Wall Street and the world are increasingly alarmed by the US debt crisis. This has been yet another catalyst for the bull market in gold as global central banks continue to increase their gold hoards.
KWN has now released a powerful interview with Michael Oliver where he predicted the price of silver will hit $160–$240 (LINK BELOW). For now…
July 10 (King World News) – Gerald Celente: With the annual U.S. budget deficit already climbing toward $2 trillion, Republicans in Congress dug the budget hole even deeper by passing Donald Trump’s “big beautiful” tax-cut legislation, which the latest projections say will add $3.4 trillion to the national debt by 2035.
In the past, legislators have been willing to increase debt in the face of a crisis, such as World War Two or the Afghan war following the September 11 attacks.
This time, however, there is no economic crisis requiring a massive debt increase. In fact, analysts say, the growing debt is the crisis, having reached a level resembling that during the 2008 Great Recession.
“The government is like a teenager with a credit card that has no limits until it has to be paid,” Bill Gross, founder of the PIMCO private equity firm, said to the Wall Street Journal. “The payment due comes not with a default but with a weak dollar and higher interest rates.”
The first six months of this year saw the dollar post its sharpest first-half-year drop since 1973…
Listen to the greatest Egon von Greyerz audio interview ever
by CLICKING HERE OR ON THE IMAGE BELOW.
Ray Dalio, founder of the Bridgewater Associates hedge fund, expects the current trend to lead to some combination of a bond market crash, a sharp economic downturn, and interest-rate increased by the U.S. Federal Reserve that could reignite inflation.
Trump and his allies dismiss the worries. Their version of math shows that the massive tax cuts, combined with equally massive reductions in spending on healthcare and food assistance for millions of Americans, will put the country on a solid financial foundation.
“For all cost-cutting Republicans, of which I am one, REMEMBER…we will make it all up, times 10, with GROWTH, more than ever before,” Trump tweeted to GOP senators as they were about to vote on his bill.
At $1.8 trillion, last year’s budget gap equaled about 6 percent of GDP. If current trends continue, it will reach 9 percent by 2035, Moody’s Analytics forecasts. At that point, the cumulative national debt—now slightly less than the U.S. GDP—will rise past 130 percent.
The previous record was 106 percent, set in 1946 as the U.S. began to rebuild itself and Europe after World War Two.
Since 1800, advanced economies with debt levels above 90 percent of GDP have consistently shown lower economic growth, according to a study led by Harvard University economist Kenneth Rogoff.
The U.S. ran over that threshold during the COVID War when it made forgivable loans to businesses and gave billions in cash gifts to American households, Rogoff noted.
Foreign banks and investors are unlikely to dump the bonds and run, Harvard economist Jeremy Stein, who was a Fed governor from 2012 into 2014, told the WSJ.
However, “I wouldn’t be surprised if, over the next couple of years, as their portfolios roll off and they have to reinvest, they start shifting that reinvestment more towards Europe or German bonds,” he added.
Concern over the debt has already led to two government bond selloffs in the last two years.
In the summer of 2023, investors recoiled when the treasury announced it would have to borrow more to cover the yearly deficit than anyone had expected. Last May, investors bailed again when Moody’s became the third of three major credit rating agencies to downgrade the U.S.’s creditworthiness.
In both cases, the markets bounced back. However, yields on bonds maturing in 10 years or longer are now higher than one would expect based on simple projections from short-term rates.
TREND FORECAST:
Foreign countries hold a third of U.S. debt bonds. As the U.S. debt level rises so too does the level of concern which means that investments will be made elsewhere and there will be fewer bond buyers to support U.S. government borrowing.
That extra yield or “premium” is now at its highest since 2014, according to the Federal Reserve Bank of New York. The premium rises as investors see a greater risk in sticking with government debt over the long term compared to the short term.
And as we have detailed, much of the world has had enough of U.S. economic and geopolitical hegemony and the BRICS building stronger is a factual reality of the socioeconomic pushback against America.
Closing out the BRICS summit meeting in Rio de Janeiro yesterday, India’s Prime Minister Narendra said“ Together, we strive for a more peaceful, equitable, just, democratic and balanced multipolar world order.” Taking a geopolitical and economic shot at the United States, the BRICS members denounced the United States tariff war as an “indiscriminate” trade measure.
In response, on Monday, U.S. President Donald Trump threatened to impose an additional 10 percent tariff on nations that “aligns itself” with BRICS… who he said want to impose “anti-American policies.”
Trends are born, they grow, mature, reach old age and die. BRICS was born with just four countries in 2006: Brazil, Russia, India and China. Today there are more than 30 nations that have applied to join the BRICS club.
Again, we note this to illustrate how there will be fewer countries supporting the U.S. dollar and few buying bonds as the nation goes deeper in debt.
King World News note: The combination of the West seizing Russia’s assets and the West becoming engulfed in its own debt crisis has only fueled the move into physical gold. The move into gold is still ongoing as the Metal of Kings has become the world’s reserve currency. The combination of central banks continuing to replace US dollar assets with gold and the repricing of gold significantly higher will increase central banks gold reserves to the targeted level.
Michael Oliver Just Predicted Silver Will Hit $160-$240
To listen to Michael Oliver’s jaw-dropping predictions for the price of silver, gold, and the mining stocks in one of his greatest interviews ever CLICK HERE OR ON THE IMAGE BELOW.
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To listen to Alasdair Macleod discuss the massive upside breakout in the silver market and much more CLICK HERE OR ON THE IMAGE BELOW.
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