The $38 Trillion Reckoning: Debt, Devaluation, and the Flight to Gold

The US national debt has now surpassed $38 trillion—a figure so vast it no longer shocks. But scale still matters when it signals a collapse in fiscal discipline and a broader erosion of trust in the US dollar. Washington has entered a phase of permanent deficit financing, where each new dollar of GDP demands two or three dollars of additional debt. This isn’t growth; it’s leverage posing as prosperity. And leverage, inevitably, ends in devaluation.

The issue isn’t the size of the debt alone, but its structural unrepayability. The US Treasury continually rolls over trillions in short-term debt, while interest payments have become the largest single line item in the federal budget—surpassing defence and Medicare. Meanwhile, the Federal Reserve has quietly resumed its role as buyer of last resort, monetising debt under the banner of 'liquidity management'. This is debt monetisation in practice, and it is intrinsically inflationary.

For gold and silver investors, this marks the long-anticipated inflection point. When debt outpaces growth, the only politically feasible path forward is to inflate the debt away. The Fed will not raise rates meaningfully again—not with this burden. Instead, it will tolerate ‘controlled inflation’—bureaucratic shorthand for a stealth default. Gold and silver perform in this environment because they operate outside the credit system. No counterparty, no promise, no default risk.

Silver, in particular, often becomes explosive in such cycles. It’s a high-beta hedge on sovereign decay—part monetary metal, part industrial necessity. As debt grows and real yields fall negative, silver’s dual nature becomes a catalyst. Investors look to gold for preservation; they look to silver for outperformance. If gold is insurance, silver is the trade.

The last time US debt doubled, gold nearly tripled. History may not repeat exactly, but it rhymes. This $38 trillion milestone is more than a fiscal marker—it’s a psychological turning point. As the realisation spreads that this debt cannot be repaid in real terms, the repricing of hard assets won't be orderly. It will be sudden. Gold and silver won’t rise because investors favour them—they’ll rise because they must.