Why the Dollar Is Dying—and Gold Is Thriving

In the latest episode of the Money Metals Midweek Memo, host Mike Maharrey dives into the troubling trajectory of the U.S. dollar, recent warnings from international banks, and the growing shift toward gold among global central banks. 

Drawing on fresh data, historical parallels, and economic indicators, Maharrey lays out a compelling case: the dollar is in trouble, and gold is emerging as the true safe haven.

UBS: The Dollar Is “Unattractive”

Leading the charge in dollar skepticism is Swiss banking giant UBS. In a recent analyst note, the firm bluntly advised investors to "reduce and hedge exposure to USD before further dollar declines." UBS stopped short of calling the dollar “garbage,” but Maharrey was happy to supply the term.

The note cited the 10.8% drop in the U.S. Dollar Index from January 1 to June 30, 2025, marking the steepest dollar decline in the first half of any year since 1973—just two years after President Nixon severed the last link between the dollar and gold. 

UBS anticipates more weakness ahead, citing a slowing U.S. economy and an increasingly fragile fiscal outlook in Washington.

“This was supposed to be the dollar’s moment,” Maharrey said, referencing global geopolitical tensions, Fed interest rate policy, and aggressive tariffs. “Instead, the dollar has stumbled.”

Exporters Rejecting the Dollar

Bloomberg reports further affirm the trend. Many global exporters are now asking U.S. importers to settle invoices in euros, pesos, or yuan, aiming to shield themselves from dollar volatility. 

The trend reflects a deeper unease about U.S. monetary policy and the growing politicization—or “weaponization”—of the dollar in global affairs, ultimately leading to naturally rational de-dollarization. 

Gold: The Overlooked Currency

While UBS failed to mention gold, others in the financial world have not. Frank Holmes, Chief Investment Officer at U.S. Global Investors, called gold "the preferred reserve asset," and one of the "surest beneficiaries" of dollar weakness. 

He noted that gold recently surpassed the euro as the second-largest global reserve asset—a milestone driven by surging central bank demand.

Central Bank Gold Buying by the Numbers:

• 2022: 1,136 metric tons (highest net purchases on record since 1950)
• 2023: Only 6.2 tons lower than 2022
• Average (2010–2021): 473 tons/year
• 2025 Outlook:
  • 95% of central banks expect global gold reserves to increase
  • 43% expect their own reserves to grow (up from 29% in 2024)
  • 73% anticipate a decline in their U.S. dollar holdings over the next 5 years
     

Meanwhile, the dollar’s share of global reserves has dropped to 57.8%, its lowest since 1994, down from 72% in 2002.

Holmes' Warning to Investors

Frank Holmes urges retail investors to think like central banks. With the dollar’s supremacy “gradually slipping,” Holmes advises individuals to diversify their portfolios with gold and other real assets—particularly as inflation risks resurface.

The Real Threat of De-Dollarization

Maharrey emphasized that even modest de-dollarization could pose serious problems for the U.S. economy. The dollar’s reserve status helps support the country’s massive deficits and borrowing by sustaining global demand for dollar-denominated assets. If that demand wanes, inflationary pressures could intensify at home.

The Money Supply and Inflation Disconnect

Contrary to the “tight monetary policy” narrative, Maharrey reveals that the U.S. money supply has grown by over $600 billion since mid-2023. While M2 briefly contracted during the Fed’s rate-hike phase—bottoming at $20.6 trillion—a $3 trillion reduction would still be needed to return to pre-pandemic trendlines.

“If the world stops soaking up those dollars,” Maharrey warns, “that inflation stays home. You’re going to feel it in the checkout line.”

Retail Sales: The Inflation Illusion

Retail sales have increased by 15.9% since July 2021, reaching $715.4 trillion in May. But when adjusted for inflation, real retail sales have been flat since April 2021, hovering between $550 trillion and $575 trillion.

“The consumer is spending more and getting less,” Maharrey explains, debunking media narratives that portray strong retail sales as proof of economic health.

He illustrated this with a simple example: If widget prices rise from $1 to $2 but purchases fall from 100 to 60, retail sales still increase from $100 to $120—even though consumers got fewer widgets.

Official CPI vs. Real-World Inflation

Government inflation statistics understate the true impact, Maharrey argues. The CPI was redesigned in the 1990s to mask inflation. Using older metrics from the 1970s, true inflation may be double the reported rate, closer to 6% rather than the official 3%.

Conclusion: Your Dollar Is Garbage

Bringing the episode full circle, Maharrey restated his blunt thesis: “Your dollar is garbage.” 

Inflation isn’t an accident, he said. It’s a policy choice designed to fund government excess without raising taxes—so long as consumers don’t notice.

But they are noticing. And that’s why investors—like central banks—are turning to gold and silver. Maharrey closed by urging listeners to consider adding precious metals to their portfolios as a hedge against currency debasement.

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