America’s financial foundation is showing strain. Federal debt has passed $38 trillion and interest costs are topping $1 trillion per year. Economists like J.P. Morgan’s David Kelly warn that the United States is “going broke slowly.” Continuing political gridlock amid the current government shutdown is adding pressure, raising doubts about Washington’s ability to manage the nation’s finances.
Trouble is also brewing in the private sector. Recent bankruptcies among midsized companies—from auto lenders to parts makers—have exposed risky lending practices at regional banks and within the fast-growing private credit market. Banks have more than $4 trillion tied up with hedge funds and nonbank lenders, linking traditional finance to the less-regulated corners of the financial system. Rising funding costs and lingering bond losses have added to the unease. Even small defaults now trigger wider concerns regarding the overall health of the U.S. banking system.
The ongoing government shutdown has slowed spending, hurt confidence, and strained the labor market. Economists warn that if the standoff drags on, it could push the country toward weaker growth or even a downturn. Falling confidence could lead to even less spending, more layoffs, and another wave of financial stress. The Federal Reserve may have to step in with more rate cuts or new support measures—moves that could spark fresh worries about inflation.
In response, more people and institutions are turning to gold. Central banks and wealth managers are expanding their gold holdings as a safeguard against rising debt, unstable credit markets, and uncertain policy, while Goldman Sachs and J.P. Morgan see growth potential in the precious metal as more portfolios add it alongside traditional paper assets.