This is Wall Street's hottest trade right now amid inflation fears
If there's a phrase of the day on Wall Street right now, it's "debasement," says Sarah Beaton, director of investment strategy at Madera Wealth Management.
"Everyone's talking about it," she told Business Insider. "That's the boogeyman right now."
So, what is it?
Essentially, investors are worried about the debasement of fiat currencies and sovereign debt assets as government spending and debt levels continue to rise. In simpler terms, they're concerned that the value of money and bonds will be inflated away.
To deal with this threat, investors are increasingly piling into what's being called the debasement trade — taking long positions in gold, silver, and bitcoin. All three of the assets have surged more than 60% in 2025, crushing the stock market.
Here's what to know about the buzziest trade on Wall Street.
Why now?
Think about the collective investor as your nutty uncle who's been getting really into doomsday prepping lately. The gist of the debasement trade is to hedge portfolios against the devaluation of other investments.
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There are valid warning signs that debasement is underway. The US government deficit is set to balloon further as tax cut extensions take hold in 2026. Debt, which is inherently inflationary, is mounting, and the government has piled up $38 trillion of it as of this month, according to data from the Treasury Department.
The Federal Reserve, meanwhile, is slashing interest rates, adding fuel to the economy by making borrowing cheaper. Higher tariffs threaten to leak into consumer prices.
But one could also argue that the apocalypse isn't as close as some would have you believe, and that worries about debasement aren't all that severe yet. After all, long-term inflation expectations are still muted, the dollar's value hasn't declined all that much in recent months, and long-term interest rates are still below 5%.
Can the trade keep going?
It depends on who you ask, but some think yes, the rallies in precious metals and bitcoin can continue.
"We believe lower US real interest rates, further USD weakness, and ongoing political twists will drive prices higher," said Wayne Gordon, a strategist at UBS, in an October 3 client note.
Ben McMillan, the CIO at IDX Advisors, said that gold and bitcoin should also benefit from governments buying them up.
Gold is "going into vaults in China, India, Russia, and everywhere else, and it's out of circulation. It's not unlike bitcoin being burned, frankly. And that's because people are worried about the beginning of the end of dollar hegemony," he said. "Bitcoin is just a digital version of that trade."
Others are skeptical. David Kelly, the chief global strategist at JPMorgan Asset Management, thinks bitcoin is a fraudulent asset with no value, for instance, and that gold has a poor track record.
"It does have a standing as a central bank reserve currency. It also has industrial and jewelry uses, so it's not just pure ether like cryptocurrencies," Kelly said. "But it doesn't pay any dividends, doesn't generate income, and hasn't proved to grow wealth over time."
He continued: "Since 1980, gold has basically, through a lot of zigs and zags, just kept pace with inflation. People talk about long-term assets being 'as good as gold' — I can't think of any long-term asset that's been as bad as gold."
Are gold, bitcoin, and silver the right way to hedge debasement?
Some market pros have called into question investing in assets like gold and bitcoin as a play on the debasement trade.
Kelly said that a better way to play a falling dollar is to be in UK and European equities and currencies.
"I'm not a fan of gold. But if I want to make a bet that the dollar is going to come down — and I do — you could bet on gold, but I'd rather bet on foreign developed country currencies, particularly the euro, but also sterling and the Swiss franc," he said.
Beaton, the director of investment strategy at Madera Wealth Management, said that she also thinks international stocks are a better way to go, along with Treasury inflation-protected securities and real estate.
"Personally, gold is not how I prefer to get inflation protection," she said. "I think there are better ways to protect yourself from dollar devaluation — international investing is one of them."
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