US Dollar: Why It’s Falling Despite High Demand?

April 2025 isn’t just another month—it’s been full of big moves in the financial world. At the center of it all is the dollar, which is weakening even though interest rates are high at 5.25%. This has surprised many investors who expected the USD to stay strong. But the real story is more complex.

Just a year ago, we believed Peter Schiff’s prediction that the USD would collapse due to too much debt and money printing. But today, we are starting to see that Brent Johnson’s Dollar Milkshake Theory may explain things better.

Back in 2023: Why We Thought the Dollar Would Collapse

In 2023, we agreed with Peter Schiff’s view. The US government was adding debt quickly. Inflation was high. The Federal Reserve seemed trapped. And many thought countries around the world were starting to move away from the dollar. Gold looked like the safest place to put money.

We believed that the bond market would crash, inflation would keep rising, and the USD would lose its value fast.

Brent Johnson’s Dollar Milkshake Theory Explained

Then we learned about Brent Johnson’s idea. His Dollar Milkshake Theory says that before the dollar falls, it actually goes up first. Why? Because the world has over $300 trillion in debt—most of it in dollars. When the Federal Reserve raises interest rates, countries need more dollars to pay their debts.

This creates a global dollar shortage. So instead of countries getting rid of the dollar, they are forced to sell US Treasuries to get more dollars. Johnson believes the dollar will rise sharply before falling.

April 2025: Is the US Dollar Really Weak?

Even though interest rates are still high, the USD is down almost 9% this year. The Dollar Index just hit a three-year low. That looks like weakness—but it might be something else.

Between December and February, foreign governments sold $86 billion in Treasuries. But it wasn’t because they are giving up on the dollar. It’s because they need cash. They are under pressure from slow trade and rising debt. Selling US bonds is a way to raise dollars fast.

At the same time, private investors are buying Treasuries. In February, net private purchases reached $125.8 billion—one of the highest levels in years. This shows confidence in the US economy. Even Belgium, often seen as a proxy for Chinese investment, increased its US holdings to $400 billion.

The US Dollar Short Squeeze May Be Coming

Brent Johnson’s theory is now playing out. Countries are selling US Treasuries not to leave the USD, but to get more of it. This could set up a short squeeze—where everyone who needs dollars is forced to pay more. That could drive the dollar up sharply in the near term.

Gold Prices Are Rising with the Dollar in Focus

While all this is happening, gold is up more than 15% this year. Central banks are buying gold in record amounts. They’re not guessing—they’re preparing for what might come next. If the dollar spikes one last time, gold is likely to do even better in the long run.

Why We Changed Our View on the USD

Peter Schiff helped many people understand the risks of debt, inflation, and fiat money. But his predictions missed one thing—timing.

Brent Johnson didn’t say Schiff was wrong. He just said that before the dollar dies, it must go through a phase of strong demand. That’s what we’re seeing now.

We still believe gold is important. We still see risks in the system. But we now think the USD could go up again before it eventually falls.

UAE Is Buying USD Assets While Others Sell

One surprising trend: while most countries were selling US bonds, the UAE bought $43 billion worth in just two months. Why?

They are planning ahead. Dubai wants to become a global US dollar hub. So while others panic and sell, the UAE is buying. That’s a smart move showing how powerful capital plans long-term.

What This Means for Investors

The message is clear: both Peter Schiff and Brent Johnson had valid points. Schiff warned us about the risks. Brent mapped out how those risks would play out over time.

• The dollar may rise before it falls.
• Gold remains a key hedge.
• Countries will still need dollars until there’s a real alternative.

So we now hold gold in one hand and watch the Dollar Milkshake mix with the other. Because in markets, direction matters—but timing wins.

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