Gold’s sparkling ride in 2025 has caught even veteran investors off guard, with gold stocks and bullion making a sharp leap as worries over inflation meet fiscal disarray in Washington. Among the funds at the forefront of the rally is the Strategy Shares Gold Enhanced Yield ETF (NYSE:GOLY), which is up 36% for the year and boasts a five-star Morningstar rating.
David Miller, GOLY portfolio manager and co-founder and CIO at Catalyst Funds, contends that the rally is more than a classic “fear trade.” Rather, he identifies structural currency debasement as the motive.
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“One major factor I don't think is fully priced into the market—and a big reason I'm such a strong advocate for gold—is currency debasement,” Miller said. “If you owed $36 trillion, like the U.S. government does, and were running a $1.9 trillion annual deficit—spending that much more than you bring in through taxes—and also had a printing press, you'd likely use it,” he added.
He supplemented that austerity and increased taxation are unpopular politically, which leaves debasement as the path of least resistance. “Politicians face major pushback for austerity or aggressive tax hikes, so the easiest path is to gradually debase the currency. It's not just the U.S.—governments globally have learned this,” Miller said.
Deficit spending unabated could see the dollar decline by around 5% every year, estimates Miller. “That naturally lifts nominal corporate earnings, even without real growth, simply because the currency is worth less.”
A way to guard against this as an investor or consumer is to denominate your holdings in hard currency—such as gold—rather than the euro, yen, or dollar, emphasized Miller.
GOLY presents a unique structure by pairing investment-grade corporate bonds with a 1x overlay of gold, creating what Miller terms a solid hedge against inflation. “That strategy has returned nearly 29% annualized over the past three years and is up over 40% year-to-date. It's been a reliable way to bet on long-term dollar devaluation,” he said.
Miller emphasizes that the rally is not only about the traditional safe-haven role of gold. “While gold can serve as a safe haven from market volatility, what’s really driving it now is its ability to preserve purchasing power during currency debasement. The same logic applies to equities—when the dollar loses value, earnings often rise, and stocks perform better in inflationary environments. Gold benefits even more directly from inflation,” he said.
For investors concerned about Washington’s spending trajectory, Miller argues gold exposure is not only a defensive move but a means to maintain purchasing power when currencies themselves are in jeopardy.
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