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.
That’s why Johnson rejects the idea that the dollar and gold are mortal enemies. In his framework, they can rise together — and a surging dollar may be more destabilizing than a weak one.
Gold Doesn’t Need a Dollar Collapse
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.
The Strong Dollar Problem
A weak dollar, in Johnson’s telling, does not break the system; it extends it, fueling credit expansion and looser liquidity. The greater threat is strength.
“A strong dollar will do more to wreck the monetary system than a weak dollar,” he said, pointing out that the reason lies offshore.
“The rest of the world owes far more than 40 trillion. They don’t owe it to the United States. They owe it to each other. And it’s in dollars,” Johnson noted, citing Bank for International Settlements estimates of at least $80 trillion — possibly north of $100 trillion.
Those borrowers cannot print dollars. When the dollar rises against local currencies, servicing that debt grows costlier, triggering credit crunches, defaults and liquidity crises. That scarcity, he argues, also gives Washington geopolitical leverage, extending swap lines with strings attached — as he says played out with Argentina.
“The relative levels of fiat currency are probably the most important thing that nobody understands,” he added.
Disruption Trades Beyond Gold
Johnson’s framework also points to less obvious opportunities, like agricultural commodities. He sees potential upside in corn, wheat, soybeans and soybean meal later this year or early next year, tied to possible delays in fertilizer, chemicals and other farm inputs caused by Middle Eastern tensions and Strait of Hormuz disruptions. Invesco DB Agriculture Fund (NYSE:DBA) is up 7.94% year-to-date.
A second overlooked pressure point is aviation maintenance, repair and overhaul. The Gulf is an important MRO hub for widebody cargo jets, and missed maintenance deadlines force regulatory groundings that cascade into fresh supply-chain snarls.
