Dollar Weakness, Bitcoin Risk, and the Gold Signal Markets Are Screaming About

The U.S. dollar has been sliding even as political leaders continue to insist the economy is “strong.” For critics of current monetary policy, this divergence is not a coincidence – it is a warning.

Veteran investor and long-time gold advocate Peter Schiff argues that what markets are experiencing today is not a temporary distortion, but evidence of something fundamentally breaking beneath the surface. In his view, the relentless surge in gold prices, with new highs being set repeatedly, is not speculative excess. It is a reaction to a loss of confidence in U.S. monetary discipline.

Gold has historically acted as a referendum on central bank credibility. When faith in paper money weakens, gold tends to respond first. Schiff has repeatedly pointed to remarks by former Fed Chair Alan Greenspan, who once described gold as the ultimate measure of whether monetary policy is on the right path. By that standard, today’s market signals are deeply troubling.

Dollar Decline and the Policy Contradiction

Despite repeated claims from policymakers that the economy is on a “good trajectory,” the dollar tells a different story. Schiff argues that a weakening currency undermines any attempt to declare victory over inflation. If the dollar continues to fall, import prices rise, purchasing power erodes, and inflation becomes structurally harder to contain.

This contradiction was put into sharp focus after recent comments from Jerome Powell, who declined to address concerns about the dollar’s decline, stating that the Federal Reserve does not comment on currency strength. For critics, this response is alarming. Monetary policy and currency stability are inseparable. Ignoring the dollar while targeting inflation, Schiff argues, amounts to abandoning the Fed’s own mandate.

At the political level, Schiff sees additional pressure coming from fiscal policy. While Treasury Secretary Scott Bessent has spoken about a commitment to a strong dollar, Schiff argues that the broader agenda under Donald Trump points in the opposite direction. Massive deficits, rising debt issuance, and pressure for lower interest rates all work against currency strength. The belief that rate cuts automatically support the dollar, Schiff says, is a dangerous misconception.

Bitcoin Faces a Different Kind of Stress Test

Schiff is equally critical of Bitcoin’s role in the current environment. While Bitcoin has often been promoted as “digital gold,” he argues that the comparison breaks down during periods of systemic stress. In his view, Bitcoin has already absorbed the bulk of speculative inflows willing to take that risk. The idea that a collapsing dollar will drive fresh waves of capital from gold into Bitcoin, he says, has not been supported by market behavior.

If investors truly believed Bitcoin was the ultimate hedge, Schiff argues, that rotation would have already happened. Instead, gold continues to attract capital while Bitcoin remains vulnerable to broader market sell-offs. In a scenario where bond markets destabilize and risk assets unwind, Schiff warns that Bitcoin could suffer alongside equities rather than act as a refuge.

A Structural Shift Away From the Dollar

Perhaps the most consequential development, according to Schiff, is happening outside U.S. borders. Central banks around the world are steadily reducing dollar exposure and increasing gold reserves. This is not a short-term trade but a strategic reallocation. The global financial system, Schiff argues, is slowly moving away from a dollar-centric model.

In that context, gold’s rise is not a bubble but a recalibration. Schiff believes the dollar’s decline could persist for many years, potentially more than a decade, setting new lows as confidence erodes further. If bond markets eventually crack under the weight of debt and rising yields, he warns, policymakers may find that the window to act has already closed.



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