Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. For years, the financial news space has been flooded with narratives of dollar doom, an incoming hyperinflation, and gold winning once the U.S. currency finally dies. According to Brent Johnson, founder of Santiago Capital and author of the "Dollar Milkshake" thesis, that framing gets the world backward.
Investors, he argues, should spend less time asking how the monetary system ought to work and more time studying how it actually does. "Regardless of what our morals or what our wishes tell us the world should be, this is the way it is," Johnson said. The global economy is still built around the dollar, not because the U.S. has pristine finances, but because every other major country has its own debt, demographic, political or market constraints.
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In his framework, they can rise together — and a surging dollar may be more destabilizing than a weak one. Gold's recent strength challenges a core assumption of the doom narrative: that bullion requires currency failure to rally. Since the global financial crisis, the dollar index has strengthened while gold has multiplied in price.
"You don't have to hate the dollar, and you don't have to think the dollar is going to collapse and you don't have to think the United States is going to go into the Great Depression to own gold," Johnson said. Gold made headlines earlier this year when it overtook the Treasuries as the leading constituent of bank reserves. Johnson acknowledges deliberate diversification away from Treasuries, but argues the overlooked aspect is how much bullion appreciated while bond prices fell.
Even so, gold buying does not end dollar dependence. Johnson argues central banks accumulate bullion precisely so they can sell it in a crisis to obtain dollars — which helps explain why the two can rise together during liquidity squeezes, then diverge when holders dump appreciated gold to secure scarce dollars for oil, food and debt service. Trending: Avoid the #1 Investing Mistake: How Your 'Safe' Holdings Could Be Costing You Big Time A weak dollar, in Johnson's telling, does not break the system; it extends it, fueling credit expansion and looser liquidity.
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