Rising Gold Prices Underscore Uncle Sam's Spending Problem

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The U.S. government's reckless spending has led to a growing national debt, now exceeding $38.5 trillion and surpassing the country's GDP. This has eroded the dollar's value, prompting foreign banks to ditch the dollar and buy up gold to limit exposure to potential volatility. The rush to exchange paper money for gold has pushed its value above $5,000 per ounce, the highest ever. Lawmakers have shown little courage to address the issue by significantly slashing spending or raising taxes, saddling future generations with untenable debt.

Why it matters

The U.S. government's inability to rein in its spending and address the growing national debt is undermining the dollar's status as the world's reserve currency. This is leading to a shift towards alternative assets like gold, which could have far-reaching economic and geopolitical consequences for the United States.

The details

The U.S. dollar's status as the world's reserve currency has been eroded by the country's high debt burden and lack of political will to address it. Credit rating agencies have downgraded the U.S. rating, citing the government's failure to reverse the trend of large annual fiscal deficits and growing interest costs. Foreign banks are increasingly ditching the dollar and buying up gold to limit exposure to potential volatility, while investors are also rushing to exchange paper money for gold, pushing its value to record highs.

• In 2024, nearly 40% of U.S. households worried they wouldn't be able to afford their bills.
• Banks bought more than 863 tons of gold last year and over 1,000 tons the year before.

What they’re saying

What’s next

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