Steve Rand
General Manager / Sr. Precious Metals Advisor
Steve Rand is the General Manager and a Sr. Precious Metals Advisor at Scottsdale Bullion & Coin. He brings over 20 years of experience in the physical precious metals markets.
Todd Graf
Precious Metals Advisor
Todd Graf is a seasoned Precious Metals Advisor at Scottsdale Bullion & Coin. He has a decade-long career in finance, previously at Morgan Stanley and Vanguard. He is Series 7 licensed and has extensive experience in traditional and defensive assets, providing clients with solid investment strategies.
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The U.S. Treasury just announced plans to double its bond-market buyback intervention. Instead of calming markets as intended, the move has revived concerns about the federal government’s fiscal credibility, and gold and silver prices surged.
Watch this week’s The Gold Spot to hear Scottsdale Bullion & Coin’s Sr. Precious Metals Advisor Steve Rand and Precious Metals Advisor Todd Graf break down the return of the debasement trade, Treasury’s expanded buybacks, and why gold and silver prices are headed higher.
Gold & Silver Prices Sprint Higher
For months, investors questioned whether gold was entering a bear market or facing a correction. The precious metals market responded with a full-throated rally as fears rose, with strong gains across the board.
Within the last 30 days, gold prices rose by ~15%, regaining a significant amount of ground lost over the past six months.
True to form, silver prices not only followed suit but surpassed gold’s gains, rising by ~18%.
These moves amid broader market concerns suggest the foundational drivers of precious metals’ strength remain intact.
“For metals, that kind of move in a single month is big. Historically, that’s not a normal pace; that’s a sprint.”
Steve Rand
General Manager / Sr. Precious Metals Advisor
Bond Market Fears Fuel Precious Metals
The powerful upward momentum in both gold and silver markets in the last month is largely attributable to increasingly turbulent bond markets. At the same time, long-term government yields are soaring to multi-decade highs, and the Treasury has significantly expanded its buyback program.
Rising U.S. Treasury rates reflect falling confidence in the government’s fiscal management as investors demand more to hold its debt. In response, the Treasury announced on August 19th a plan to double its buyback of securities to improve market liquidity, as older, lower-yield assets become less attractive.
While this isn’t the same as the central bank’s quantitative easing, the heavy-handed intervention has stoked fears of federal fiscal restraint and broader monetary stability. In fact, prices jumped by 3% on the day of the announcement. Gold’s bullish reaction has many experts talking about the debasement trade again.
What is the Debasement Trade?
During the gold standard, debasement referred to the reduction of precious metal content within a coin or the decrease in a fiat currency’s value in gold. Today, debasement is the diminishing purchasing power of fiat currencies.
Oftentimes, investors turn to the inflation-hedge properties of precious metals to reduce their exposure to the steady value erosion of fiat currency, i.e., paper currency. Broadly, this is called the debasement trade.
The Current Debasement Pressures
To be sure, this phenomenon is nothing new, but a number of macroeconomic and policy pressures are reinvigorating the conversation and pushing investors to prioritize true portfolio diversification.
Skyrocketing U.S. National Debt
The U.S. national debt recently crossed $40 trillion, reaching another grim milestone of financial malpractice. This came only five months after the $39 trillion mark, demonstrating the rapid pace at which the U.S. debt is expanding.
This ever-increasing figure and the federal government’s reluctance to take meaningful action weigh on the U.S.’s credibility as a debt issuer, both at home and abroad. To make matters worse, the Treasury has entered a debt tug-of-war with major tech companies competing for bonds.
Persistent Federal Deficits
It’s been about a quarter of a century since the federal government last balanced a budget, and 2026 isn’t shaping up to buck the trend. The Congressional Budget Office (CBO) places the shortfall at $1.8 trillion for the first 10 months of fiscal year 2026.
For reference, 2025’s entire deficit was $1.8 trillion, demonstrating how much the government adds to the debt annually.
SUGGESTED VIDEOStructural Interest Costs
The consequences of rising U.S. debt are showing up in the government’s borrowing costs. The CBO projects net federal interest spending will reach roughly $1 trillion in FY2026, equal to about 3.3% of GDP.
That’s well above the 2.1% average over the past 50 years, meaning Washington is devoting an unusually large share of the economy simply to servicing existing debt. As those costs rise, they put even more pressure on future budgets and borrowing needs.
“What spooked investors is…the fear that Washington is becoming more willing to step into the bond market and manage borrowing costs, instead of letting yields reflect what inflation and debt risk justify.”
Steve Rand
General Manager / Sr. Precious Metals Advisor
Wall Street Questions Treasury’s Growing Market Role
Rising concern about the Treasury’s active involvement in the Treasury market isn’t limited to online chatter or investor speculation. Highly reputable institutions and big-name players are sounding the alarm.
The World Gold Council admitted the buy-back expansion wasn’t yield-curve control. Still, the preeminent voice in the gold market highlights prominent economist Mohamed El-Erian’s argument that it could be seen as a step toward a more hands-on approach.
Meanwhile, billionaire investor and Treasury Secretary Scott Bessent’s former mentor, Stanley Druckenmiller, criticized the policy overhaul as a “mistake,” arguing that markets were right to view it as price management. He warned that increasingly aggressive intervention could damage the U.S. Treasury market’s credibility.
Gold Benefits as the Debasement Trade Returns
For decades, gold has been the favored debasement trade in the fiat-currency era by retail, institutional, and official investors alike. However, gold’s quick upsurge isn’t the only signal that the market is benefiting from America’s deteriorating financial picture. The Treasury’s buyback announcement triggered an immediate reaction across financial markets.
Investors Are Increasing Their Gold Exposure
Gold’s rally is being reinforced by growing investor demand. The World Gold Council reported $3 billion in global gold ETF inflows during July, while total 2026 inflows reached $11 billion through the month. Meanwhile, the share of fund managers calling gold undervalued jumped from 6% in July to 16% in August, pointing to increasingly bullish institutional sentiment.
Wall Street Raises Its Gold Targets
Major banks are responding to gold’s renewed momentum with higher forecasts. Citi recently raised its short-term gold target to $4,800/oz while maintaining a $5,000/oz target over the next six to 12 months. JPMorgan has also suggested gold could retest $5,000/oz relatively quickly if upcoming inflation data provide additional support. Overall, many institutions see gold hitting $5,000/oz soon as the correction eases.
Silver Joins the Rally
Silver has moved even more aggressively than gold, recently trading near $71/oz after gaining roughly 20% during the month. Citi sees further upside, targeting $75/oz in the near term and $90/oz over six to 12 months, and expects the global silver market to remain in deficit through 2027.
How Much Gold Should You Hold?
The return of the recurring debasement trade conversation underscores the systemic vulnerability investors face with stocks and bonds. Not to say these aren’t worthwhile investments, but rather to acknowledge that a portfolio heavily weighted in these assets is subject to rising debt, inflation, and dollar weakness.
This structural risk is one of the main reasons investment firms and multinational banks are moving beyond the traditional 60/40 portfolio toward a 60/20/20 mix, with more room for gold.
Physical gold isn’t another borrower’s liability, and policy decisions can’t expand its supply. As fiscal pressures mount and Wall Street rethinks bonds’ role as a portfolio hedge, gold is increasingly being treated as insurance against risks investors can’t control.
If you’re wondering how much gold could make sense in a diversified portfolio, check out our recent report: How Much Gold Should Be in Your Portfolio? Expert Guidelines for Precious Metals Allocation. This free report pulls together more than two dozen expert gold-allocation recommendations from leading investors and financial institutions.
Of course, the “best” portfolio allocation depends on your specific circumstances. For direct support with one of our Precious Metals Advisors, call toll-free at 1-888-812-9892 or use our live chat function.
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