Gold, Debt, and the Coming Financial Storm

In a recent episode of the Money Metals podcast, host Mike Maharrey sat down with financial analyst Greg Weldon to discuss the state of global markets, gold’s record-breaking rally, and the looming debt crisis threatening economic stability. Weldon, a veteran trader and macroeconomic expert, shared critical insights into gold, inflation, government debt, and what investors should expect moving into 2025.

(Interview Starts Around 6:34 Mark)

Who is Greg Weldon? A Veteran in Global Markets

Greg T. Weldon is a highly respected figure in financial markets, with decades of experience spanning multiple sectors. His career has included roles as a floor trader, hedge fund manager, commodity trading advisor, institutional broker, and portfolio manager. As a financial investor, his deep understanding of macroeconomic trends has made him a sought-after analyst, particularly in commodities, currencies, and interest rate markets.

As the founder of Weldon Financial, he provides high-level market research for hedge funds, institutional investors, and individual traders. His analysis goes beyond surface-level headlines, digging into economic data and global monetary policy to uncover the forces shaping financial markets. Weldon is also a published author, having accurately forecasted major financial crises, including the 2008 recession, in his book Gold Trading Boot Camp. His ability to recognize trends before they become mainstream narratives has cemented his reputation as a leading voice in macroeconomic forecasting.

With this expertise, Weldon offers a unique perspective on today’s economic challenges, particularly in gold, inflation, and government debt. His insights are invaluable for investors looking to navigate the uncertain financial landscape ahead.

Gold’s Meteoric Rise: What’s Driving the Rally?

Gold has surged past $2,900 per ounce, breaking multiple record highs. The mainstream narrative suggests that tariffs are fueling safe-haven demand, but Weldon argues that deeper structural forces are at play. While trade wars and economic tensions certainly contribute to market jitters, the bigger picture reveals a global shift away from reliance on the U.S. dollar.

One major driver of gold’s ascent is the trend of de-dollarization. Many central banks, particularly those aligned with BRICS nations, are actively reducing their holdings of U.S. Treasuries and accumulating gold. This shift is part of an effort to establish alternative trade currencies backed in part by gold, challenging the dominance of the dollar in global transactions. Additionally, Weldon highlights the massive outflow of physical gold from London bullion banks, indicating a growing preference for direct possession of metal rather than paper contracts. Reports from sources like Bloomberg even suggest that gold and silver bars are arriving in bulk shipments at U.S. airports, further underscoring the demand for tangible assets.

A crucial distinction in this gold rally is that it has not been fueled by speculative investment. Unlike previous surges where hedge funds and retail investors piled into gold-backed ETFs, this time, the demand is being driven primarily by sovereign institutions and central banks. U.S. investors have actually been net sellers of gold ETFs, with outflows totaling $3.2 billion in 2023. Weldon warns that gold’s true breakout will come when the U.S. dollar weakens—an inevitable scenario given the nation’s fiscal trajectory.

The U.S. Debt Crisis: A Black Hole of No Return

Perhaps the most alarming part of the discussion centered on the unsustainable trajectory of U.S. debt. Weldon describes the current situation as a “macro event horizon,” comparing it to a black hole from which there is no escape. The problem, he explains, is that the U.S. now requires $1.86 in new debt to generate just $1 of GDP growth. This debt dependency has reached a critical threshold where the economy can no longer grow without continuously expanding the money supply.

Government debt has ballooned to $36 trillion, while household debt sits at a staggering $18 trillion. The consumer debt crisis is just as severe, with credit card debt reaching an all-time high of $1.4 trillion—far outpacing the total personal savings of just $980 billion. This gap highlights the financial strain facing American households, as more people rely on credit to maintain their standard of living.

One of the most concerning shifts has been in consumer spending versus disposable income. Historically, Americans earned significantly more than they spent, maintaining a healthy buffer for financial security. However, for the first time in modern history, this ratio has flipped. 

Today, Americans are spending $20.4 trillion annually while earning just $17.7 trillion—a stark reversal from the surpluses seen in past decades. This means that consumer spending is now being propped up by debt rather than income growth, a dynamic that is ultimately unsustainable.

Federal Reserve’s Tightrope Act: A Losing Game?

Despite the Federal Reserve’s public stance on maintaining high interest rates to combat inflation, Weldon argues that their actual policies tell a different story. While officials claim to be keeping rates “higher for longer,” the Fed has already cut interest rates by an effective 1% when considering its monetary interventions. At the same time, money supply growth, which had briefly contracted, is once again rising—suggesting a return to accommodative policies.

This creates what Weldon describes as a “Three-Card Monte” scenario, where the Fed simultaneously presents conflicting narratives. One side of the policy equation suggests tight monetary conditions through interest rate hikes, while another side—through increased liquidity injections—points to a more dovish stance. The result is market confusion, with many investors unsure of the Fed’s real intentions.

The biggest risk, according to Weldon, is that the economy reaches a point where the government has no choice but to resort to large-scale money printing. If economic conditions deteriorate to the point where financial markets collapse or consumer spending grinds to a halt, the Fed could be forced to intervene aggressively. In this scenario, inflation would spiral out of control, leading to a dramatic loss in purchasing power—potentially pushing the cost of basic goods, like a loaf of bread, to $50.

Stock Market Disconnect & Corporate Debt Bomb

While the stock market continues to rally, Weldon sees a glaring disconnect between economic fundamentals and stock valuations. He points to the S&P Retail Index (XRT), which has been breaking down relative to the broader market. This signals a weakening consumer sector, despite continued stock market gains. Additionally, corporate bankruptcies have now exceeded their 2020 pandemic levels, yet credit spreads—historically a measure of financial risk—remain unusually tight, suggesting that investors are underpricing the likelihood of economic distress.

One of Weldon’s biggest concerns is the artificial boost that AI-related stocks have provided to the market. While he acknowledges the long-term potential of artificial intelligence, he sees alarming similarities to the dot-com bubble of 2000. Companies like Nvidia have led a speculative frenzy, driving valuations to unsustainable levels. The danger, he warns, is that if market sentiment shifts, a wave of selling could trigger a significant stock market correction, wiping out a large portion of recent gains.

Silver & Copper: The Next Moves?

Silver has remained stuck in a historically high gold-silver ratio above 90, meaning it continues to be undervalued compared to gold. Weldon believes silver’s move will come, but only when broader market participation shifts beyond central banks to institutional and retail investors. He sees $32.50 per ounce as the critical breakout level. If silver can push past this resistance, it could see a rapid and explosive price surge.

Copper, meanwhile, has seen a strong rally in recent weeks, though its fundamentals remain clouded by economic uncertainty. Weldon remains cautiously bullish, pointing out that inventories have been steadily declining, signaling tightening supply. However, he warns that copper’s future price action will depend heavily on macroeconomic trends, particularly in industrial demand.

Final Thoughts: Preparing for What’s Coming

Weldon’s bottom-line message is clear: the current financial system is unsustainable, and investors must be prepared. Whether through gold, silver, commodities, or strategic market positioning, those who recognize these trends early will have a significant advantage.

For those seeking deeper insights, Weldon offers market research and specific investment recommendations through his service at WeldonOnline.com, and can be followed on Twitter at @WeldonLive. His research covers global stock indexes, bond markets, currencies, and commodities, providing investors with the tools needed to navigate the unfolding financial landscape.

As the world teeters on the edge of a debt spiral, one thing is becoming increasingly clear—gold is no longer just an asset; it is a necessity.

Key Questions & Answers

The following are the key questions from the Money Metals podcast with host Mike Maharrey interviewing financial analyst Greg Weldon: 

What is driving gold’s record-breaking rally?

Gold recently surged past $2,900 per ounce, setting new all-time highs. While mainstream analysts attribute this rally primarily to safe-haven demand driven by tariffs, Greg Weldon believes the true catalyst is a deeper global shift away from reliance on the U.S. dollar. Many central banks, particularly those associated with BRICS nations, are moving to reduce their exposure to U.S. Treasuries and instead accumulate gold as a hedge against potential currency instability.

This de-dollarization effort is leading to a significant drain of physical gold from London bullion banks, as many nations are now opting to take direct possession of their reserves rather than holding them in Western vaults. Weldon cited reports of large shipments of gold and silver arriving in the U.S., underscoring the growing demand for tangible assets. Additionally, lease rates for gold have spiked to 12%, indicating a tightening supply. Unlike past gold rallies driven by speculative investment, this surge has been led by sovereign entities rather than hedge funds or retail investors. U.S. investors, in fact, have been net sellers of gold ETFs, with outflows of $3.2 billion in 2023. Weldon warns that the real breakout in gold’s price will come when the U.S. dollar begins to weaken—a shift he sees as inevitable given the country’s worsening fiscal position.

How severe is the U.S. debt crisis, and what does it mean for the economy?

Weldon describes the current U.S. debt situation as a “macro event horizon,” likening it to a black hole from which there is no escape. The fundamental problem, he explains, is that the U.S. now requires $1.86 in new debt to generate just $1 of GDP growth. This level of debt dependency has created a vicious cycle where economic expansion is only possible through ever-increasing borrowing.

Government debt has skyrocketed to $36 trillion, while household debt sits at an alarming $18 trillion. Consumers are also struggling under unprecedented levels of credit card debt, which now exceeds $1.4 trillion—far surpassing total personal savings of just $980 billion. For the first time in modern history, Americans are spending more than they earn. The ratio of consumer spending to disposable income has flipped, with annual expenditures of $20.4 trillion outpacing total earnings of $17.7 trillion.

This debt-fueled economy is unsustainable, according to Weldon. He warns that if this trajectory continues, the Federal Reserve will eventually be forced to intervene with aggressive monetary easing, leading to severe inflation and a dramatic loss of purchasing power.

Is the Federal Reserve tightening or easing?

Although the Federal Reserve publicly maintains a stance of keeping interest rates “higher for longer” to combat inflation, Weldon argues that their actual policy actions tell a different story. While officials claim to be committed to restrictive monetary policy, the Fed has already effectively cut interest rates by 1% when considering its various interventions. Additionally, money supply growth, which had been contracting, is now expanding again.

Weldon describes the Fed’s strategy as a “Three-Card Monte” game, where different parts of its policy framework send mixed signals. On one hand, rate policy remains elevated, which gives the appearance of restraint. On the other hand, Quantitative Tightening (QT) continues, though at a slower pace. Meanwhile, money supply expansion suggests that liquidity is actually being injected into the system. This contradictory approach confuses investors, as the Fed appears to be both tightening and easing simultaneously.

The most significant danger, according to Weldon, is that the economy could reach a crisis point where the government is forced into full-scale money printing. If financial markets experience severe stress or consumer spending collapses, the Fed would likely step in with extreme measures, leading to an inflationary spiral that could push the cost of basic goods, such as a loaf of bread, to $50.

Why is there a disconnect between the stock market and economic fundamentals?

Despite mounting economic risks, the stock market continues to rally. Weldon believes this disconnect between Wall Street and Main Street is unsustainable and that a correction is inevitable. He points to the S&P Retail Index (XRT), which has broken down relative to the broader market. This signals a weakening consumer sector, even as stock prices remain elevated.

Adding to the concerns, corporate bankruptcies have now surpassed their 2020 pandemic levels. Despite this, credit spreads—historically an indicator of financial risk—remain tight, suggesting that investors are failing to account for potential economic distress.

Weldon also sees an alarming parallel between today’s AI-driven stock boom and the dot-com bubble of 2000. He acknowledges the long-term potential of artificial intelligence but warns that stocks like Nvidia have been propelled to unsustainable valuations. If sentiment shifts, a wave of selling could trigger a significant stock market correction, wiping out a large portion of recent gains.

Will silver finally catch up to gold’s rally?

Silver has remained undervalued relative to gold, with the gold-silver ratio still hovering above 90—far above historical norms. While many analysts expect silver to eventually catch up, Weldon argues that the metal’s price movement has been constrained by the fact that central banks, which have been driving the gold rally, do not buy silver.

That being said, Weldon remains optimistic about silver’s potential. He believes that once broader investor participation increases, silver could experience a rapid surge. He identifies $32.50 per ounce as a critical breakout level. If silver can push past this resistance, he expects an explosive rally to follow.

Another factor to watch is the performance of silver mining stocks. Companies like Pan American Silver, Mag Silver, and Fortuna Silver Mines have shown strength recently, which Weldon sees as a bullish indicator. Historically, mining stocks tend to move ahead of the metal itself, suggesting that silver’s next big run could be on the horizon.

Is copper signaling a shift in the metals market?

Copper has experienced a strong rally in recent weeks, but Weldon warns that it remains in a volatile trading environment. Unlike gold and silver, which are driven primarily by monetary factors, copper is more closely tied to industrial demand. This makes it particularly sensitive to macroeconomic conditions.

One of the key trends Weldon is watching is the decline in copper inventories. While a sharp increase in stockpiles earlier in the year temporarily pushed prices down, recent data shows that inventories are once again falling. This suggests that supply is tightening, which could provide further support for copper prices.

Despite his generally bullish stance, Weldon remains cautious due to the broader economic uncertainty. He notes that copper has yet to outperform the industrial sector of the stock market, which is often a warning sign. If the global economy slows, copper demand could weaken, making its rally short-lived.

What can investors do to protect themselves from financial instability?

Weldon’s primary message to investors is that the current financial system is unsustainable, and those who recognize the warning signs early will be best positioned to protect their wealth. He sees gold as a crucial hedge against economic instability and believes that silver, copper, and other commodities can also play a role in preserving purchasing power.

For those looking for deeper insights, Weldon offers extensive market research through Weldon Financial, where he provides analysis on global stock indexes, bond markets, currencies, and commodities. His work is followed by major hedge funds and institutional investors, but he also provides guidance for individual traders and self-directed investors.

As the global economy edges closer to a potential financial crisis, Weldon’s key takeaway is clear: gold is not just an asset—it is a necessity.

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