Why Marc Faber Thinks the U.S. Could Default Under Trump

“Gold has never had a more friendly president. But I wouldn’t be surprised if the U.S. defaults before Trump’s second term ends.”
—Marc Faber

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It’s the kind of line that stops a seasoned macro investor mid-scroll.

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Marc Faber, legendary editor of The Gloom, Boom & Doom Report, has long been one of the sharpest, and most unfiltered, voices in global finance. He’s made a career of spotting cracks in the system before others even notice the tremors.

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In early July, 2025, he returned to the Pinnacle Digest podcast to put forward a warning: a revelation hiding in plain sight. And it all starts with the most powerful currency in the world. As the U.S. Dollar down about 10% year to date, investors are searching for safety and growth elsewhere.

The Dollar Is Dying a Slow Death, And No One Cares

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While most economists obsess over inflation targets and Fed cuts, Marc Faber sees something more dangerous brewing: the quiet unraveling of trust in the U.S. dollar.

“There must be a reason,” he told me, “that the dollar began weakening considerably after Trump was elected. It may be a coincidence. Maybe not.”

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For decades, the dollar’s dominance has hinged not just on the size of the U.S. economy or military might, but on credibility. The credibility of its institutions, the consistency of its policies, and the expectation that, unlike banana republics, the U.S. pays its debts.

But according to Faber, that credibility is fading fast. And in a second Trump presidency, it could collapse altogether.
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Trump’s Shadow Over the Bond Market

Here’s the paradox: Trump may be the most precious metal–friendly president the U.S. has ever had. But his economic policies - massive deficits, tariff wars, and political volatility - have also fueled what Faber calls a “complete disregard” for America’s ballooning debt.

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In 2024 alone, the U.S. is projected to spend $1.4 trillion just on interest payments. And yet Trump is campaigning on more spending, more tariffs, and more confrontation with America’s largest creditors.

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This, Faber warns, is a recipe for disaster:

“Under Trump, the U.S. household deficit—the budget deficit—is going to be up. And the monetary and fiscal policies will have to be expansionary. That means interest rates will rise, not fall.”

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Higher interest rates mean more pressure on bonds. And the bond market is already signaling its discontent. The long end of the yield curve refuses to fall, even as Fed speakers talk about rate cuts.

“There’s a risk the bond market keeps weakening over time,” he said. “Eventually, something breaks.”

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Protectionism: The Trojan Horse of Economic Decline

Many in Trump’s camp argue that tariffs will boost American manufacturing and bring jobs home. But Faber—who has studied global trade patterns for over 40 years—doesn’t buy it.

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“Protectionism,” he said bluntly, “is a disease.”

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And like most diseases, it spreads quietly - hidden behind patriotic slogans and policy speeches. But the effects are clear: rising prices, lower product quality, and weakened competitiveness.

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Faber pointed to history. In the 19th century, it was U.S. protectionism that partially sparked the Civil War. In the 1930s, tariffs like the Smoot-Hawley Act deepened the Great Depression. And today, the numbers tell the same story: while tariffs may bring in a few billion per month, the trade deficit has widened, not shrunk.

“Trump touts tariffs,” Faber said. “But they’re a drop in the bucket compared to the deficit. They won’t save the dollar. They won’t stop the bleeding.”
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The Illusion of Prosperity

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If the fundamentals are so fragile, why does the S&P 500 keep hitting all-time highs? Why do investors keep pouring into U.S. stocks?

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Faber offered a chilling answer:

“We are living through a massive illusion of wealth. The standard of living has been falling for 20 to 30 years. It’s masked by rising asset prices—but the average family is struggling more than ever.”

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He’s not wrong. Home prices have surged, but so have the costs of food, rent, and education. Most middle-class families are just one job loss, or interest rate hike, away from crisis. What's worse, the middle and upper class are forced to speculate in risk assets to outpace inflation, fueling the bubble further. Another key sign is the plunging birth rate all over the globe.

“No population growth, no GDP growth. It’s a slow-motion collapse.”
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Why Gold Is Not in a Bubble (Yet)

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Despite record-high prices, Faber remains bullish on gold, silver, and especially platinum.

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“I’m not surprised gold is going up,” he said. “But the public still isn’t really in yet.”

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ETF flows are tepid. Miners have underperformed. And most institutions are still obsessed with tech stocks.

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But Faber sees that as opportunity.

“When everything goes down, what goes down the least? That’s the key. In a real asset deflation, I believe precious metals will go down the least. That’s why I hold them.”

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He even floated the idea that Middle Eastern nations could squeeze the platinum market, driving it to $6,000 an ounce. Far-fetched? Maybe. But in a world where currencies can be printed into oblivion, the case for tangible scarcity is becoming stronger by the day.

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The Revelation: Default Is No Longer Unthinkable

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And now we return to the heart of the matter.

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In Faber’s view, the U.S. is rapidly approaching a tipping point, both politically, financially, and culturally. The bond market is flashing warnings. The dollar is drifting lower. The debt is unsustainable. And the population is losing faith.

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Could the U.S. actually default?

“Yes,” he said. “Under Trump, I wouldn’t be surprised.”

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Not because America can’t print more money. But because confidence in the system could crack. Bondholders may demand higher rates. Foreign buyers may walk away. And when the market loses faith in a currency, no amount of spin can restore it.

“The dollar has already lost over 90% of its purchasing power since 1900. And now the global mood is shifting. Once it starts… it can go very fast.”

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The Final Shock: U.S. Default, Dollar Collapse, and the Investor Wake-Up Call

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The coming dollar collapse isn’t just a story of inflation or interest rates, but a crisis of confidence. Marc Faber believes the pillars holding up the global financial system are rotting from within: unchecked debt, declining productivity, and growing political extremism. If trust in the U.S. dollar evaporates, history shows that collapse can come swiftly and without warning.

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