In a recent report, J.P. Morgan (click here) made headlines by highlighting what it calls the “debasement trade.” The concept isn’t new, but its resurgence underscores a theme that’s becoming increasingly hard for investors to ignore: concerns over the long-term purchasing power of the US dollar.
Content continues below advertisement
Capital has been flowing into real assets (notably gold, Bitcoin, and commodities) as investors seek protection from fiscal deficits, persistent inflation pressures, and ballooning government debt. J.P. Morgan even noted that Bitcoin, sometimes viewed as “digital gold,” could reach as high as $165,000 if it continues to capture flows from gold and traditional inflation hedges.
At its core, the “debasement trade” reflects a growing skepticism that fiat currencies will maintain their real value over time. And while the phrase may be newly popular, the underlying investment rationale is linked to an idea Astoria has been articulating for years.
Astoria’s Early Call: Protecting Purchasing Power
Nearly five years ago, Astoria launched our Real Assets SMA Strategy amid our anticipated erosion of purchasing power and the implications for long-term portfolios. Our viewpoint was simple but powerful: traditional portfolios were overexposed to nominal assets that fail to preserve real value when inflationary pressures rise.
At that time, we argued that investors should think less in nominal returns and more in real terms. A 5% gain means little if inflation runs at 6%. The challenge isn’t simply beating benchmarks; it’s maintaining the real purchasing power of wealth over time.
We emphasized that the traditional 60/40 framework, while effective for decades, was not built for an environment of persistent deficits, monetary expansion, and structural inflationary trends. Instead, we advocated for a strategic allocation to real assets — assets with inherent scarcity, pricing power, or inflation linkage.
That early standpoint and research set the foundation for what has become a core element of Astoria’s investment philosophy. We then proceeded to launch our Real Assets ETF in December 2021.
Understanding the “Debasement Trade”
Currency debasement occurs when a nation’s monetary and fiscal policies erode the purchasing power of its currency. This can happen gradually through sustained inflation, persistent deficits, and/or repeated stimulus cycles, or abruptly during crises when governments expand balance sheets aggressively.
The result is that each dollar buys less. Investors, recognizing this erosion, begin to migrate toward assets that hold intrinsic or inflation-adjusted value. Historically, these have included gold, commodities, real estate, and infrastructure. In recent years, digital assets such as Bitcoin have entered that conversation as well.
Both gold and Bitcoin ETFs have recently seen significant inflows as investors hedge against the possibility that monetary policy will remain loose while fiscal imbalances persist. It can be referred to as a popular trade in 2025, but we feel preserving wealth in real terms is timeless.
Astoria’s Holistic Approach to Real Assets
While the headlines often focus on gold and Bitcoin, Astoria believes a more holistic portfolio construction approach is necessary. Hedging inflation risks and currency debasement requires more than just holding shiny metals or digital tokens. We argue a portfolio should include a diversified mix of assets that can perform well across various inflationary and growth scenarios.
We believe Astoria’s Real Assets Strategy is well-positioned to serve these objectives. Our portfolio includes exposure to:
-
Data Centers and Digital Infrastructure: As the world digitizes, these assets represent “new infrastructure,” with strong pricing power and secular growth trends.
-
Industrials Stocks: A cyclical but critical component that provides exposure to manufacturing, logistics, and capital investment trends often associated with reflationary periods.
We view this blend not as a bet on any single theme, but as a robust portfolio solution with the goal of preserving and compounding wealth in real terms regardless of how inflation or policy evolves.
Why Real Assets Are Back in Focus
For much of the 2010s, real assets lagged. Inflation was tame, interest rates were low, and technology-driven deflation dominated market narratives. But the world has changed dramatically in the past few years.
-
Supply Constraints: De-globalization, onshoring, and energy transitions have introduced persistent supply-side inflation.
-
Geopolitical Realities: Global tensions are reinforcing the need for resilient, domestic, and tangible assets.
In this context, real assets are no longer niche. Astoria believes they are essential in one’s portfolio. They can potentially provide inflation protection, diversification, and exposure to sectors poised to benefit from structural investment themes.
Positioning for the Next Cycle
It’s tempting to treat the “debasement trade” and inflation as short-term narratives, but the structural forces driving them are unlikely to fade quickly. The US debt-to-GDP ratio remains high, and government spending, defense budgets, and infrastructure needs are all growing. At the same time, central banks face constraints in keeping policy too tight without disrupting economic stability and the labor market.
In other words, the path of least resistance may remain one where inflation runs above target, even if modestly — a quiet but steady erosion of purchasing power.
For investors, Astoria doesn’t think the answer is to abandon traditional equities or bonds, but to complement them with real assets that can provide balance, resilience, and inflation-linked return potential.
Astoria’s Real Assets Strategy has aims to do just that, offering diversified exposure across real and digital asset classes, infrastructure, industrials, and more in a single, research-driven framework.
A Forward-Looking Perspective
Our early call on purchasing power risk proved not to be passing view. It was a structural insight into how macro dynamics, inflation, and policy evolution would reshape portfolio construction.
By combining macro research, quantitative discipline, and diversified implementation, Astoria strives to help investors translate theoretical risks, like currency debasement and higher inflation, into actionable portfolio solutions.
Ultimately, the goal isn’t just to hedge inflation or chase the latest trend. It’s to own real assets that can generate real returns in an environment where nominal value alone may no longer be enough.
Originally published October 8, 2025
For more news, information, and strategy, visit the ETF Strategist Content Hub.
Warranties & Disclaimers
Any third-party websites provided on www.astoriaadvisors.com are strictly for informational purposes and for convenience. These third-party websites are publicly available and do not belong to Astoria Portfolio Advisors LLC. We do not administer the content or control it. We cannot be held liable for the accuracy, time-sensitive nature, or viability of any information shown on these sites. The material in these links is not intended to be relied upon as a forecast or investment advice by Astoria Portfolio Advisors LLC, and does not constitute a recommendation, offer, or solicitation for any security or any investment strategy. The appearance of such third-party material on our website does not imply our endorsement of the third-party website. We are not responsible for your use of the linked site or its content. Once you leave Astoria Portfolio Advisors LLC’s website, you will be subject to the terms of use and privacy policies of the third-party website. Refer here for more details.