Why market wall of worry, debasement trade are boosting gold, crypto

Gold and bitcoin have traded to record highs as investors look for protection in what’s typically a volatile October for the market.

Rising inflation and debt, a weakening U.S. dollar, the government shutdown, and Wall Street’s newest buzz, the “debasement trade,” have all boosted assets beyond stocks and bonds.

“This whole debasement trade is benefiting gold,” Amplify ETFs CEO Christian Magoon said on CNBC’s “ETF Edge” this week.

The Federal Reserve’s battle with inflation and the mounting national debt have heightened investor concern about long-term currency stability. As of early October, the U.S. gross federal debt stands at around $3.7 trillion, according to Fiscal Data from the Treasury. The U.S. dollar index (DXY) has declined roughly 8% since the beginning of the year.

Both gold and bitcoin are being treated as safe havens in a market shaped by inflation and policy risk. Gold first surged past $4,000 Tuesday, hitting an all-time high. The precious metal continues to rally as uncertainty fuels it. Bitcoin joined gold in the debasement trade as a digital alternative to traditional currencies. The cryptocurrency broke a little over $126,000 early this week, setting a new all-time high.

The so-called “debasement trade” is a bet that government borrowing and money printing will erode the value of the U.S. dollar, and is leading more investors to flock to safe-haven assets. 

“Inflation is substantially above target and substantially above target in all forecasts for next year. It’s part of the reason the dollar’s depreciated,” Citadel’s CEO Ken Griffin told Bloomberg Monday. “Gold is at record highs and the appreciation on other dollar substitutes … in items like crypto, for example, is unbelievable.”

The move has not come out of nowhere for gold. It has now bested the performance of all major U.S. equity market indexes year-to-date, and over the past one-year and three-year periods.

Gold continues to attract steady inflows, while silver has gained around 66% since the beginning of the year, with the precious metal surging to $50, an all-time high on Thursday.

“We see silver going from the high 40s to into the 60s over the next 12 months,” Magoon said on “ETF Edge.”

“We’re in the sixth year of limited supply and silver in the trends, from an industrial standpoint, are only getting more bullish for silver,” he added.

October is historically the most volatile month of the year on Wall Street, and Jay Jacobs, BlackRock‘s head of equity ETFs, says he’s seeing many clients reposition their portfolios, shifting into global monetary alternatives. Jacobs told CNBC’s “ETF Edge” this week some traders are seeking non-sovereign assets that behave differently than stocks and bonds, including gold, silver and cryptocurrencies. “People are looking for assets that live outside of the traditional system. That can be a bit of a portfolio,” Jacobs said.

Jacobs said SPDR Gold Trust (GLD) and iShares Gold Trust (IAU) remain heavyweight options for gold exposure. Meanwhile, iShares Silver Trust (SLV) is a go-to for silver, and iShares Bitcoin Trust (IBIT) is seeing interest from those who want regular exposure.

The bitcoin ETF has recently also been besting the biggest U.S. equity ETFs in weekly flows.

Billionaire hedge fund manager Paul Tudor Jones told CNBC’s “Squawk Box” on Monday he would own a combination of gold, cryptocurrencies and Nasdaq tech stocks between now and the end of the year, to take advantage of the rally fueled by the “fear of missing out.” 

Jones shot to fame after he predicted and profited from the 1987 stock market crash.

“Bear markets are tough,” Magoon said. “This is a way to hide out or profit during times of uncertainty,” Magoon said.

But he also added that “often times, bull markets crawl up a ‘wall of worry’. It seems like one of these ‘wall of worries’, that’s going to dissipate, and we’re going to have, I think a good fourth quarter.”

Stocks turned sharply lower on Friday as a new risk presented itself amid the rising tensions between the U.S. and China over rare earth elements, with President Trump threatening “massive” new tariffs.

Jacobs said earlier this week on “ETF Edge” that there is strong momentum going forward and heading into 2026, including enthusiasm around corporate earnings, and optimism surrounding potential rate cuts by the Federal Reserve.

According to Fed minutes released Wednesday, policy makers were nearly unanimous that the central bank should cut interest rates, due to weakness in the labor market, but they disagreed over whether there should be two or three total cuts this year, including the quarter percentage point reduction approved at last month’s meeting.

Jacobs said there are reasons for the hot trades beyond stocks and bonds to continue. “If we continue to see geopolitical uncertainty, continue to see inflation uncertainty, people are looking for assets that live outside of the traditional system,” he said.

 Watch the full ETF Edge episode for more on how investors are using ETFs to manage market volatility.