The debt of the U.S. federal government is a factor that should affect the price of gold since the U.S. dollar is the world reserve currency. Recent developments in the level of the federal government debt are perplexing and it appears that debt levels are increasing rapidly, but presumably some of this is due to efforts to suppress reported debt levels below the official debt limit prior to its increase on December 16, 2021.
On that day the debt limit was increased from $28,881 billion to $31,381 billion, an increase of $2,500 billion.
The table below highlights the substantial increase in the debt level reported in recent days:
* * *
Date Debt level
30-Dec ... 29,468
29-Dec ... 29,447
28-Dec ... 29,444
27-Dec ... 29,366
24-Dec ... 29,340
23-Dec ... 29,338
22-Dec ... 29,344
21-Dec ... 29,299
20-Dec ... 29,201
17-Dec ... 29,193
16-Dec ... 29,180
15-Dec ... 28,881
31-Dec20 ... 27,721
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As can be seen, since the increase in debt limit after the close of business on December 15 the federal debt has increased by a reported amount of $587 billion, or $293 billion per week over the two-week period. This compares to the period of 50 weeks from December 31, 2020, which saw debt increase by $1,160 billion, or $23 billion per week.
So in just the last two weeks debt has increased by nearly half the increase seen in all of 2021 up to December 15.
No doubt a substantial proportion of this increase was due to efforts to suppress the reported debt level to keep within the limit of $28,881 billion in place as of December 15. But still the recent increase in the debt level appears to be accelerating markedly.
Perhaps the amount of debt suppressed and hence excluded from the reported debt at December 15 was around $300 billion, which is the actual increase in debt reported on December 16. If this is the case, then the average weekly increase in debt in the first 50 weeks of 2021 becomes $29 billion and the average increase in the two weeks after December 16 becomes $143 billion.
So perhaps the suppression as of December 15 was even bigger, but no explanation is provided with the figures.
It would make sense for the U.S. Treasury Department to explain better the underlying trends in debt increase, and it seems surprising that more focus on requesting and examining this hasn’t come from the financial press. But it is hard to imagine that this apparently relaxed attitude toward explaining the huge recent increases in federal government debt should not be positive for the gold price.
Robert Lambourne is a retired business executive in the United Kingdom who consults with GATA about the involvement of the Bank for International Settlements in the gold market.