The U.S. Government Debt and Gold

You are probably aware that the United States of America national debt continues to tick higher every second of every day.

• In 1988, the U.S. government debt stood at $6.6 trillion.
• In 2001, the U.S. government debt stood at $9.9 trillion.
• In 2014, the U.S. government debt stood at $17.8 trillion.
• In 2019, the U.S. government debt stood at $27.1 trillion.
• In 2024, the U.S. government debt has soared above $35 trillion.

More concerning to many policy watchers is that the rising debt levels are occurring during peace time when the U.S. economy is growing. Historically, the debt rises during economic recessions, not periods of peacetime and economic growth. This leaves the U.S. vulnerable to an even bigger increase in the debt during the next recession.

Debt and Easy Money Policies

It’s no surprise the explosion in government debt levels corresponds to a period of increased money printing and easy monetary policy. Since 2000, central bank balance sheets in the U.S., EU, UK, and Japan have climbed nearly 10-fold, from $2.5 trillion to $22 trillion, according to State Street Global Advisors.

Q. What does this mean exactly?

A. The world is awash with paper money.

While debt levels are climbing and fiat money levels are expanding, the price of gold skyrocketed 586% over the same time period. “This is in part due to individual and institutional investors shifting into gold to combat pervasive, long-term risks stemming from the central banks’ increased debt and liquidity,” SSGA said.

Gold is Beholden to No Government

Unlike the U.S. dollar, the Japanese yen or the euro, gold is a currency that is beholden to no national government and has no obligations or debts against its value. There is no counter-party risk when you own gold and a government can’t simply devalue gold or print more of it.

In a world where politicians promise tax cuts to get elected alongside spending programs that cost more money, our country is facing an unsustainable debt load ahead.

It’s no wonder that institutions and individuals are buying precious metals this year, pushing gold 24% higher and silver 26% higher. Simply put, precious metals are insurance for your wealth. At some point the U.S. debt will face a financial reckoning day. When that day comes, gold will rise in value and the U.S. dollar will fall. Are your finances prepared for the day? If not, give us a call. We are here to help!

Want to read more? Subscribe to the Blanchard Newsletter and get our tales from the vault, our favorite stories from around the world and the latest tangible assets news delivered to your inbox weekly.