Market: What is the ‘Debasement Trade’, the Bet Against the Loss of Value of Major Currencies (Like the Dollar), and Why is it Talked About So Much? – Jewelry and Gem

Editor’s Note

This article examines the recent surge in precious metal prices, questioning whether it signals a genuine loss of confidence in major currencies or reflects market hype. It introduces the concept of speculative trades, like the “TACO trade,” to illustrate how political narratives can influence investment trends.

Le debasement trade anticipe la perte de valeur des grandes devises

The Soaring Prices of Precious Metals as a Symptom

The surge in precious metal prices has apparently triggered a return of this form of investment that anticipates the loss of value of major currencies, particularly the dollar. But is this phenomenon not exaggerated?
The stock market is full of sometimes somewhat cryptic expressions. As an example, take the famous “TACO trade”, the acronym TACO referring to “Trump always chickens out”, or “Trump always ends up backing down”. In short, it involves anticipating the idea that in the end, behind the US president’s fierce threats, a negotiated solution always emerges.
In recent months, one expression has persistently returned: the “debasement trade”. This term refers to market bets around the loss of value of major currencies. Rather than investing in securities denominated in these currencies, operators focus on “tangible” assets, like commodities.

“In other words, it is a flight to real assets – gold, silver, commodities, real estate, even cryptocurrencies (more so in recent days) – as fiat currencies lose their purchasing power,” explained John Plassard, investment advisor at Cité Gestion, in a note in October.

“When states finance their deficits through debt, and central banks artificially support rates, the currency itself becomes an adjustment variable. It is in these moments that investors seek ‘non-dilutable’ assets, capable of preserving their intrinsic value,” he elaborated.

“If we look at history, in the past to make a currency lose value, they would dilute silver with copper or with other metals less precious than silver,” explained Maud Reinalter, Chief Investment Officer at Belfius Asset Management, on BFM Business on January 30.

“Today, this reflects the fear that the currency one holds in a portfolio will lose value relative to other currencies. This is very important for investors seeking to ‘hedge’ or protect a part of their portfolios,” she added.

Historically, this phenomenon has already occurred several times, notably in the 70s. In 1971, US President Nixon declared the end of the gold standard, i.e., the convertibility of the dollar into a certain amount of gold. The Kingston Agreements in 1976 then sealed the end of the gold standard worldwide.

“The abandonment of the gold standard led to a rush towards precious metals, then seen as the only guarantors of stable value,” recalls John Plassard.

The market specialist points out that other episodes of this kind occurred in 2008 and then 2020, each time when monetary and fiscal policies were ultra-accommodative, leading to significant money creation.
This expression has come back into fashion for about five to six months. The sharp rise in silver and gold, which gained 148% and 65% respectively in 2025, and 19% and 13% in January, has been interpreted by several market experts as a signal showing a “debasement trade” around the dollar and dollar-denominated assets.

The Yen Also Affected

This interpretation is notably that of Swissquote, which sees it as “the strong return of the ‘debasement trade'”.

“States finance their spending through debt, which central banks end up indirectly absorbing. Result: the money supply increases, purchasing power is diluted, and confidence erodes,” writes the financial intermediary.

In October, John Plassard noted that US public debt had reached “historic highs while European deficits are bogged down”. As for central banks, if their rhetoric proves restrictive, in reality real interest rates “struggle to become positive again,” wrote John Plassard.

“Investors, aware of this contradiction, seek to protect themselves against a slow systemic devaluation with ever-present inflation (with real interest rates struggling to become positive again),” emphasized the investment advisor.

“The simultaneous rush towards gold, stocks, and even cryptocurrencies can be considered in the context of the ‘debasement trade’. Investors fear that the massive borrowing and significant deficits of major governments will ultimately erode the value of fiat currency,” explained Allianz in October.

“Rather than holding cash or low-yield bonds, which could be devalued by inflation, they invest in assets with limited supply, such as precious metals, stocks, and bitcoin,” continued the insurer.

Barclays for its part noted at the end of January that the “debasement trade” had “hit” the dollar and Japanese bonds,

whose yields have recently soared,

particularly with the massive fiscal stimulus plan of Japanese Prime Minister Sanae Takaichi.

Deutsche Bank Cautious on the Phenomenon

If this “debasement trade” therefore seems palpable, does it reflect a genuine loss of confidence in currencies? And is its importance not exaggerated?
While some analysts therefore clearly see the existence of this market phenomenon, others are a bit more cautious.

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⏰ Published on: February 07, 2026

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