TLDR:
- Dollar index plunged from 110 to mid-90s as Trump administration pursues deliberate devaluation strategy
- U.S. national debt exceeded $38 trillion in late 2025, accumulating over $6 billion in new debt daily
- Central banks purchased more gold than U.S. Treasuries for first time in 50 years, shifting reserves
- Gold surged 100% in twelve months, rising from $4,500 to above $5,500 amid loss of fiat confidence
The dollar index has collapsed from 110 to the mid-90s, marking a four-year low as gold prices breach $5,500 per ounce.
Crypto analyst Lark Davis warns this represents a deliberate policy shift rather than market volatility. The monetary reset, long discussed in financial circles, appears to be unfolding in real time as central banks worldwide diversify away from dollar-denominated assets.
Debt Crisis Drives Currency Devaluation Strategy
U.S. national debt surpassed $38 trillion in late 2025, adding over $2 trillion within twelve months. The country now accumulates debt at a rate exceeding $6 billion daily.
This massive debt burden has forced policymakers to consider unconventional solutions, including proposals for 100-year bonds and Bitcoin-linked instruments.
President Trump’s approach centers on engineering a weaker dollar to manage refinancing costs. Approximately $10 trillion of U.S. debt issued at near-zero rates will mature within the next year.
These obligations must be refinanced at current rates around 3.5%, creating enormous pressure on federal budgets.
The administration has nominated Kevin Warsh to replace Jerome Powell as Fed chair when his term concludes in May 2026. Warsh, who served as a Fed governor from 2006 to 2011, is expected to implement more aggressive rate cuts. Markets currently anticipate two rate reductions in 2026, though more substantial cuts may follow.
Net interest payments on federal debt now exceed defense spending, according to Goldman Sachs projections. The investment bank estimates debt could surpass $40 trillion this decade from refinancing costs alone.
Lower interest rates would significantly reduce these payments, providing temporary fiscal relief while potentially stoking inflation.
Central Banks Abandon Treasuries for Physical Gold
Central banks have shifted their reserve strategies for the first time in decades, purchasing more gold than U.S. Treasuries.
Gold established 53 new all-time highs throughout 2025, ending the year around $4,500 before jumping above $5,500 in early 2026. This represents a 100% gain over twelve months.
China has reduced its Treasury holdings while accumulating gold reserves. Japan has similarly decreased exposure to dollar-denominated assets.
Even stablecoin companies like Tether have become significant gold holders, diversifying beyond short-term Treasuries.
Davis notes that stablecoin growth creates unexpected demand for U.S. government debt. Companies backing digital tokens with dollars must hold Treasury securities, partially offsetting foreign central banks’ selling.
As stablecoin market capitalization expands into the trillions, this demand could extend dollar dominance despite geopolitical shifts.
The analyst warns that CBDCs represent the next phase of monetary control. European jurisdictions are advancing programmable money systems with geographic and temporal restrictions.
Combined with AI-driven unemployment and recurring financial crises, these digital currencies could enable unprecedented monetary oversight.
