The Currency Crisis No One Wants to Name

Is the American political system capable of handling the coming economic disruption?

The markets are screaming something that Washington refuses to hear: America is sliding into a currency crisis, and the consequences will reshape our politics, our economy, and our place in the world.

I don’t often write about money because it too often sounds alarmist - but all of the bells seem to be going off at the same time and that has made the topic unavoidable. At a minimum we have to look at the changing geo-political order and recognize that there are tectonic plates driven by changing economic assumptions. Precious metal markets are exploding. The dollar is losing value quickly. The stock market is being held up by seven tech companies valued on the promise of what the future may - or may not - bring.

Look at what’s actually happening, not what the talking heads are saying. Gold hit $5,111 per ounce today—more than double what it was just two years ago. Silver just exploded past $108 per ounce—having surged over 200% in the past year alone and shattering records that stood for over four decades. Both metals are moving upwards in price so fast the numbers I’m posting will likely be outdated the second I hit the ‘publish’ button. Rare earth elements are commanding unprecedented premiums. These aren’t random market movements or speculative bubbles. They’re a coordinated flight from paper promises into tangible assets. When the world’s governments, banks and investors simultaneously decide they’d rather hold rocks than dollars, that’s not market volatility—that’s a vote of no confidence.

And this has as much to do with geo-politics as it does with the economy.

The Silver Story: Two Crises in One Metal

Silver’s surge is particularly revealing because it represents both a currency crisis and a structural shortage that our digital transformation has created. Unlike gold, which sits in vaults and serves primarily as a monetary hedge, silver is being consumed at unprecedented rates by the very technologies that define modernity.

Every iPhone contains a fraction of an ounce of silver in its circuitry. Every electric vehicle uses between 25 to 50 grams of silver in its electrical systems, motors, and battery connections. Every data center—and we’re building them at breakneck speed to support AI and cloud computing—requires massive amounts of silver for its server infrastructure and cooling systems. Solar panels, which governments worldwide are subsidizing as part of green energy transitions, use about 20 grams of silver per panel.
Here’s the problem: we’re mining less silver even as industrial demand accelerates. Major silver deposits are playing out. Most silver comes as a byproduct of copper, lead, and zinc mining, which means silver supply is constrained by the economics of other metals. And unlike gold, which can be recycled indefinitely from jewelry and bars, most industrial silver is used in such small quantities that recovery is economically impractical. It’s essentially consumed and gone.

The silver market has been in a supply deficit for six consecutive years now. Above-ground stocks are depleting. The London physical market has faced such tight liquidity that lease rates temporarily spiked over 30 times normal levels. Exchanges have raised margin requirements trying to cool the market. This is precisely the same playbook they used in 1980 and 2011—but this time it hasn’t reversed the trend.

Silver prices are exploding faster than gold

So silver’s price spike tells two stories simultaneously. First, it’s investors fleeing currency risk just like with gold, but second, it’s real industrial users scrambling to secure supply for actual production needs. Tesla needs silver to build cars. Apple needs silver to build phones. Amazon needs silver to build data centers. All of them are competing with China and India who are hoarding silver for national security and economic reasons. When both speculators and manufacturers are competing for a finite resource that’s actually running out, prices don’t just rise—they explode.

This is what a supply crisis looks like when it collides with a currency crisis. And it reveals something crucial about the dollar’s troubles: we’re facing a moment when paper claims on resources are being tested against physical availability. For seventy years, the dollar’s dominance meant we could simply buy whatever we needed. But when the resources aren’t available at any price, currency dominance matters less than supply chain control. China understood this a decade ago, which is why they secured rare earth supplies and are now implementing export controls on silver. We’re learning it the hard way.

The Faith and Credit Problem

The dollar isn’t backed by gold anymore. We all know this. It hasn’t been since 1971 and at risk of sounding like a ‘gold bug’ and raising paranoid alarm bells and advising people to buy canned goods and start prepping, there’s too many warning signals not to say something to this audience…after all, the name of this newsletter is “The Great Transformation”… and I am committed to analyzing what I’m seeing as institutions change, crumble and evolve through this chaotic time - money is part of that.

What backs the dollar is something far more fragile than gold: the full faith and credit of the United States government. That phrase always sounded solid, almost constitutional. Think about this for a moment, like when you were a kid growing up. There was nothing - not even gold - that you could rely on more than America. But faith and credit aren’t natural resources you can mine or manufacture. They’re earned through predictability, competence, and trust in institutions.

Over the past decades but more specifically the past year, we’ve systematically demolished all three.

We’ve had government shutdown threats become routine political theater. We’re facing another one in a few days. We’ve watched the debt ceiling turn from a fiscal guardrail into a weapon of legislative hostage-taking. We’ve seen the basic functions of government—from processing immigration cases to maintaining diplomatic posts—grind toward dysfunction. And we’ve done it all while adding trillions to our national debt with tax cuts that produced far less economic growth than promised.

The world was willing to overlook a lot when America was the indispensable nation. But indispensability requires capability, and we’re broadcasting our incapability daily. When the full faith and credit of the United States takes a beating, the dollar takes a beating. Gold’s $5,000+ price isn’t predicting future inflation—it’s pricing in present chaos. And silver’s surge past $100 is pricing in both chaos and the recognition that the digital economy runs on physical materials we can’t simply print more of.

The Venezuela Tell

The Trump administration’s latest moves in Venezuela were sold as being about oil production and humanitarian intervention. But look deeper at what we’re actually protecting: the petrodollar system.

Since the 1970s, the dollar’s status as global reserve currency has rested on a simple arrangement: oil gets sold in dollars. It’s why we’ve maintained relationships with Saudi Arabia that make no sense on human rights grounds. It’s why we care so intensely about who controls Venezuela’s oil fields. It’s not about the oil itself—global markets can absorb supply disruptions. It’s about ensuring that when countries buy that oil, they need dollars to do it.

Venezuela has been flirting with selling oil in yuan, in euros, in anything but dollars. Remember Maduro meeting with Chinese leaders just a few days before the US invaded and captured him? For an administration supposedly focused on “America First” isolationism, we’re remarkably committed to interventionist policies in Caracas. That contradiction makes sense only when you understand we’re not defending democracy or even oil supplies. We’re defending the structural mechanism that creates global demand for dollars.

When you’re the global reserve currency, you get to run persistent trade deficits because everyone needs your currency to conduct international trade. You get to borrow at lower rates because everyone needs dollar-denominated assets. You get to export your inflation to the rest of the world. Lose reserve currency status, and the American standard of living takes a hit that will make 2008 look like a minor correction.

And hat dramatic loss of our standard of living would be politically, and economically, disastrous and that’s why Washington is doing everything it can…including invading countries for their resources…to head it off.

The Greenland Gambit

Trump’s fixation on Greenland seemed absurd until you understand it through the lens of currency crisis. Greenland isn’t primarily about real estate or military bases—it’s about rare earth elements and control of resources that will matter desperately in a world losing confidence in fiat currency. Yes, Greenland is about national strategic considerations but not for the reasons were being told. When the climate denying crowd are telling us its about new passages opening up because of ice caps melting that should be a sign that they’re not being honest with us.

Greenland holds substantial deposits of rare earth elements essential for everything from defense systems to renewable energy technology. But more importantly, it represents tangible assets. In a currency crisis, nations don’t want promises—they want stuff. Real estate, minerals, strategic position, and yes, to a lesser degree physical control of trade routes as Arctic ice melts.

The Greenland push isn’t imperialism for imperialism’s sake. It’s asset accumulation by a nation sensing that its paper might not be worth what it used to be. It’s the international equivalent of converting your portfolio from stocks to gold—or to silver, or to rare earths, or to anything that exists in the physical world rather than as entries in a ledger.

China has been hoarding resources and strategically exerting its global influence over these resources for years through its ‘Belt and Road’ initiative. Alternatively, the United States has relied on its paper power and the full faith and credit in our dollar to lull us into complacency. We believed that our control of financial markets and the dollar would be sufficient to retain our dominance. But the real world of metals and minerals is now competing with paper promises. It appears as though the reckoning has arrived.

The Political Reckoning

Here’s where it gets dangerous: currency crises don’t resolve themselves through market mechanisms alone. They create political pressure that democracies handle badly.

Domestically, we’re likely to see three simultaneous and contradictory responses:
Denial and Scapegoating: The first political instinct will be to blame anyone but ourselves. Look for China to be the new focus and political enemy of the administration. China will be accused of currency manipulation (true, but also: pot, kettle). The Federal Reserve will be accused of either printing too much money or being too tight. “Globalists” will be blamed for undermining American sovereignty. We’ll see a renewed push for tariffs and trade wars, which will make the currency crisis worse while feeling like action.

Watch for silver shortages to be blamed on “speculators” or “hoarders” rather than on our failure to secure industrial supply chains. When manufacturers can’t get the silver they need to build EVs or iPhones, politicians will find someone to blame other than the policy decisions that left us dependent on global spot markets for critical materials.

Austerity Politics: As borrowing costs rise and debt service consumes more of the federal budget, we’ll face genuine fiscal constraints. But we won’t distribute the pain fairly. We’ll see efforts to cut Social Security, Medicare, food assistance—anything that can be characterized as “spending we can’t afford”—while preserving tax cuts for the wealthy and Pentagon budgets. AOC has been warning about this recently. This will accelerate the political realignment I’ve been tracking, where working-class voters of all ethnicities increasingly see both parties as failing them economically.

Authoritarian Impulses: This is the most dangerous response. When currency crises hit democracies, there’s always a temptation toward strongman solutions. We’ll hear calls for “emergency powers” to stabilize markets. We’ll see proposals to restrict capital flight, control currency exchanges, maybe even restrictions on converting dollars to other assets. The same instincts that led to Trump’s threats against control over the Panama canal, the political decapitation of Maduro in Venezuela and the

interest in Greenland could manifest domestically as economic controls that erode property rights and market freedoms.

Imagine the federal government trying to restrict American citizens from buying silver or gold “for national security reasons” or imposing export controls on metals already in private hands. It sounds far-fetched until you remember that FDR literally confiscated gold from private citizens in 1933. When governments panic about currency, property rights become negotiable.

The International Scramble

On the world stage, a dollar crisis will accelerate the multi-polar realignment that’s already underway.

BRICS Alternative Systems: Brazil, Russia, India, China, and South Africa aren’t building alternative payment systems because they hate America—they’re building them because they’ve watched us weaponize dollar access through sanctions and threats. A clear dollar crisis will accelerate this trend. We’ll see more bilateral trade agreements that bypass dollars entirely. We’ll see regional reserve currencies emerge. The yuan won’t replace the dollar as global reserve, but the dollar won’t be as dominant as it was.

Alliance Stress: Our treaty allies depend on American security guarantees, but those guarantees are ultimately backed by economic capacity. When European nations or Japan or South Korea start questioning whether American commitments are credible—and a currency crisis raises exactly those questions—the entire post-World War II alliance structure comes under strain. This is especially acute with NATO expansion and commitments to defend the Baltics or Poland. Can we credibly extend nuclear deterrence when our economic foundation is shaking?

Resource Nationalism: The scramble for tangible assets will intensify globally. We’ll see more nations following Russia’s playbook of using energy supplies as geopolitical weapons. We’ll see China accelerate its Belt and Road investments, not as aid but as asset acquisition. The competition for rare earth elements, lithium deposits, agricultural land, and water resources will increasingly look like the colonial scrambles of previous centuries.

The silver shortage will accelerate this. Countries with silver deposits—Mexico, Peru, China, Poland—will face enormous pressure to restrict exports and prioritize domestic industrial use. China has already implemented export controls. We could see export quotas and strategic reserves, just as we do with oil. Except this time, the United States isn’t the dominant player securing supply. We’re just another buyer in a seller’s market.

What No One Wants to Admit

The cruelest truth is that currency crises are ultimately resolved through one of three mechanisms: dramatic fiscal reform, high inflation that devalues debt, or default. None of these are politically viable in the current environment.

Fiscal reform would require tax increases on the wealthy and spending cuts to programs people actually use—politically impossible with our current coalition structures. High inflation devastates the middle class and triggers voter revolt. Default would be catastrophic, ending dollar dominance overnight and likely triggering a global depression.

So instead, we’ll muddle through with half-measures and denial until markets force a resolution on terms we don’t control. The longer we wait to acknowledge the problem, the more painful the correction will be.

Gold at $5,000+ per ounce isn’t a prediction. It’s a judgment. Silver breaking past $100—rising over 200% in a year—isn’t speculation. It’s the market recognizing that our digital future requires physical materials we don’t control, purchased with currency the world increasingly doubts. The world is watching America’s institutional decay, our fiscal irresponsibility, our political dysfunction, and our increasingly erratic foreign policy. And the world is deciding it would rather hold metal than hold dollars—or that they need to hold metal because the technologies we depend on literally cannot function without it.

When people lose faith, that faith doesn’t return because you want it to. It returns because you’ve earned it back through competence, stability, and trustworthiness. Look around at American governance in 2025 and ask yourself: are we earning back trust, or burning through what little remains?

The markets have already answered that question. Silver’s record price—more than doubling in a year to break records that stood for 45 years—is answering it in terms even clearer than gold. It’s saying: we don’t trust your currency, and we don’t trust your ability to secure the physical resources your economy needs to function.
The only question left is whether our politics can face the answer before it’s too late.

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