis – gold.

Frequent Money Metals podcast guest Frank Holmes didn't forget. The Chief Investment Officer for U.S. Global Investors just called gold the “preferred reserve asset,” pointing out that “one of the surest beneficiaries of the dollar’s weakness has been gold.”

In fact, gold recently moved ahead of the euro as the second-largest reserve asset. But it’s not so much that central banks are trading in gold for euros. The EU currency’s share of global reserves has remained relatively steady.

But what's happening is they are swapping dollars for gold, making last year the third-largest expansion of central bank gold reserves on record. And strong buying has continued here in 2025.

Holmes says investors "should think carefully about how exposed their portfolios are to a single currency.”

He’s right.

Even a modest de-dollarization of the global economy could be a disaster for the United States.

The U.S. depends on this global demand for dollars supported by its reserve status to underpin its massive government. The only reason Uncle Sam can borrow, spend, and run massive budget deficits to the extent that it does is the dollar’s role as the world's reserve currency. It creates a built-in global demand for dollars and dollar-denominated assets. This absorbs the Federal Reserve’s money creation and helps maintain dollar strength despite the Federal Reserve’s inflationary policies.

So, if the world no longer needs dollars, who will absorb the inflation?

American consumers.

To be clear, it doesn't take an outright currency collapse for there to be problems. A partial de-dollarization of the world economy would cause a dollar glut, and the value of the U.S. currency would further depreciate. That translates to more price inflation at home.

In other news, Money Metals' national effort to remove sales taxes from gold and silver have borne more fruit in recent days.

Florida governor Ron Desantis just signed a bill which removes the arbitrary $500 purchase minimum for Floridians to qualify for sales tax exemptions on gold and silver -- with that new law taking effect in August.

At the same time, governors in Virginia and Connecticut signed bills which enact full exemptions on precious metals purchases in those states.

As it stands, the tally of states with precious metals sales tax exemptions is now up to 45... and that number would have been 46 if Maryland's legislature and governor hadn't just canceled out the partial exemption that had long been on the books there. Sadly, all purchases of sound money in Maryland are now socked with a sales tax.

Meanwhile, the sales tax exemption in Washington State is scheduled to terminate at the end of the year, barring an intervention.

Like every freedom we enjoy, Americans can't take for granted the freedom to protect their purchasing power in gold and silver without paying a financial penalty to the government.

Money Metals' legislative team is working to protect and defend sound money policies all across America... and with your ongoing support of our company, we will continue to do so.

After all, vigilance is required to protect and defend ANY right -- and the forces of tyranny remain a clear and present danger to all of us.

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