Anyone making a recent trip to the local American grocery store likely noticed that avocados have dropped in price to around 25 cents per avocado. The low prices are a welcome surprise to many people who are used to paying over a dollar per avocado. Although the drop in avocado prices has more to do with recent bumper crops creating a surplus of the fruit it is part of an evolving realignment of trade in North America. México, whose economy depends on foreign trade with its northern neighbor, recently become America’s number one trading partner both in imports and exports. Avocados are one of the many Mexican commodities making their way to American consumers. Almost 30% of México’s revenues comes from its manufacturing sector.
Much of what México manufactures ends up with American consumers.
When consumers are noticing the low prices of avocados, they are also seeing the headlines of record gold and silver prices only to see new headlines proclaiming that prices have dropped significantly in the two metals. Why and what drives the dizzying and confusing price fluctuations of gold and silver and what it means to American consumers and Mexican exports is what is known as debasement trade.
After reaching close to $5,500 per ounce last week, gold prices dropped to $4,700 only to rise to almost $5,000 in a matter of hours just to drop again. Silver prices are also fluctuating.
Driving the price fluctuations is the uncertainty over global trade with the on again, off again Trump administration tariffs with its trading partners, making investors jittery about their investments. When investors are jittery, they look for “safe haven” investments that they feel protects their investments. Gold, and now silver have become safe haven investments for jittery investors. The seizure of Nicolás Maduro last month and the invasion political rhetoric about Greenland and México helps lead to the high prices of the two precious metals.
Another trigger for investors is the uncertainty over who the Trump administration would choose to lead the federal reserve. When the Trump administration nominated Kevin Warsh to lead the Federal Reserve last week, investors seemed to see the appointment in a positive light. Gold and silver somewhat stabilized, although they remain volatile today.
Debasement Trade
Debasement trade is an investment strategy of moving investment money away from currency assets like the U.S. dollar to so-called hard assets like gold or silver. The theory being that as the U.S. dollar, for example is devalued against other currencies, the move to gold protects the assets from losing value along with the dollar.
Sometimes called de-dollarization, moving assets away from the U.S. dollar standard has been ongoing for some time now but the global economies’ reliance on the U.S. dollar makes it much harder to de-dollarize than simply moving money to an asset such as gold.
Too much of the global trade is conducted in U.S. dollars. But for some time now BRICS member nations have been pushing towards de-dollarization of the world’s trade. BRICS is made up by Brazil, China, Egypt, Ethiopia, India, Indonesia, Iran, Russia, South Africa and the United Arab Emirates. China is the world’s second largest economy. Brazil, India and Russia are part of the top ten economies in the world today. Canada, México and the U.S., which are part of USMCA, are also among the top ten economies in the world.
Pressure against the dollar, political or otherwise, leads to investors seeking refuge in gold and silver leading to the rise in prices. When investors feel comfortable again with the dollar, they close their metal investments and reinvest in the dollar leading to gold and silver prices dropping.
While investors continue to be concerned about the White House’s political rhetoric driving the dollar down, and the prices of avocados and other Mexican consumables on American shelves drop in price, México’s export market continues to grow.
México’s Trade Surplus
In December, México had a $2.43 billion trade surplus with Mexican exports rising by 17.2% from November. In 2025, México enjoyed a trade surplus with its manufactured goods. A trade surplus generally translates to new jobs and increased economic growth.
But with trade surplus comes the consequence of political pressure from the Trump administration as México continues to widen its trade surplus at the expense of American manufacturers. While the U.S. consumer enjoys lower prices at the grocery stores, the American manufacturing sector demands more strict control over the widening trade surplus with México. This friction can lead to tariffs being imposed on Mexican goods leading to higher prices.
México At Center of Debasement Trade
México is central to the physical supply of gold and silver used in debasement trade. Moreover, the Mexican Peso has remained strong even though the U.S. dollar is the target of the debasement. In 2025, the Mexican Peso appreciated almost 16% against the dollar. The Mexican Peso is one of the world’s most-traded currencies and the most liquid in Latin America. As the U.S. dollar weakens, the Mexican Peso gains strength from various factors tied to a weakening dollar and rising Mexican exports.
Trade debasement is happening as México’s exports to the U.S. continue to grow.
The widening trade imbalance with the U.S. and the upcoming USMCA renegotiations scheduled for later this year puts pressure on México’s economy. The USMCA requires the three countries to agree to continue the free trade agreement if they believe it has benefited their economies every six years. Although the free trade agreement is likely to continue at the conclusion of the renegotiations, the Trump administration’s disdain for treaty obligations and foreign trade makes the outcome somewhat uncertain. Notwithstanding the uncertainty the Mexican economy is likely to continue to grow because it makes sense for the U.S. economy and the American consumers who are weary of continued price uncertainty in their pocketbooks.
Most Americans may not understand what a weakened dollar looks like or the implications of gold pricing fluctuations, but they understand rising consumers goods.
As trade continues to grow between the U.S. and México, the Mexican government has started to take steps against Chinese imports to México with tariffs. The first was the textile industry. The second has to do with electric vehicles. Both measures are ostensibly to protect Mexican workers while placating the Trump administration’s demand to keep Chinese products out of the USMCA supply chain.
The Mexican economic move against China has now led to the phenomenon where México is now forced to balance its trade strategies between the two largest economies in the world – China and the U.S. The new Chinese-Mexican-U.S. triangular trade paradigm is not yet fully understood. While Chinese trade through México was characterized as a “back door” through USMCA for Chinese products to the U.S., the new trade dynamic can force Chinese investments in México and a widening trade portfolio for México’s manufacturing sector in the years to come. How this plays out is anyone’s guess today.
But the recent trade debasement suggests that México is positioning its manufacturing economy to be less dependent on trade with America. The Peso’s strength through the latest economic stressors suggest that México can positively benefit from being part of the triangle economy between it and China and the U.S.
On the surface it may appear that the USMCA renegotiations may stall on the strength of the Mexican Peso and the weakening of the U.S. dollar. Normally this would be the case, but the Trump administration wants a weak dollar.
Trump Wants A Weaker Dollar
Upsetting the dollar even more is that the Trump White House wants a weaker dollar upsetting decades of global trade led by the U.S. dollar. In essence, the Trump administration continues to hope to bring back manufacturing the U.S. To do so, the administration needs a weak dollar. A weak dollar makes imports costlier to U.S. consumers. As the price of imports increase, the Trump administration believes that American goods would become more attractive to the consumers, albeit at higher prices. Economists disagree with this notion – that a weaker U.S. dollar is good for America with some fearing that the global trade “barometer,” will show “that something’s going wrong, either domestically or internationally.”
While a weaker dollar may make U.S. products more attractive to foreign consumers, it will not lead to more American factories hiring American workers to produce more consumables. The problem is that American manufacturing has been pivoting away from America for some time now. Should manufacturers ignore other reasons for moving operations to other countries like access to reliable raw materials, cheaper costs and less regulation, reshoring manufacturing to the U.S. would require retooling factories or building new ones.
As companies retool their factories, they will look to save costs by reducing their need for expensive American labor and introduce automation to their manufacturing floors. Although newly reopened U.S. manufacturing would be selling American products to local consumers and those abroad, they will be doing so with less American workers working the production lines.
Thus, the broad investor uncertainty remains because investors are generally jittery about upsetting decades of investments to align the global trade that makes investors’ the money want but which the White House seeks to undermine.
