The Great Debasement: Why Gold is up 65% This Year

Gold and silver are hitting all-time highs, bitcoin is an a slight surge, and Jerome Powell, Federal Reserve Chair, hinted that money printing could be on the way. What we’re seeing in the markets is called the debasement trade.

The term debasement means to reduce the quality or value of something. Historically, rulers mixed precious metals with a less valuable metal to create more money to fund wars and building projects without raising taxes. Now, debasement is when the Fed prints money, flooding the markets with more capital to ignite growth in the economy. This inflation of the money supply ends up reducing the buying power of our dollars.

The debasement trade is an investment strategy where investors get rid of their fiat currencies and government debt to buy hard assets such as precious metals and cryptocurrencies. These are periodically preferred over cash because they’re limited in quantity. Metals aren’t being made and there’s a finite amount of crypto produced, but cash can always be printed. This is a defensive trade isn’t used to grow wealth, but to protect it. The high spending of the government coupled with high government debt creates pressure to print more money so the government doesn’t default on its debts. This leads to a “hidden tax” as our money loses buying power.

For reference, the average annual inflation rate over the past 60 years is 3.75%. That means the price of goods doubles every 19 years.

Since January 1st, Gold is up approx. 65%, silver is up 58%. Both has surpassed the S&P 500 which is up only 14.55% on the year.

Bitcoin is up 20.17% over the same period. Though it does meet the criteria of having a finite supply, this currency doesn’t have the same properties as the other “stores of value” we discussed. Bitcoin is an asset with high volatility. When people hedge their investments against inflation, volatility is typically avoided. Bitcoin’s 20% increase on the year compared to the 65% and 58% increase in gold and silver, respectively, makes sense for that reason. Also, we don’t have a long history to lean on that shows bitcoin as a safe hedge against inflation. Bitcoin started in 2009 and didn’t become popular until 2017.

For those looking to protect their cash, GLD -3.64%↓ and SLV -14.10%↓ are great options to gain exposure to hard metals without trading futures. These ETF’s are ran buy iShares, regarded as one of the best and larges ETF (exchange traded fund) providers in the world.

Notice the debasement trade doesn’t include selling stocks. Smart investors know selling stocks when there is a downtrend in the market is a wealth killer. If you’re thinking about selling stocks, here’s an article about how to know when is the right time to sell stocks.

Note: as of the date of this article, 10/21/25, both GLD -3.64%↓ and SLV -14.10%↓ are down from their all-time highs.