What is the debasement trade?

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The Debasement Trade: A Narrative
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One of the big themes that has quietly but steadily emerged over the last twelve months is what market watchers have come to call the debasement trade. It didn’t begin with any single dramatic event; rather, it built slowly from ideas that long pre‑dated today’s political headlines. Even before Trump returned to power, one of his advisers had laid out the blueprint in a paper dubbed the “Mar-a-Largo Accord” - a proposal centred around a coordinated dollar devaluation aimed at making the American rust belt competitive again.

The thinking was simple enough. If you weaken the dollar a bit - steadily, gradually - you give U.S. exporters a fighting chance. You also stimulate the broader economy, push growth rates higher, and hopefully improve real wages for ordinary Americans. Trump had, for years, argued that countries like China had been deliberately manipulating their currencies, tilting global trade in their favour. His response, once in office, came in two parts: impose tariffs widely and call out what he labelled “currency manipulation.”

The concern among investors was always about how such moves would unfold. In a coordinated manner, as the Mar-a-Largo concept suggested, they could result in a stable, predictable weakening of the dollar. But done unilaterally, aggressively, or unpredictably, they risked triggering sudden step‑changes - sharp, disorienting devaluations.

Layer onto this the swirl of conspiracy theories that seem to orbit any debate about fiat money. Questions about whether there’s enough gold in Fort Knox, speculation about whether BRICS nations might try to engineer a deliberate de‑dollarisation of their economies, and a philosophical movement that leans heavily toward “fiat money is imaginary.” Some go even further, insisting investors should place their faith only in digital assets like Bitcoin. All of this folds neatly into the broader anxieties driving the debasement narrative.

Markets have already seen flashes of what this looks like. The dollar wobbled around tariff announcements. It wobbled again earlier this year when concerns surfaced about central bank independence - after Trump publicly criticised Powell, subpoenas flew, and questions around corruption and cost overruns made headlines. Central bank independence is one of the key pillars underpinning dollar stability, so the market’s reaction was immediate.

The debasement trade, then, got a kind of “second leg”: first tariffs, then fears about political interference in monetary policy. When Trump nominated Kevin Mulch - a name markets viewed as steady and competent - the dollar bounced back. As Trump himself boasted, he could “make the dollar go up and down like a yo‑yo,” and January and February provided ample proof.

So what do investors buy on the other side of the debasement trade? If you’re worried about treasuries being worth no more than the paper they’re printed on, or if you doubt fiat currency itself, the traditional answer is gold and other precious metals - assets with core value, even if they don’t produce income. Those performed strongly through 2025 and into 2026.

Digital‑asset believers would argue for Bitcoin and crypto, treating them as scarcity tokens. But the evidence is mixed: during risk‑off moments tied to Trump‑Fed tensions, everything fell - equities, crypto, and even gold - leaving investors wondering where safety really lies.

Positioning a portfolio for the debasement trade, the speakers note, requires two things: layering and timing. Layering means spreading exposure across real assets - gold, copper, energy - while pairing them with income‑generative holdings like infrastructure and utilities. Timing means accepting that entry points are hard to get right, especially when volatility is the norm.
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Their message is ultimately one of gradualism: build diversification slowly, stay layered, and recognise that in a world of political noise and currency swings, steadiness may be the most valuable asset of all.