Gold and silver have both pulled back sharply from their January 2025 highs, falling below key psychological milestones. Gold is down about 28% from its January high of $5,600 and is now trading below $4,000 an ounce, while silver fell more than 50%, slipping below $59 an ounce on Wednesday.
The selloff is largely driven by growing fears of tighter monetary policy under new Federal Reserve Chairman Kevin Warsh. Markets are currently pricing in two 25 basis point rate hikes by March 2027, which would bring the federal funds rate to between 4.00% and 4.25% due to renewed inflation fears.
This reversal marks a radical shift from the dominant macroeconomic narrative of 2025, the “devaluation trade,” the belief that persistent budget deficits and rising public debt would continue to erode the purchasing power of fiat currencies.
However, Bitcoin was largely stagnant for much of 2025, trading around the $100,000 level, while gold and silver rallied aggressively. This divergence has led many investors to question whether Bitcoin still has a place in the devaluation trade and whether its role as a hedge against the dilution of fiat currency has weakened.
