Debasement trade returns as gold, silver and bitcoin rally on surging global bond yields 

Debasement trade explained

Wall Street's term nods to rulers such as Henry VIII, who diluted gold and silver coins with cheaper metals to fund state spending. Its modern equivalent describes investors seeking refuge from the dollar amid concerns that fiscal expansion and monetary accommodation are eroding its value. The trade dominated markets for much of 2025, with gold peaking near $5600/oz in January 2026 before a hawkish Federal Reserve (Fed) pivot dragged prices sharply lower. It is now attempting a second act.

Why it's back: global yields surge to multi-decade highs

The renewed momentum traces to a broad-based bond sell-off. The 30-year US Treasury yield surged above 5.3% last month – its highest level since 2007 – on persistent inflation concerns, ballooning government debt and competition from a wave of corporate AI-related bond issuance crowding out demand for Treasuries. The move was not confined to the US: Japan's 30-year yield hit a record high, France's 30-year touched a post-2008 peak, and the UK's 30-year gilt reached its highest level since 1998.

US Treasury Secretary Scott Bessent responded by announcing a plan to double the size of the department's long-bond buyback operations to at least $4 billion per operation – a move some investors have interpreted as stealth easing rather than a genuine structural fix. The next operation, the first at the enlarged size, will take place on 9 September.

Global government 30-year bond yields

Winners and losers: fiat currency versus gold, silver and bitcoin

The trade's logic splits assets into two camps. Losing out are assets a government can create at will – fiat currency and the debt issued against it – since their supply reflects policy choice rather than physical constraint. Winning are assets with structurally fixed supply: gold and silver, expandable only through slow, costly mining, and cryptocurrencies such as Bitcoin, whose 21 million-coin cap is fixed by protocol. That scarcity is precisely what investors pay for once the debasement narrative takes hold.

Gold: central-bank buying and ETF inflows align

Gold prices have risen close to 15% to reclaim the $4600 level month-to-date, having plunged 28% from the January peak near $5600. Beyond the recent catalyst of surging global bond yields, central-bank buying rebounded to 289 tonnes in the second quarter (Q2) – the strongest second-quarter total on record, according to World Gold Council data. Investment demand has caught up too: after net redemptions of $4.6 billion in Q2 amid a stronger dollar and elevated rate expectations, gold exchange-traded fund (ETF) flows have turned positive for seven consecutive weeks since 10 July, with last week's $6.4 billion inflow the largest since January, per World Gold Council figures. Both demand legs are now aligned.

Reclaiming the 200-day moving average marks a significant technical breakthrough for gold. Should prices sustain levels above this threshold, it may signal an end to the bearish trend and open the way for a recovery towards the next resistance zone between $4780 and $4880. That said, traders should remain wary of a technical pullback as the relative strength index (RSI) approaches 70 – the overbought threshold. The previous pivot level near $4350 should provide immediate support.

Spot gold daily price chart

Silver: supply deficit and industrial demand underpin the rally

silver has followed a similar path, with prices rebounding 19% month-to-date after a 53% drawdown from the January peak of $121.6. From a physical scarcity perspective, 2026 is on track to be the sixth consecutive year of a supply deficit, with the shortfall projected to widen to 46.3 million ounces, according to the Silver Institute's World Silver Survey 2026. Industrial demand – spanning solar, electric vehicles, data centres and AI-related electronics – accounts for roughly 60% of total consumption. That gives silver a distinct demand driver from gold, even as both benefit from the debasement environment.

Bitcoin: three-month high clouded by CLARITY Act delay

Bitcoin has surged to a three-month high, briefly trading above $80,000, although it remains around 38% below its October peak. The rally has coincided with regulatory progress: the Senate left for its August recess without voting on the CLARITY Act, the digital-asset market structure bill, after Democrats withheld consent over unresolved ethics language. A procedural cloture vote is now scheduled for 15 September.

The more immediate driver was political signalling: President Trump hosted crypto executives at the White House on 19 August and urged Congress to pass 'a fair version' of the bill, coinciding with bitcoin's sharpest two-day rally in months. Bitcoin's correlation with the debasement narrative has also proven inconsistent: in January 2026, when the trade moved into high gear, bitcoin's price fell even as gold and silver rallied.

From a technical perspective, bitcoin's next resistance sits at May's high of $82,528. A decisive break above this level would complete a double-bottom formation traced from the January and July lows, shifting the longer-term trend back to bullish with an upside target near $108,000. That said, the RSI is flashing overbought conditions, raising the risk of a near-term pullback towards 23 August's low around $76,000. A hold above this level would be constructive for the bullish structure to remain intact. A failure to do so, however, would expose the next material support near $69,200, where the 200-day moving average currently sits.

Bitcoin daily price chart

What to watch: Fed Chair Warsh's Jackson Hole keynote

The next test lands this week. The Kansas City Fed's Jackson Hole symposium runs 27 to 29 August, with new Fed Chair Kevin Warsh delivering his first keynote as chair on Friday. Warsh has avoided explicit rate guidance so far, though July's Federal Open Market Committee (FOMC) minutes already showed three dissents favouring tightening. A hawkish tilt, or credible signal of balance-sheet reduction, would undercut the debasement trade's underlying premise.