23¢ on the Dollar, $11B a Day, and 26 Months of Gold Buying: The Great Repricing Has Begun

“23¢ of every tax dollar is now interest.”

When ~23% of tax revenues get swallowed by interest, the government’s balance sheet turns reflexive: higher rates → higher interest expense → bigger deficits → more issuance → higher term premia → higher rates.

That feedback loop is why the long end has stopped obeying policy jawboning. It also explains why the system desperately prefers short bills (optics) while the real problem—duration risk—keeps migrating outward. Translation: Treasuries are still “money,” but they are no longer frictionless collateral.

Implication: Fiscal dominance isn’t a theory; it’s the operating system. The more the debt service eats the budget, the more the market prices debasement risk and the more valuable non-liability collateral (gold/silver) becomes.

“$345B deficit in one month (~$11B/day).”

That’s not seasonal noise—that’s flow. In a world where the private sector’s balance sheet is already duration-fatigued, those flows must be absorbed by:

• money funds (via bills),

• the Fed/foreign official sector (intermittently), or

• higher term premia (the market’s way of saying “pay me for the risk”).

Implication: More issuance with weaker natural demand means the cost of capital ratchets, even as policy cuts the front end. That divergence is fertile soil for precious metals leadership.

“26 straight months of central-bank gold buying.”

This rally isn’t hype — it’s being engineered by the most well-informed and well-funded traders on Earth: central banks.

When momentum funds chase a trade, it’s a wave. When retail piles in, it’s a splash. But when central banks — with trillion-dollar balance sheets, perfect intel pipelines, and zero liquidity constraints — buy gold, it’s not a wave or a splash. It’s continental drift.

They don’t care about quarterly marks. They don’t care about basis points of carry. They care about survival, sovereignty, and anchoring reserves in neutral, sanction-resistant collateral. That’s why this is different from 2011: the marginal buyer is no longer a hedge fund, but a nation-state.

Implication: a structural bid is now locked beneath gold. This compresses downside risk, extends up-cycles, and forces private capital — from hedge funds to pensions — to front-run the official sector. Gold is no longer just a trade. It’s transitioning back into its ancient role: the base layer of trust in a world where debt is no longer trusted.

“Gold’s highest monthly RSI in 45 years.”

On monthly timeframes, extreme RSI doesn’t mean “sell”; it means power regime.

In 1980, Volcker could crush it with double-digit real rates. Today, real yields are already high and gold is rising anyway—which tells you the bid is about trust and collateral, not CPI prints. Overbought can persist for months in a regime transition.

Implication: Gold is being repriced as base collateral in a system where debt is abundant and trust is scarce. Silver is the torque.

“Dalio: 10–15% in gold.”

When conservative macro titans publicly anchor allocations in double-digit gold weights, the Overton window for institutions shifts.

Consultants codify it; CIOs benchmark it. That’s how a structural bid goes from early to mainstream.

Implication: The adoption curve is young. Once large pools normalize 5–10% gold and discover silver beta, flows and liquidity preferences will not be symmetric on the way back out.

“1% of global reserve assets into silver = 5 years of supply.” (BofA)

Silver’s market is tiny versus global savings.

If reserve managers, ETFs, or even a sliver of retail tries to size silver like they size gold, the flow overwhelms float. This is how asymmetry expresses: small changes in allocation → huge changes in price.

Implication: Silver is the escape-hatch collateral: indispensable to industry, rediscovering monetary status, and sitting on consecutive structural supply deficits. When gold sets the altitude, silver provides the acceleration.

Bottom Line

We’re looking at a system where every fix shifts the pressure, but each amplifies leverage and structural fragility.

Interest is eating revenue, deficits print at $11B/day, long ends resist policy, and central banks quietly convert paper claims into immovable collateral.

Gold is the anchor. Silver is the lever. The gap between the scale of global liabilities and the tiny float of real money is the most explosive asymmetry of our lifetimes.

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Luke Lovett
Cell: 704.497.7324
Undervalued Assets | Sovereign Signal
Email: [email protected]

Disclaimer:
This content is for educational purposes only—not financial, legal, tax, or investment advice. I’m not a licensed advisor, and nothing herein should be relied upon to make investment decisions. Markets change fast. While accuracy is the goal, no guarantees are made. Past performance ≠ future results. Some insights paraphrase third-party experts for commentary—without endorsement or affiliation. Always do your own research and consult a licensed professional before investing. I do not sell metals, process transactions, or hold funds. All orders go directly through licensed dealers.