What does Greenland have to do with the fall of the dollar and the yen, and the rise of the Swiss franc, gold, and silver?
The answer, as almost always in Economics: "It depends on who you ask that question to."
For some, it is a sign - perhaps the definitive one - of the end of the dollar empire. The reasons: the ever-increasing public deficits (generated by constant tax cuts) of the United States, and the loss of the refuge status of the still leading world economy.
That is the long-term view. The tax cuts for the wealthiest taxpayers (who should almost be called former taxpayers) carried out by the Republican Party and Donald Trump last year have solidified the idea that the US debt is destined to rise for centuries. At the same time, the idea that at some point in the future Washington will regain fiscal sanity and start increasing revenue has ceased to be a mantra for financial markets due to the political dynamics of that country.
This is because, in just one year of presidency, Donald Trump has changed the US and global economic landscape. In terms of trade, he has unleashed a new era of global protectionism. From the perspective of the US economy, he has unprecedentedly increased state interference in the private sector - even with Executive Orders from the White House against law firms simply because they employ former Democratic politicians - and has lowered the quality of official macroeconomic statistics, especially regarding prices. And in terms of international cooperation, he has done everything possible to undermine US relations with its allies, insulting Europeans in Davos, publicly declaring support for the far-right in the EU, even threatening to invade and annex its neighbor Canada. Or Greenland, a symbol of Trumpist imperialism determined to seize that island from a country that has done nothing to him, Denmark.
Thus, the US seems to have decided to deliberately undermine all the confidence it had built since it established with the UK at Bretton Woods in 1944 the foundations of what has been the world economic order until now, generating a period of unparalleled wealth growth in history. At the end of World War II, between 70% and 75% of the Earth's inhabitants lived in extreme poverty, according to studies by Branco Milanovi of the London School of Economics, and Martin Ravallion of Georgetown. Today, the percentage is less than 9%, according to data from the World Bank.
Therefore, according to this explanation, money does not want to have anything to do with the dollar. And the euro is not a solid alternative. Although the European Union is attracting more capital from the US due to increased public spending in Germany and investment in defense, it has lost the race in the Internet, is losing in Artificial Intelligence (AI), and seems destined to lose in quantum computing. The continent lives under the threat of a Russia even more imperialistic than the United States, with the perpetual fear that Washington will abandon it, and under the threat of the victory of nationalists similar to Trump in France in 2027, and in the UK and Germany in 2029. As if that were not enough, the EU's attempt in December to use the reserves of the Russian central bank as collateral to finance the continuity of the Ukrainian State has led more and more investors - public and private - from emerging countries to slowly but steadily withdraw their reserves from the Eurozone.
With this scenario, emerging markets still present too many risks. They usually do not have convertible currencies. With exceptions, their legal uncertainty is significant. Their transparency and the strength of their institutions are, at best, questionable. This leaves only the Swiss franc, gold, and silver as a refuge.
Therefore, with the world increasingly fragmented into antagonistic blocs using the economy and finance as tools to extend their power, it is logical to be cautious and not have all the risk concentrated. Reinout De Bock, Head of Interest Rate Strategy in Europe at the Swiss banking giant UBS, succinctly summarizes it: "In our meetings with investors, we see a growing intention to diversify." So far, gold, silver, and the Swiss franc have been the big beneficiaries. But the Canadian dollar and the Australian dollar, as well as the British pound, could also benefit from this trend.
That is the possible long-term response to the causal relationship between Greenland, on one hand, and the fall of the dollar and the rise of the Swiss franc, silver, and gold. But, as Keynes said, "In the long run, we are all dead," so it may be useful to look for more immediate factors. If this strategy is followed, market movements caused - as in the first case - by government actions appear, without meaning that the market has entered a definitive phase of "selling the United States." It is a theory that has less reflection in the media and on social networks but more acceptance in the market.
According to this thesis, everything started on December 19 in Japan. That day, the yield of the ten-year Japanese bond, which had been hovering around 1.96%-1.97% all month, rose to 1.99%. Three days later, it reached 2.1%. It was the highest level of Japanese debt in 23 years. On December 27, the yen began to plummet. On January 20, the bond yield reached 2.355%, its highest level in almost three decades. A week earlier, the yen had hit bottom, losing 2% against the dollar in three weeks.
Japan seemed to be experiencing something unimaginable: a debt and currency crisis. Or, in a very light version, the nightmare that Spain went through in the euro crisis. The world's third-largest economy had never had a greater problem financing a monstrous public debt, which closed 2025 at a record 237% of GDP - double that of the US and almost two and a half times the ratios of Spain and the UK - partly due to its colossal internal savings rate. But now something was failing.
That something is actually someone: Sanae Takaichi, the Prime Minister of that country. The market was fearful of rumors that Takaichi was planning early legislative elections, in which the Liberal Democratic Party (LDP), to which she belongs, could achieve a large majority in the Diet, the Japanese Parliament. With a large parliamentary margin, the LDP could freely implement its economic program, known as Takainomics, which is a copy of what Donald Trump would like to apply: a weak currency to favor exports and limit imports, increased public spending, and tax cuts. It is no coincidence that the bond yield reached its highest level just one day after she announced the early elections held today.
Meanwhile, the market was assessing rumors of a joint intervention by the Federal Reserve and the Bank of Japan to stabilize the yen, something that has not happened so far in the 21st century. The New York Federal Reserve, responsible for these operations, was preparing for it when, on January 27 and 28, Donald Trump and the US Treasury Secretary, Scott Bessent, ruled it out. Bessent's position was not surprising, as since Robert Rubin was Treasury Secretary during the Clinton administration, the US policy has been that "a strong dollar is in the national interest of the US."
But Trump's position is. The current president had always been an advocate of a weak dollar, as befits his mercantilist obsession to export as much as possible and import as little as possible. In fact, the two Trump presidencies have marked an almost symmetrical decline in the dollar. And that leads to the next factor explaining the dollar's decline, which this time is not the Japanese policy and economy, but that of the United States.
On one hand, there is the short-term factor, with a very simple name: inflation. The market anticipates that the underlying PCE (Personal Consumption Expenditures) index, the indicator the Federal Reserve uses to determine inflation and therefore interest rates, will break the 3% barrier and remain above it until at least after the summer. This is historic. Since the Fed started using the underlying PCE, exactly 26 years ago, it only exceeded the 3% ceiling in the 2021-2024 period when all countries in the world were devastated by the inflation explosion caused by the end of COVID-19.
All of this leads to another person: Kevin Warsh. Last Friday, Trump announced the nomination of this economist and former investment banker as the next President of the Federal Reserve, a position he should assume - if all goes well, which is far from certain - in May. Warsh has a family relationship with Greenland. His son-in-law, the billionaire Ronald Lauder - one of the heirs of the cosmetics empire founded by his mother, Estée Lauder, and president of the World Jewish Congress - is the one who convinced his old friend Donald Trump in 2019 that the United States should annex Greenland.
Warsh is linked to the fall of the dollar due to the predicament he has gotten into by accepting the nomination. Trump wants him to lower interest rates. However, inflation not only does not decrease, but it seems to be heading towards higher levels. Add to that Trump's continued pressure for the dollar to drop, partly because he believes it will help the Republican Party win the November legislative elections, and Warsh himself made it clear in a speech at the International Monetary Fund (IMF) in March of last year that his economic views are entirely subject to Trump's directives.
This does not mean that the United States will lower rates beyond a quarter-point cut in the first half of the year, as it is most likely that the Fed will focus on financial deregulation to try to accelerate growth without generating inflation. But it does suggest that the U.S. central bank will follow the path of other institutions in that country and become completely politicized. This situation does not convince investors, even though Warsh follows orders from Stanley Druckenmiller, a former hedge fund manager who has a significant influence on Donald Trump and who, like Bessent himself, worked for George Soros, supposedly the president's number one enemy. The consequence is that U.S. monetary policy is currently a mystery. No one knows what Warsh means when he says he will implement "practical monetarism" at the Fed. All this uncertainty is not well received by investors.
All of this tension encourages investing in gold and silver. This is unusual because precious metals are typically only in demand when real interest rates in the U.S. are very low. However, at least for now, that is not the case. If the official rates are discounted from U.S. inflation, there is still a reasonable 2% return, which is not much, but certainly more than gold or silver, which offer absolutely no interest and whose only return is the appreciation they achieve.
This correlation between low real rates and high gold was broken with the Russian invasion of Ukraine four years ago. Since then, it has been reinforced, especially in light of recent news. Donald Trump not only baselessly accused the current President of the Federal Reserve, Jay Powell, of corruption. He also joked that if Warsh does not lower rates as much and as quickly as he wants, he will sue him. Add to that the fear of non-European investors of putting their money in the Old Continent and exposing themselves to situations like Russia, combined with the diversification of reserves that emerging central banks have been carrying out for a decade to reduce their dollar holdings in favor of gold. The result is a perfect scenario for the dollar to continue falling and the precious metal to keep rising.
It seems like a combination of perceptions affecting both the short and long term. Perhaps both theories are true. The world is moving towards a reduced weight of the dollar, but in the short term, this trend is reinforced by the political and monetary situation in the United States. So, with this outlook, the most logical thing is to go for safety: precious metals and the Swiss franc.