The Biden administration is bragging that this year will have the largest annual deficit decrease in US history. It's hard not to agree that this is brilliant spin given the annual deficit for fiscal 2021-22 will be around a trillion dollars. The market's acceptance of the spin that an annual deficit of "only" a trillion US dollars is positive news is a factor in the decline in price of gold and silver.
Fiscal-year-to-date the deficit is $726 billion, a record year-over-year decrease of $1.814 trillion (71%), for the first ten months of the fiscal year. Fiscal-year-to-date Receipts were $787 billion (24%) higher, while Outlays were lower by $1.027 trillion (18%). Source: https://www.fiscal.treasury.gov/files/reports-statements/mts/mts0722.pdf
Given that Japan has demonstrated that a government that controls their own currency can run up an enormous debt that has yet to cause their currency to collapse, it becomes challenging to predict when the US debt will become so overwhelming that it leads to debasement of the US dolar with a result of the price of silver exploding higher. But with an annual deficit run rate of a trillion dollars or more, US dollar debasement is only a matter of time. But this result may be a matter of years not months. (and the value of the yen is down 18% versus the US dollar year to-date, so the long predicted collapase of the Japanese Yen may already have started).
As of July 2022 the annual US borrowing costs was $589.5 billion to fund the debt, which is 12.20% of total federal spending. Given the increases in interest rates this year, that percentage is going to go higher. And as the debt increases, the cost funding the debt will eat up an unsustainable ever increasing percentage of US revenue.
While there are numerous factors that could lead to a massive increase in the price of gold and silver in the short term, I'm not counting on this happening in in the next few months. But it is inevitable that the price of gold and silver will be substantially higher at some point in the future.
