$37 Trillion Debt Bomb: Why Gold Is Holding Strong and Mining Stocks Could Explode

Well, this week the U.S. national debt officially topped $37 trillion for the first time ever.

You may recall the federal government ran up against the debt ceiling on January 1. As a result, the federal government couldn’t borrow any money until the enactment of the “Big Beautiful Bill,” which raised the debt ceiling by $5 trillion as of July 1.

At that time, the national debt stood at $36.2 trillion. It took less than two months for the federal government to borrow more than $800 billion, pushing the debt over $37 trillion.

The growth of the national debt is increasing at an exponential rate. In 2020, the Congressional Budget Office projected that the debt wouldn’t hit $37 trillion until 2030.

Oops!

Going back a little further, when Congress effectively eliminated the debt ceiling on June 5, 2023, the national debt stood at $31.5 trillion. Since then, the Biden administration added $4.5 trillion to the national debt. That was over just 18 months, for those of you keeping track at home.

This isn't shocking when you realize Uncle Sam is blowing through about half a trillion dollars every single month.

And federal spending isn’t going to slow down anytime soon.

To be fair, this isn’t just a Biden or Trump problem. Every president since Calvin Coolidge has left the U.S. with a bigger national debt than when he took office.

It’s hard to fathom $37 trillion. What does that even mean?

Well, here’s some perspective.

Every U.S. citizen would have to write a $108,509 check to pay off the debt.

Of course, a lot of people don't pay taxes. That means the taxpayer burden is much higher. Every U.S. taxpayer would have to write a check for $323,053 to wipe out the debt. Oh, and by the way, that's on top of the taxes we already pay!

Looking at it another way, $37 trillion is more than the annual GDP of China, Germany, India, Japan, and the UK combined.

It's hard to wrap your head around how big 1 trillion is, much less 37 trillion. But here are a couple factoids to help you visualize just how big that number is:

• There are 1 million seconds in 11.5 days. A trillion seconds is about 32,000 years.
• If you could say one number every second, it would take about 11.5 million days to count to 1 trillion.
• If you had spent $1 million every day since the birth of Christ, you still wouldn't have spent $1 trillion by now.
• If you line up dollar bills end-to-end, you could go to the moon and back around 203 times with $1 trillion. You could wrap them around the Earth about 3,893 times.

Keep in mind that all these examples illustrate the size of $1 trillion. The national debt is 37 times that number.

We consistently report on budget deficits and the growth of the national debt, but the truth is, most people don’t really care... or think it even matters.

But why does it matter?

In the first place, large government debts put a drag on economic growth. According to the national debt clock, the current debt level represents 123.3 percent of the GDP. Studies have shown that a debt-to-GDP ratio of over 90 percent holds back the progress of economic growth by about 30 percent.

Even more concerning is the fact that at some point, the world will decide it’s no longer interested in financing the U.S. government’s borrowing and spending. The debt is a big driver for the inflation problem we are having... and it's leading to sagging demand for U.S. treasuries and higher interest rates.

To cover the federal government's funding shortfall, the Fed often steps in to create money out of thin air. The new money gets injected into the monetary system and the economy. This is, by definition, inflation.

People seem unconcerned about the growing debt because people have warned about it for decades, and the promised crisis hasn’t occurred – yet.

But the bottom line is that just because the debt hasn't caused a crisis doesn't mean it won't. After all, things happen slowly and then all at once.

Well before we get to this week’s interview let’s take a look at the market action in the metals here. Gold is off 1.6% to trade at $3,355 an ounce. Silver is down 1.0% to check in at $38.17. Platinum is up 0.5% to come in at $1,355. And finally palladium is down 0.5% to trade at $1,146 as of this Friday morning recording.

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