Page 26 - Bullion World Volume 4 Issue 5 May 2024

Bullion World | Volume 4 | Issue 5 | May 2024

The primary cause for concern is the unregulated buildup account for about $1 trillion of the U.S. government's
of the United States government's debt, as interest spending, surpassing even the amount spent on national
payments continue to consume a bigger portion of the defence. If this keeps up, the federal government may
government's budget, often surpassing that allocated to spend more on interest over the course of the next ten
national defence. years than on discretionary non-defence spending, which
includes money for general government, transportation,
In 2019, the annual debt interest payment was $300 veterans, education, health, international affairs, natural
billion. And we have reached a stage where a substantial resources and the environment, general science and
amount of the budget is been allocated to interest technology, and international affairs.
payments. In the upcoming year, interest payments will

The FED now has four alternatives to lower this alarming already this year—by Fitch in August and Moody's in
debt: raising taxes, cutting spending, lowering interest November—a third rating would cause more investors
rates, or going into default. Because the first two choices to switch from the dollar to other currencies or gold as a
are a little more challenging to implement, the US crisis hedge.
depends on low-interest rates to fund its government.
The United States would also become practically So to conclude the next big trigger for Gold that would
bankrupt as a nation if interest rates were to increase take prices to $3000 in the next 2-3 years would be the
substantially higher than they already are. At that point, US Debt crisis. The United States will be unable to pay
the Fed would come under political pressure from the its debts if it defaults, disrupting the world's financial
federal government to peg the yield curve across the markets and leading to catastrophe. Investors will
curve. When US 30-year bonds were fixed at 2% in the probably keep turning to gold in the case of a debt crisis
1930s and 1940s, this was previously done. The Federal to protect their capital from the consequences. Gold is
Reserve will persist in creating an infinite quantity of a good investment at any price since it's best seen as a
money to purchase an infinite quantity of bonds at a long-term asset.
specific yield point.
Investors should not skip a chance to buy gold on dips
In addition, the Fed is given new authority and around $2200-$2250 (~Rs 68000-69000) in the month
responsibilities virtually every year. The Federal of May, which would be a base price for the next 2-3
Reserve, in my opinion, is already a way too strong years. It is forecasted that gold prices will be trading
an organization that is not accountable to anybody. It 10% higher to around $2500 (~Rs 75500) from the
contributes to the issue. With its unprecedented potential current levels by the end of 2024. So those who missed
to influence both national and international economies, the earlier rally can jump on the train this month for good
the Federal Reserve has emerged as the world's most long-term returns.
powerful institution. After downgrading U.S. debt twice

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