Wall Street tycoon Schiff warns: Collapse of the dollar's credibility could trigger rising interest rates, a debt crisis, and an economic recession

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A warning about the damage to America’s credibility and the acceleration of de-dollarization is intensifying concerns about more challenging economic prospects—prospects that could be characterized by rising debt, higher interest rates, persistent inflation, and an increased risk of recession.

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Gold surges, signaling weaker the U.S. dollar and rising inflation concerns

Heightened geopolitical tensions and fears about currency are causing the market to pay even more attention to gold, viewing it as a signal of a shift in economic confidence. Wall Street heavyweight and economist Peter Schiff said on March 31 on the social media platform X that the gold price has surged sharply, highlighting growing unease in the market about U.S. fiscal and monetary stability.

Spot gold closed up sharply on Tuesday (March 31), soaring $156.15, up 3.46%, to $4,666.83 per ounce.

Euro Pacific Asset Management CEO Peter Schiff said: “Gold prices have risen by more than $100, and have once again moved back above $4,600. The war has improved the bullish fundamentals for precious metals.”

He also warned: “The result will be a further erosion of U.S. credibility and the acceleration of de-dollarization. For the U.S., that means more debt, higher interest rates, higher inflation, and an economic recession.”

Expectations around inflation and interest rates remain at the core of the overall outlook. Schiff pointed out that even if the Federal Reserve keeps lending costs unchanged or raises them slightly, inflation pressure could still exceed these measures—thereby compressing real yields and increasing demand for assets that can preserve value.

Central banks around the world shifting reserves to gold to hedge risks

Concerns about the sustainability of sovereign debt are affecting global reserve-allocation strategies. In a recent debate with investors Mark Moss, Schiff said that monetary authorities in various countries are allocating more assets to gold to hedge currency depreciation and fiscal uncertainty.

Structural developments in the financial system may also further strengthen gold’s role. Innovations such as tokenization and digital infrastructure improve gold’s divisibility and transferability, enhancing its functionality in modern markets without changing its basic attributes.

Broader economic impacts remain closely tied to ongoing fiscal deficits and ever-rising borrowing costs. In the same debate, when discussing the actions of central banks in various countries, Schiff said: “I think foreign central banks are already shifting more dollar reserves into gold, because they are losing confidence in the U.S. dollar and no longer believe that the U.S. government can repay its debts with ‘real money’ without relying on printing money.”

Beyond the above remarks, Schiff has repeatedly further elaborated on the themes of declining U.S. credibility and the acceleration of de-dollarization in recent comments. He described the possibility that the dollar could lose its status as the reserve currency as a decisive blow to the U.S. economic system, and believes that reliance on the dollar is the foundation of a nation’s financial strength.

Schiff also pointed to potential catalysts, such as “weaponizing” the dollar through sanctions and a continuously expanding fiscal deficit (which he believes are all unsustainable). He warned that this shift could trigger a long-term inflationary recession, a decline in living standards, and debt-driven crises associated with monetary expansion.

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