The Incredible Shrinking Dollar
Addison Wiggin / June 4, 2025
In the forex market, most moves are measured in pips – a mere 1/100th of 1%.
So even a 1% move is big and notable. Currency traders on the right side of a 1% move can make their trading year.
That brings us to the return of the U.S. dollar – which still manages to pass itself off as the world’s reserve currency.
Year to date, the buck is down nearly 9%:
That’s the kind of move that you might see out of an emerging market currency over six months. But not a developed nation. And certainly not one that dominates global trade.
The drop in the dollar reflects several factors. There’s rising uncertainty over trade and taxes. And there are concerns over the unsustainable path of the U.S. government’s budget.
With the dollar in a downtrend, if you’re an American just buying American goods, it’s no biggie. If you’re exporting internationally, a weaker dollar is great. But if you’re buying foreign imports, it means higher prices – with or without tariffs.
The speed of this dollar decline suggests that something is broken in financial markets. And we may know soon enough what that is.
~ Addison
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P.S. With the dollar heading down, other currencies should have a tailwind and can trend higher. That includes foreign currencies, as well as non-fiat alternatives such as gold and bitcoin. With the dollar weakening on top of everything else, we see the potential for gold prices to soar far higher over the next 18 months.
That’s part of the conversation we’ll have on Grey Swan Live! tomorrow with Frank Holmes, CEO of USGlobal Funds – whose background is extensive in the hard asset space, from gold to the digital realm with bitcoin mining. We’ll also be looking under the hood of two intriguing ETFs he launched – JETS and WAR. It’ll be worth your time to tune in and hear Frank’s perspective.
As always, your reader feedback is welcome: feedback@greyswanfraternity.