After a 15-year bull run, the U.S. dollar ended the first half of 2025 with its biggest loss since 1973 — down 11% against major trading partners.
Morgan Stanley, who also added a 20% gold allocation to its infamous 60/40 rule, calls the dollar’s demise this year a “mid-act intermission,” not the finale.
Analysts for the bank predict another 10% slide by next year as American growth and interest rates converge with the rest of the world.
“Policy now bends to debt, not the other way around,” another strategist told The Financial Times. “Fiscal dominance is no longer theory—it’s the system.”
And if you’re investing your own money… or even listening to the advice of a financial professional near you … you’d better understand the winds of change before they whip up into a maelstrom.
A weaker dollar helps exporters and debtors but erodes savings, worsens inflation, and makes foreign capital more skittish. As the world’s reserve currency slips, U.S. influence slips with it. For now. Trump’s got trade deals and peace treaties up his sleeve, say administration officials… (cue lingering doubt).
Gold Ascendant, Silver Unleashed
On the flipside of that fiat coin, gold spent its first full weekend above $3,900, the highest ever. Likewise, silver, gold’s scrappier cousin, is up 15% over the last month and is knocking on the door of $50 at $48.50.
A reminder too: “Despite the rally, miners’ valuations remain historically cheap,” reports the FT, noting that P/E ratios are contracting even as earnings rise.
The NYSE Arca Gold Miners Index is up +123% this year — its best century-to-date performance. But gold’s strength is a double-edged sword.
In 1979, savers lined up to buy Krugerrands as inflation neared 14% — a signal of crisis, not confidence. When gold becomes a panic trade, it stops being ballast and starts being a lifeboat.
The Altman AI Paradox
OpenAI’s Sam Altman, now presiding over a $500 billion startup, sounded equal parts prophet and poker player last week.
Touring the company’s new Abilene, Texas data complex, he mused, “Between the ten years we’ve already been operating and the many decades ahead, there will be booms and busts. People will overinvest and lose money, and underinvest and lose a lot of revenue.”
Sam’s been skeptical of his own company’s financial success for months now. These latest comments? A calm acceptance of chaos — the sort of line you expect from a CEO who knows he’s building something too big to fail, but maybe too unprofitable to justify.
Altman conceded that OpenAI will “make some dumb capital allocations,” but insisted that over time, “this technology will drive unprecedented economic growth.”
According to The Wall Street Journal, AI-related capital expenditures have contributed more to U.S. GDP growth this year than all consumer spending combined. The boom is breathtaking — but also brittle.
Paul Tudor Jones Smells the Same Smoke
Billionaire investor Paul Tudor Jones told CNBC, “My guess is all the ingredients are in place for a blow-off. History rhymes a lot, so some version of 1999 is going to happen again. If anything, now is so much more potentially explosive.”
Jones pointed to circular financing deals in the AI sector — firms investing in each other’s data centers, chip supply, and cloud platforms — calling it “eerily reminiscent” of the vendor financing that set up the dot-com crash.
The Wall Street Journal chimed in here, too, adding that speculative AI ETFs are now pulling in record flows while short interest in mega-cap tech stocks has collapsed to its lowest level in over a decade.
As Jones put it, “It’s not about whether AI changes the world. It’s about how much you pay for it before it does.”
Government on Pause, Markets on Play
The U.S. government shutdown drags into a second week, and yet markets have barely blinked. The S&P 500 closed at a record high Friday, apparently indifferent to the fact that 750,000 federal workers are furloughed.
Jeff Bezo’s plaything, The Washington Post, noted that the delayed jobs report is “the first casualty in what could be a string of missing data.” CPI, PPI, and GDP numbers may also be delayed, leaving the Fed “flying blind,” said analysts at Edward Jones.
Democrat and Republican “leaders” on the Hill confused their petty tit-for-tat for news during the Sunday round of mainstream political talk shows. If the smattering of Grey Swan members who wrote in are any indication, nobody really cares which side is at fault for which reasons.
Senator Rand Paul, (R. KY), who was the sole Republican to vote against a continuing resolution, seems to care about the actual finances of the government. “I would never vote for a bill that added $2 trillion in national debt,” Paul said in various interviews over the weekend.
The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.
Oy.
We liked what Liz Wolfe at Reason wrote on Friday, so we’ll repeat it here: “One of the dirty little secrets of every shutdown is that everything remains mostly fine. Private markets could easily replace many federal functions.”
It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.
Tariffs, Trade, and a $10 Billion Bailout
With China refusing to buy U.S. soybeans, farmers face their worst season in decades. Prices have cratered, fertilizer costs have soared, and the Wall Street Journal estimates losses of $100 per acre.
President Trump floated a $10 billion bailout funded by tariff revenues, posting on Truth Social that, “the farmers built this country” and will be made whole.
The plan underscores a political truth: tariffs are taxes by another name, and sooner or later, someone has to pay.
Perhaps those farmers will be paid in upcoming coins the U.S. Treasury is designing for America’s 250th anniversary.
Both sides of the coin are set to feature the current POTUS – even though U.S. coinage law only reserves that honor for those who have passed away.
The 1886 law stipulating that only deceased persons could have their portraits appear on U.S. coinage has been deleted from the U.S. Treasury side – showing that shutdown or not, someone in the government is updating websites to downplay inconvenient laws.
The Free Press Goes Prime Time
Here’s some good news: CBS News is expected to name Bari Weiss editor-in-chief today as part of a $150 million deal to acquire her startup, The Free Press.
It’s a stunning generational handshake: a 98-year-old broadcast network buying a four-year-old Substack. Critics call the move political; defenders call it pragmatic.
Weiss built The Free Press as an antidote to legacy bias. You have seen many of their articles published here in the Grey Swan pages. Now she’ll try to reform the legacy itself.
This Wednesday, we’re attending an event she’s hosting on Capitol Hill (at an as-yet-undisclosed location): a conversation with Anduril founder and visionary Palmer Luckey on technology and defense — a collision of media, power, and the future.
Somewhere between those signals lies the truth: the system is still running, but the engine knocks. How much viscosity is left in its lubricant is anyone’s guess…
~Addison
P.S.: Grey Swan Live! continues Thursday at 2 PM ET.
This week’s guest? You’re gonna love him. He’s a tech expert who has been keeping an eye on trends like AI and quantum computing for decades – and is now seeing many of his forecasts from the 1980s and 1990s come to fruition.
We’re looking forward to picking his brain on the opportunities in AI today – and an eye on how much further the AI bubble can blow – and which tech niches can allow investors to safely navigate today’s high-priced markets.
Who do you think it is? Send your guess to Feedback@GreySwanFraternity.
We’ll send one final hint this afternoon, with the big reveal tomorrow. But don’t wait to sign up and become a member – it just takes a few minutes.
If you have any questions for us about the market, send them our way now to: Feedback@GreySwanFraternity.
