Mitch Salkow is president of Thor Metals Group.
America’s national debt exceeded $36 trillion for the first time in history, setting a new record. This is a staggering amount that could affect not only U.S. economic growth but also essential government-funded services such as Social Security and Medicare.
High national debt can have a significant impact on the federal budget, which in turn can affect funding for areas such as infrastructure, education, and scientific research. A country’s debt can also affect currency values and taxation, all of which can impact business growth, private equity, available capital, and the overall startup environment.
Concerns over national debt are also contributing in part to the rise in gold prices. As the president of a financial services company that helps investors buy gold, I talk about the country’s debt, how it could affect gold, and what leaders specializing in precious metals investing have in mind going forward. Let’s take a closer look at what you need to put.
understand the national debt
The U.S. Treasury Department explains that the national debt consists of “debts held by the people,” including “debts held by any person or entity other than the U.S. federal government,” including individuals, corporations, banks, and foreign governments. Includes national debt. The same applies to “government ownership.” This is essentially a debt owed among the federal government’s own agencies. The sum of these debts equals our total debt, which has doubled over the past 10 years.
In 2019, America’s debt grew at the fastest pace since World War II, with America’s debt exceeding its gross domestic product. How did we get here? Simply put, the government spends more than it receives. Rising health care costs and an aging population, increased government spending, and increased interest on existing debt may worsen debt.
If the U.S. government fails to make interest payments or satisfy creditors, it is effectively in default. According to NPR, this could cause a recession and a market crash, lowering the U.S. credit rating and raising interest rates. The US dollar may also fall. The dollar is the world’s key currency, currently accounting for approximately 58% of the world’s foreign exchange reserves (foreign assets held by central banks), and is likely to have a major impact on the global economy.
Gold acquisition is on the rise
A weak dollar is one of the reasons central banks around the world are buying gold. Gold is considered a reliable store of value, helping monetary authorities diversify foreign exchange reserves and manage currency risks. Unlike paper money, gold is a physical asset with intrinsic value. It cannot be printed, altered, or diluted. thus preserving purchasing power.
Central banks have been consistently net buyers of gold for years, according to data from the World Gold Council. Gold purchasing records were set in 2022 and 2023, with over 1,000 tonnes of gold acquired in both years. In the third quarter of 2024, the National Bank of Poland was the largest gold buyer. According to the World Gold Council, the company has acquired 42 tonnes of gold reserves. The Central Bank of Hungary, the Reserve Bank of India and the Azerbaijan State Petroleum Fund also collected large amounts of money.
In 2025, I think central banks are likely to continue acquiring gold as a safe-haven asset as policy uncertainty and debt servicing costs continue to rise. According to the General Accounting Office, the U.S. debt is expected to grow twice as fast as the U.S. economy over the next 30 years.
Gold’s potential limits
Gold has been buoyed by geopolitical uncertainty, inflation, and national debt. Each of these price factors will continue to have an impact in 2025. And there’s something else about gold that’s worth noting. It’s momentum. Gold has gained global attention as a means of portfolio diversification, and many retail investors, small businesses and industry leaders are turning to gold because it is relatively easy to buy and sell and can be traded around the world.
However, it is important to note that gold does not pay dividends or interest. Some say they are “unproductive” investments that tend to have lower returns than stocks, real estate, and bond investments. In short, it doesn’t generate cash flow. As such, it may not be ideal for people who are targeting short-term investment returns or who need to earn a regular income.
Lessons for precious metal investment leaders
At my company, we strongly believe that educated investors are the ideal candidates to acquire gold as an alternative asset. Gold is a global commodity and precious metals providers have a duty to educate their customers about how gold is subject to:
• Geopolitics
• Global conflicts
• Central bank policy
• Market volatility
• World debt
• Currency fluctuations
• Inflation rate
• Consumer psychology
This is achieved through easy-to-understand blog posts, articles, e-books, white papers, explanatory videos, and skilled personnel with a clear understanding of the macro trends impacting gold demand. As gold thrives on risk and volatility, it is also paramount that we share insights on current debates around unsustainable debt, market overvaluation, political polarization, and de-dollarization. Anyone considering adding gold to their financial portfolio should understand all the relevant triggers that affect gold prices in both the short and long term.
The information provided here is not investment, tax, or financial advice. You should consult a qualified professional for advice regarding your specific situation.
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