Going For Gold: The Deliberate Dollar Collapse
Hedge funds loaded up on gold in early 2025. Liberation Day crashed markets in April. Gold hit $4,000 in October. The timing wasn’t luck.
Grüezi!
Grüezi!
1. What Everyone Missed
From Trump’s January 2025 inauguration through early April, financial commentators dismissed his tariff regime as economic vaudeville. Markets churned.
Those who wrote it off as chaos missed the pattern. Those who engaged with the economics and found it maddeningly incoherent and stopped looking.
As regular readers will recall, five months before Trump’s inauguration, Stephen Miran had published “A User’s Guide to Restructuring the Global Trading System.”
Then a hedge fund strategist at Hudson Bay Capital, now chairman of the Council of Economic Advisers, Miran had spelled out how to crash the dollar through coordinated tariff warfare.
April 2025’s “Liberation Day” executed Miran’s “cunning plan” with almost comedic incompetence. The S&P 500 plunged 5%, the Nasdaq 6%. Global equity markets lost trillions. Trump announced a 90-day pause.
But Treasury Secretary Scott Bessent keeps following Miran’s playbook.
The thesis is simple. America’s persistent trade deficits stem from structural dollar overvaluation driven by foreign central bank demand for Treasury securities as reserve assets.
The remedy requires coordinated dollar devaluation – a “Mar-a-Lago Accord” – modelled on the 1985 Plaza Accord, where the US pressured Japan and Germany to appreciate their currencies.
ING’s currency strategy team spotted the sequencing: “Tariffs and threats of security re-alignment need to come in before the currency accord – the leverage needs to be acquired first.”
The operational order:
Impose aggressive tariffs to inflict economic pain
Sort countries into “green, yellow, or red buckets” based on compliance
Convene multilateral negotiations where allies accept a weak dollar in exchange for continued security guarantees
If multilateral cooperation failed? Miran detailed unilateral options using the International Emergency Economic Powers Act – the same 1977 authority Trump invoked on Liberation Day to bypass Congressional approval.
Whether this framework actually drives policy remains contested. Miran denied it publicly in March 2025. But the uncanny alignment between his November 2024 blueprint and the subsequent execution raises eyebrows, if not questions.
2. Follow the Money – Or Try To
January 2025: Trump announces tariffs on steel, aluminium, and automobiles. The dollar begins weakening against major currencies – contradicting conventional economic wisdom that tariffs strengthen currencies by reducing imports.
March 2025: The average US tariff rate reaches 12%, the highest since the Second World War era.
April 2025: Liberation Day. Trump announces a base 10% tariff on all imports, with country-specific rates reaching 34% for China (later raised significantly), 46% for Vietnam, 32% for Taiwan, 20% for the European Union. Hours later, Trump announces a 90-day pause.
September 2025: Monthly tariff revenue hits $30 billion – the largest single-month figure since 1993, extracted entirely through executive emergency powers.
The dollar’s 11% drop in the first half of 2025 is its worst six-month performance in over half a century.
Gold breached $4,000 per troy ounce on 7 October 2025 – up 54% since Miran published his framework. Conventional monetary theory says gold rises when real interest rates fall. But US 10-year Treasury Inflation-Protected Securities yields rose during this period.
That same day, Goldman Sachs raised its December 2026 gold forecast to $4,900 and Ken Griffin, the Trump-supporting founder of Citadel, appeared on Bloomberg to warn that investors were “de-dollarising” portfolios in response to “US sovereign risk.”
The real gold buying has been happening for years, and it’s been central banks doing it. China added 39 tonnes between November 2024 and September 2025, continuing an 11-month consecutive buying streak. Poland bought 67 tonnes through August 2025.
This is structural, not tactical. When Poland’s central bank governor says gold is “free from credit risk and cannot be devalued by any country’s economic policy,” he is articulating concerns about dollar stability that predate Trump’s tariffs. Central banks have been diversifying their reserves for over a decade.
Some Western fund managers recognised the same trend. Toronto-based Waratah Capital allocated 15-20% to gold – triple the industry average. In May 2025, co-founder Brad Dunkley told Bloomberg that “we now live in a world that is losing faith in the US dollar.”
What we have instead is a suspicious pattern. But pattern-matching isn’t proof. And without evidence of early positioning, we can’t distinguish between three possibilities: bets placed on a publicly available framework, inside information from administration contacts, or … pure coincidence.
3. The Constitutional Sleight of Hand
Tariffs are taxes. Americans pay higher prices; Treasury collects revenue. Trump’s tariffs should raise over $170 billion annually – the largest US tax increase since the early 90s.
And Congress never voted on it.
Trump invoked emergency powers under the 1977 International Emergency Economic Powers Act, declaring the trade deficit a “national security threat.” The Constitution grants taxing authority to Congress. Trump bypassed committee hearings, floor debates, and recorded votes.
Courts ruled twice in 2025 that the tariffs exceeded presidential authority – but allowed them to continue as the case proceeds to probable Supreme Court review. Even if courts eventually strike them down, Treasury has already collected six months of revenue.
The president declared an economic emergency, imposed the largest tax increase in 32 years, and collected billions before any judicial intervention could conclude. The next president – regardless of party – now has a route to circumvent Congress on taxation.
4. The Wizard Behind the Curtain
At first glance the Liberation Day crash looks like pure incompetence. Strategic masterminds don’t trigger the worst single-day market crash in five years and then scramble.
White House Press Secretary Karoline Leavitt called tariff pause rumours “fake news” hours before Trump’s announcement. That looks like panic. “Trump Always Chickens Out” became a popular refrain.
But Scott Bessent has been quietly getting on with things.
In May 2025, Britain became the first country to receive preferential treatment under Bessent’s “green, yellow, red bucket” framework. The UK got a 10% baseline tariff – half the 20% EU rate, and well below Japan’s 24% or Switzerland’s 31%.
In exchange, Britain agreed to “coordinate to address non-market policies of third countries” – diplomatic language for China containment – and to “cooperate on the effective use of investment security measures, export controls, and ICT vendor security.” In exchange? Lower tariffs, protection from future levies on pharmaceuticals and semiconductors, and a 100,000-vehicle quota at preferential rates.
This is the “buckets” framework. Countries that accept American security demands, buy LNG, and roll back tech and climate regulations get the best treatment. Those that refuse? More pressure.
Bessent represented the US in the May negotiations in Geneva, engineering a temporary de-escalation that brought Chinese tariffs from 125% to 10% and American tariffs from 145% to 30%. His system? Countries that fail to negotiate “in good faith” receive a letter from Treasury setting their final tariff rate – no further discussion.
“If you do not negotiate in good faith, you will ratchet back up,” Bessent said on CNN in May. By June, there were active negotiations with 18 priority trading partners representing over 90% of America’s trade deficit.
Bessent publicly identified Japan as receiving “priority just because they came forward very quickly” whilst noting the country’s critical military and economic ties – exactly the security-trade linkage Miran’s framework prescribes.
In 1992, a young Bessent helped George Soros humble the Bank of England, forcing Britain out of the European Exchange Rate Mechanism and netting over $1 billion. In March 2025, Bessent told the Economic Club of New York: “I know a few things about currency devaluations.”
When Tucker Carlson asked him why gold prices were surging, Bessent replied: “There was a big move out of vaults in Switzerland and London to get it into New York. Gold has always been a store of value. We’re seeing huge demand from China.”
Bessent had exempted gold from tariffs. Why facilitate gold flows to US vaults whilst simultaneously devaluing the dollar?
When pressed about the whiplash and uncertainty unleashed, Bessent trotted out what might be the operational doctrine: “If we were to give too much certainty to the other countries, then they would play us in the negotiations.”
Two things can be true simultaneously. Trump genuinely believes tariffs will restore manufacturing jobs. Bessent understands that they’re leverage for currency realignment. Different people can support the same policy for entirely incompatible reasons. Either way: consistent dollar devaluation.
The chaos helps everyone. If it works, Trump claims vindication. If it fails, he blames foreigners and hostile media. His options stay open.
This division of labour – Trump as the political battering ram, Bessent as the systematic negotiator – explains the bizarre competent-strategy-incompetent-execution pattern. Neither needs to fully grasp the other’s motivations for the combined effect to align with Miran’s framework.
5. The Economic Critique
Not everyone missed Miran’s framework. Some understood it perfectly and concluded that it was simple-minded rubbish.
In March 2025, the Financial Times’ Martin Wolf engaged directly with Miran’s argument and Bessent’s reserve currency concerns. His verdict? “Irrelevant and incoherent.”
Yes, foreign demand for dollar reserves contributes to current account deficits. But foreigners could substitute other assets for Treasury holdings. Reserve accumulation jumped between 1999 and 2014 but has since plateaued. The Eurozone – one of Trump’s primary targets – increased reserves by a mere $72 billion over 25 years.
More fundamental forces drive America’s deficits: savings and investment imbalances. Countries with high savings rates – China, Germany, Japan – run surpluses and have large manufacturing sectors. The US saves less, invests more, runs deficits, and has a smaller manufacturing base. This isn’t about reserve currency privilege.
Wolf’s harsh arithmetic? Eliminating the US current account deficit without sacrificing investment requires raising the savings rate by at least 3% of GDP – roughly $850 billion annually, close to half the fiscal deficit. An across-the-board 50% tariff could generate such revenue whilst improving terms of trade. But Trump shows “incurable disinterest” in policy. Miran’s proposals are “half-baked.” Manufacturing employment will decline regardless due to rising productivity – “manufacturing is going the way of farming.”
Wolf is probably entirely correct about the economics, but he misses the operational reality. Bessent isn’t pursuing an economically optimal policy. Tariffs are simply strong-arming and currency pressure. The UK deal, the China negotiations, the bucket framework – these follow Miran’s directions regardless of whether the underlying analysis holds.
Markets reward execution, not theoretical validity. If Bessent systematically delivers an economically incoherent framework, institutional positioning would bet on the delivery rather than the theory. Gold positioning doesn’t require believing Miran’s arguments – just recognising that Treasury would pursue policies creating dollar weakness and geopolitical uncertainty.
This distinction matters enormously. Wolf engaged with the economics. Anyone tracking the operational reality engaged with the plan.
6. What the Evidence Shows – and Doesn’t
Who attended the Treasury meetings where Bessent discussed tariff strategy? No one knows. Freedom of Information requests take months and when they do come back they’re redacted.
Does Miran’s framework actively drive policy, or does policy just happen to match it? Can’t prove it either way.
The available evidence? Miran’s guide. Policy that seems to follow its sequencing. Central banks accelerating a decade-long shift away from dollar reserves. Identical terminology in official statements. $170+ billion in taxes imposed without Congressional vote. The UK deal.
The missing evidence? Paper trails connecting specific actors to specific decisions. Documentary proof of coordination between Miran’s framework and policy implementation. Institutional positioning data showing prescient moves based on the framework.
Three indicators deserve attention over the next six months:
First, subsequent deals should reveal whether the UK pattern holds. If Japan, South Korea, and other treaty allies receive 10-15% baseline tariffs paired with security cooperation whilst ‘neutral’ countries face 20-30%, that looks like bucketing. Random or inconsistent deals would suggest Bessent lacks the ability to work to plan.
Second, watch Treasury’s language on dollar policy. Miran’s framework posits eventual multilateral currency coordination – a “Mar-a-Lago Accord.” If Bessent begins discussing exchange rates with allied finance ministers, or if G7/G20 communiqués start including currency stability language, that signals movement towards the framework’s ultimate objective. His March Economic Club speech spoke of “a grand economic reordering... going back to Bretton Woods” – unusual rhetoric for a Treasury Secretary.
Third, monitor central bank gold accumulation patterns. If Western central banks that secure preferential trade deals simultaneously slow gold purchases – signalling renewed confidence in dollar reserves – whilst countries outside the “green bucket” speed up accumulation, it confirms trade and monetary policy are directly linked. The reverse – continued broad-based accumulation regardless of trade deals – suggests the framework is failing.
7. What This Actually Means
There are three ways to make sense of all this.
Pure Chaos: Trump improvises on protectionist instincts. Policy alignments are a lucky coincidence. Bessent independently adopted “green, yellow, red bucket” language.
Deliberate Strategy: Miran’s framework drives policy despite public disavowals. Bessent negotiates coordinated tariff differentiation based on security cooperation. The UK deal, the China negotiations, the bucket framework – all follow Miran’s directions. The Liberation Day crash was just a blip.
Competent Strategy, Incompetent Execution: The administration is pursuing a coherent currency devaluation strategy with such poor implementation that the intended outcomes are fogged in chaos.
For investors and business leaders, the distinction matters less than the trajectory. Whether by design or accident, the dollar is weakening. Gold has shifted from portfolio insurance to core holding. Supply chain resilience requires planning for persistent tariff regimes. Currency hedging becomes essential for international exposure.
And here’s what matters most: if some version of the Mar-a-Lago Accord actually materialises – if major trading partners eventually accept coordinated currency realignment rather than endure escalating tariff warfare – then Bessent will have pulled off one of the most audacious economic plays since Nixon closed the gold window.
Whether anyone positioned ahead of it remains unknowable. But central banks have been preparing for dollar instability for over a decade. They didn’t need Miran’s framework to recognise the structural vulnerability. They just needed to read the deficit figures.
Martin Wolf is probably right about the economics. The framework misdiagnoses the problem, proposes incoherent solutions, and can’t reverse structural manufacturing decline.
But Bessent is carrying on, regardless of whether the underlying theory holds.
Whether he’s following Miran’s masterplan or simply pursuing the same worldview that generated it may be unknowable. The operational reality is the same either way.
Thanks for reading!
Best
Adrian
I had dinner in Beijing with Wolf shortly after the debate over Miran and the Mar-a-Lago Accord. Haven’t thought much about it since but this was terrific and quite compelling analysis Adrian. Thanks!