US debt surpasses 40 trillions, does the world need gold more than ever?

The US Treasury recently announced that the nation's total debt has surpassed 40 trillion dollars for the first time. The speed of increased government spending far exceeds government revenue, again sparking warnings that a fiscal crisis is brewing. Notably, in less than 10 years, the US debt scale has more than doubled from the previous 19.95 trillion dollars. Estimates show that in just the past year, US total debt increased by 3 trillion dollars, at the fastest rate in history outside of pandemic times.

The so-called "gold-plated" US bonds are being sold off, reflecting shaken investor confidence in the dollar. For central banks worldwide, converting their dollar assets into gold is a feasible option. Thus, in the second quarter of this year, central banks clearly accelerated their gold purchases, with nearly 290 tons bought—far exceeding less than 60 tons in the first quarter.

It's not just the amount of central bank gold purchases—the gold price itself is also positively correlated with US debt levels. Over the past 20 years, US national debt skyrocketed from less than 6 trillion dollars at the turn of the century, with gold prices then about $300 per ounce. During the 2008 financial crisis, large-scale public spending further expanded the huge budget deficit, and gold entered a super bull market, with prices surging to nearly $2,000 per ounce. During the pandemic, similar scenarios occurred again, with US debt and gold prices both rising rapidly.

Therefore, faced with America's ever-increasing debt—over the past year, US national debt increased on average about $7.9 billion per day, or roughly $91,000 per second—the need for gold has even more justification.

Editor | Jiao Yang   Layout | Jiao Yang   Visuals | Zhang Zongwei