The US dollar has lost more than 10% of its value in 2025 as an economist warns precious metals prices are sending a major warning on the global financial order.
The US Dollar Index (DXY) has lost 10.41% of its value since the start of 2025, meaning the world’s reserve currency has heavily depreciated against a basket of major foreign currencies like the euro, yen and pound.
The dollar decline has happened as precious metals like gold and silver witness historic breakouts, with gold rising 65.32% to $4,331 per ounce and silver rising 147.97% to $72 per ounce.
In a new op-ed in The Free Press, Economist Tyler Cowen says the dramatic surge in precious metal prices represents a “flash warning for the economy.”
“The rush for precious metals should worry us all. It reflects a new and possibly disastrous danger on the horizon…
The economy is becoming more correlated. Translated to everyday English, that means we have fewer sources of financial protection if matters, either economically or politically, were to go very badly. And so precious metals are stepping into the hedge and protective roles that were once fulfilled by the US dollar.”
Cowen says US policies and leaders are increasingly being seen as unpredictable sources of chaos, eroding confidence in the dollar’s historically protective role in the economy.
“It used to be that if you were worried about the future, you would move into dollars as the safe haven—in finance terms a countercyclical asset, which stays resilient when higher-risk assets fall.
But if the United States’ own government and policies are unpredictable, and its economy is volatile, you will look for some other hedges instead. Chaos in the U.S., and particularly in the White House, is pushing investors to find alternatives to the dollar.”
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