Posted on 10/08/2025 7:59:08 PM PDT by SeekAndFind
Gold is in the middle of what looks like an unstoppable bull run. It has already punched through $4,000 an ounce. At the rate the price is rising, it may well go to $5,000 within a few weeks, and perhaps even $6,000 as the next year unfolds. There have been lots of different explanations for this, from the looming collapse of the dollar, to secret Chinese buying, to the conspiracy theories circulating on the wilder fringes of the internet, such a secret plot to re-establish the gold standard, or attempts to replace all the metal that is meant to be stored at Fort Knox, America’s official gold reserve, which apparently went missing decades ago.
But the real explanation is very simple: it is the only way to hedge against soaring government debt. So long as spending remains out of control, gold is a one-way-bet.
At $4060 an ounce, gold is already at an all-time high, and looks set to go a lot higher before this bull run is over. Why? It may reflect a weakening of confidence in the dollar, although President Trump seems to have given up on his fight with the Federal Reserve, and the US economy has taken tariffs in its stride. Or it may reflect buying by central banks, although given that the Polish central bank is the largest buyer this year that may be exaggerated.
But the main reason is that government debt is spiraling out of control. In the US, the deficit is likely to remain above 5 percent of GDP even with the government shut down.
President Trump shows no interest in bringing that under control. He even looks set to give away all his tariff revenue with $2,000 checks to every household instead of reducing the deficit. In Britain, the Labour government has clearly lost control of its spending, and it is now at the mercy of party rebels who insist they shouldn’t be bossed around by the bond market. In France, a succession of Prime Ministers who attempt to merely slow the rate at which spending rises are kicked out of office. Japan’s new PM Sanae Takaichi looks set to start spending again. Even Germany, the last man standing, has suspended its debt brake, and will borrow up to €900 billion this year to fund investment in infrastructure and defense. All those governments range across the right and the left of the political spectrum, but they are all united on one point: they are determined to keep borrowing more and more.
Perhaps it will all work out fine. The extra spending may accelerate growth, as the UK’s Labour Party and Germany’s Christian Democrats hope it will. Or perhaps it can just be rolled over in perpetuity, which seems to be the strategy of the MAGA Republicans. We will see.
The important point is this: if any of those plans go even slightly wrong, and the growth doesn’t materialize, or a recession hits, then gold will be the only asset worth holding. The only real surprise is that it has taken so long for gold to start soaring in price – and now that it has started, it won’t stop until borrowing comes under control again.
>> But the real explanation is very simple: it is the only way to hedge against soaring government debt.
The ONLY way? Nah.
Anyway, broken record that I am, I’ll ask again: WHY is it so easy to buy that precious GOLD!!! with a handful of those crappy paper dollars? And what idjit would SELL me gold in exchange for my worthless paper?
Yet there are literally THOUSANDS of gold sellers taking worthless paper dollars for shiny GOLD!!!!
Why?
gold will be 3000 before 5000
but I think silver will take a huge run to about 69 before everything crashes.
this is not investment advice.
you would do well to bet I am wrong cause anyone who says they can predict the exact futures of manipulated metals is mentally ill or a liar.
although Kramer said “buy silver” this morning which means more than anything I could say
Ohnoes!
Kramer said “buy silver”!
>> although Kramer said “buy silver” this morning
Kramer??!? Guess I need to sell my silver, then! Thanks for the investment tip! :-)
Gold not increasing, it is taking more declining USD’s to buy an ounce. ALL the world’s paper currencies are rapidly losing purchasing power at an alarming rate. History shows this to be the outcome for all fiat currencies.
US debt is a contributor, but not primary. Since senile Joe weaponized the USD, countries are ditching it and buying Gold.
>> Gold not increasing, it is taking more declining USD’s to buy an ounce.
So what do you suppose the gold sellers do with the declining USD’s they take in exchange for their rock-solid gold?
RE: gold will be 3000 before 5000
Gold is $3,985 today and touched $4,000 yesterday.
I don’t see it crashing unless we fix our deficit and debt problems ( and it seems that our government don’t even see these as problems ).
>> I don’t see [gold] crashing unless we fix our deficit and debt problems
Given our debt and deficit problem (and I don’t deny them) —
I just had a look at the FOREX rates and futures. If our economic outlook sucks so bad, why isn’t USD crashing through the floor relative to other world currencies?
RE: I just had a look at the FOREX rates and futures. If our economic outlook sucks so bad, why isn’t USD crashing through the floor relative to other world currencies?
If you’re talking major world currencies then I don’t see them doing any better when it comes to debt to GDP.
Measure the value of gold with mismanaged fiat currency such as the euro, U.S. dollars, yen, etc. All around the world, governments are addicted to debt. The cycle is simple.
Politicians overspend revenue. Rather than default, they inflate the currency. In other words, they print new currency and expand the money supply. More “worth less” currency units compete for a finite number of goods and services. As a result, prices for everything that has value increase.
That can be for a cup of coffee, a gallon of gas, a new home, a college education and, of course, for an ounce of gold.
Until there is a will from Parliamentarians, Congressmen and Senators to balance a budget, this vicious inflationary cycle will continue.
Edit to add....
Central banks worldwide ( China and India included) continue buying at a pace of roughly 1,000 metric tons per year. This will be the fourth year in a row. And investors are only now starting to buy in a meaningful way. We know this thanks to several indicators:
Premiums on fabricated coins and bars are still low.
The gold price is lower than three times the previous bull market high of $1,921.
The bull market still has a few years before it reaches a minimum expected duration of 10 years.
Interest rates are too low to dissuade investors from buying gold, and they are coming down.
The U.S. dollar is entrenched in a weakening trend.
The Gold/Silver Ratio (GSR) is above 80. Expect it to take 50 ounces of silver to buy an ounce of gold when the bull market is near to running its course.
Geopolitical crises continue globally ( now this is going to be interesting because the Gaza crisis seems to be going in the right direction, but not Ukraine/Russia, or China’s beligerence towards Taiwan ).
Social uprisings continue domestically.
The Dow/Gold Ratio stands at 11.5. The end of the bull market is only expected when it takes 5 ounces of gold to buy the DJIA.
Then there’s another something to observe...
Morgan Stanley recently changed its investment allocation guidance. For years, Morgan Stanley recommended a mix of 60% stocks and 40% bonds. Now, they recommend cutting your bond allocation in half and allocating that to gold.
Yes… that is 60% stocks, 20% bonds and 20% gold.
It may not seem like much, but consider this. Morgan Stanley is a blue-chip brokerage with $4.8 trillion in assets under management. If its brokers implement their recommendations for all their clients, 20% of $4.8 trillion will be moving out of bonds and into gold.
Until you can find me a consensus in Congress that will deliver balanced budgets for the foreseeable future, gold’s price will continue to wind its way higher.
I believe Dips should be embraced.
But to each his own. I have owned gold since the mortgage crisis of 2008 and have NEVER regretted it.
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The sellers buy more gold of course...USD is just the most convenient way of taking payments. BTC would be a better means of payment...it hit an all-time a couple of days ago.
I would guess because they need the $$$ to pay off debt or make some sort of purchase. Maybe they want to buy ammo(?)
>> I have owned gold since the mortgage crisis of 2008 and have NEVER regretted it.
You were smart to buy gold then.
Now...? I’m not so sure.
>> Maybe they want to buy ammo(?)
:-)
Silly argument. Gold selling is a business. A business needs to make money daily, because the US dollar is still currently THE unit of exchange. Is a gold seller supposed to sit on their inventory? Does an automobile dealership sit on its inventory because it may be more valuable in a few months? No, they need to sell cars to stay in business.
RE: Now...? I’m not so sure.
The reason I bought gold then has not changed. Then, it was TARP, then, Obama made TARP the base line budget long after the mortgage crisis passed. Ten years later, it was Covid, After Covid, do you think we would go back to the budget we had before Covid hit? NOOOO, the massive Covid spending became the baseline for the next budget and so on and so forth.
Heck, we can’t even cut a measly $9 billion from our budget without everyone crying foul. Now, with the shutdown, the Dems want to spend an ADDITIONAL $1.5 trillion for Medicaid and Obamacare and even if they did open the government, I forsee Republicans and Trump ( ever the negotiator ) coming to terms with the Dems with spending that’s less that what they demand but STILL elevated.
I don’t see an end to this unless we have more responsible Republicans like Rand Paul in the Senate and we get a 60 seat majority ( which is not possible at this time ).
So I am DEAD SURE that Gold will continue to rise. But don’t say I didn’t tell you.
>> If you’re talking major world currencies then I don’t see them doing any better when it comes to debt to GDP.
Be that as it may... when you buy (say) a BMW, you buy it with $USD converted to EUR. Ditto with the other things in life that one uses money to buy. That BMW price isn’t going to the moon anywhere near as fast as the price of gold! So my USD are holding their purchasing price pretty well in Germany, regardless of their (and our) debt and deficit problems.
might be interesting for someone
https://worldpopulationreview.com/country-rankings/debt-to-gdp-ratio-by-country
isn’t USD crashing through the floor relative to other world currencies?
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The USD is down 11 percent since January.The USD index (value) is compared to a basket of world currencies.
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