As headlines from the Iranian “conflict” continue to leave the world guessing as to what, if any, military, political and financial solutions lie ahead, we can at least know this much: The approaching autumn looks a bit scary.
A Market Fall in the Fall?
The macro setting for our collective transition from summer to fall in 2026 is marked by rising yields across the western yield curve, from Paris to DC.
These rising yields, which represent the cost of servicing debt for nations and enterprises (i.e. stocks) already in debt beyond the sustainability mark, are nothing less than flashing warnings of Uh-Oh ahead.
As of this writing, for example, the yield on the 10Y UST has climbed past the Rubicon of sanity to a dangerous 4.7% at the same time trillions of outstanding USTs face a re-finance at much higher rates.
Needless to say, U.S. tax receipts and GDP will not be enough to pay for the same.
More Non-QE-QE…
This means we can expect more “Non-QE-QE” from a debt-trapped and fork-tongued Fed which will need to create trillions in more back-door liquidity (i.e. synthetic dollars) off the Fed’s balance sheet to avoid having to say the embarrassing “QE” word out loud.
Toward this desperate end, Warsh has familiar tricks up his sleeve to keep the TBTF banks (the Fed’s real mandate) temporarily liquid at the expense of Main Street inflation and employment stresses (which are the Fed’s pretended mandates).
In addition to draining liquidity from the Treasury General Account, bailing out the Repo markets or issuing more unwanted IOUs from the short end of the yield-curve,Warsh, talking like a hawk, will be dovishly adding a trillion dollars of levered capital to the big banks by simple non-compliance with the Basel III rules, a maze so complicated that no one on Main Street is expected to notice.
Meanwhile, as Japan, formerly America’s largest buyer of USTs, has become a massive seller of the same, this latest threat to Uncle Sam’s unloved IOUs is being “solved” by more indirect QE conveniently described as “repurchase agreements.”
But in plain English, all these “repurchase agreements” boil down to is this: The moment Japan dumps USTs, the Fed is buying them at volume in a near-term attempt to keep bond prices (and hence yields) under control with printed dollar demand for otherwise unloved USTs.
This is just a diet-Coke version of Yield Curve Control and hidden QE by another name.
America’s Check Mate Moment
In short, as the world foreseeably dumps weaponized and over-indebted USTs at a record pace in favor of gold-stacking at an equally record pace (driven primarily by the Chinese), the writing on the U.S. debt wall couldn’t be more clear: American debt management has reached its checkmate moment.
There are no good moves left.
If the Fed allows rates to go higher to “fight inflation,” this will crush everything but the USD in its wake—from stocks and bonds to BTC and yes, even gold–temporarily.
But eventually, higher rates just hit a wall of Fiscal Dominance wherein the rates become too high for even Uncle Sam to pay its own debt.
As a result, more dollar debasing QE inevitably follows, as we saw in the wake of Powell’s attempt at Higher-for-Longer in 2022 and 2023, after which gold ripped to all-time-highs in the years (and liquidity) that followed.
Alternatively, if the Fed uses extreme liquidity for extreme YCC (which it always ends up doing), this just “saves” its bond market at the direct expense of its currency, which leads, once again, to yet another tailwind for gold.
The Dollar (and Gold’s) End-Game is Clear
What all of these broad strokes ultimately point to is this: The dollar’s mathematical end-game is weaker not stronger; which means gold’s end-game is stronger not weaker.
This is not only a consequence of the hard math of debt, it is the very goal of a now desperate DC which is increasingly in favor of a weaker rather than stronger dollar to achieve its “Hamiltonian” new direction of allegedly making America “great again.”
As for this new direction, Treasury Secretary Bessent all but confessed this in a recent WSJ op-ed, and even Trump, knowingly or unknowingly, said the “Hamiltonian” part out loud when bragging about returning to the “policies of 1870 to 1913.”
But just what is this “Hamiltonian” new direction?
Going Hamiltonian
In a nutshell, it boils down to Hamilton’s 1790 version of building a then emerging American productivity base via extreme protectionism and hence otherwise unfair tariff practices.
This effectively meant that foreigners rather than Americans would pay for America’s own growth (or post-civil war re-growth).
Such protectionism made sense when America was an emerging nation in the 1790’s, or seeking to re-build its economy after the U.S. civil war ended in 1865.
But as America celebrates its 250th national birthday in 2026, this return to Hamiltonian thinking looks a tad more desperate than innovative.
Since the U.S. outsourced American manufacturing to China under the WTO deals of 2000 and 2001 (nod to Clinton), a country once known for manufacturing became an outsourced nation of factory lay-offs and extreme financialization rather than domestic manufacturing.
This was a disaster.
Rather than open China’s market as a great “purchaser” of American widgets, the WTO deal, with the complicit support of American CEO’s seeking cheaper labor and higher personal incomes/margins, simply opened China up as the greater manufacturer of American widgets.
Now the Trump white house seeks to reshore American manufacturing and labor, which on its face, is more than reasonable and very much needed.
Hamilton in 2026?
But here’s the rub: Reshoring is expensive. And the U.S. under Trump, unlike Hamilton’s 18th-century America, is staring down the fatal barrel of $40T in public debt.
This is a debt figure which must surely have Alexander Hamilton rolling in his Manhattan grave.
In order for DC to re-shore American manufacturing in such a debt backdrop, it will need a weaker dollar to both inject the needed capital as well as compete in a trade war which requires a weaker rather than stronger dollar for its export advantages.
On the other side of the Hamiltonian (i.e., protectionist) camp in DC are the classic neo-liberalist or globalist policy makers who prefer free flows and free trade to get the lowest prices on goods for American citizens.
Naturally, cheaper TV’s made in China or Japan are nice for American shoppers at Walmart, but it’s hardly much of a trade-off to haver cheaper TVs in American living rooms at the expense of millions of laid off workers in the U.S. rust-belt.
Make the Dollar Weak Again
Thus, for Trump and/or Bessent to make American manufacturing “great again,” a weaker dollar is not just a debate, it’s essential policy.
The problem is a weaker dollar helps DC, but the dollar debasement and inflation required to re-shore and re-build American productivity will hit Main Street hard in the gut via a dollar so diluted (and unsupported by equivalent wage hikes) that not even a comically bogus CPI scale will be able to hide the inflation metastasizing throughout America.
This means DC will need another way to pay for its Hamiltonian schemes than just protectionism and dollar-debasement gone wild.
The Golden Option
They will need another asset to monetize this ambitious project of American re-shoring. As Bessent himself hinted, it’s time to “monetize the asset side of the American balance sheet.”
To me, at least, this means it’s time to monetize the 260 million ounces of allegedly U.S.-held gold still priced at roughly $42.00/oz.
Such a revaluation of U.S. gold holdings (aided by the Venezuelan gold handed to Uncle Sam via the Bank of England) to market price would remove the embarrassment of more “QE” headlines and a too-rapid dollar debasement.
In short, such a gold revaluation would buy the USA something it desperately needs: Time and money.
From “Enemy” to Asset of Last Resort
But any re-valuation of U.S.-held gold would certainly do a lot more for the U.S. balance sheet if gold were marked to market at a higher rather than lower market price.
This places the U.S. at not only an historical decision point, but also an historical turning point as to its traditional view on gold.
Ever since the U.S. left the gold standard in 1971, gold was, as Volcker famously said, “America’s enemy.” After all, rising gold was an open middle finger to a post-71, nothing-backed dollar.
This early need to fight the golden “enemy” explains why the COMEX and CME tricks to legally price fix gold and silver began in earnest (along with the Petrodollar scheme) directly after the dollar decoupled from gold in August of 1971.
It was essential that rising gold be controlled to avoid humiliating the Greenback.
But 55 years later, the “exorbitant privilege” of the USD’s global hegemony is now stumbling under the self-inflicted wound of too much debt, a distrusted and weaponized IOU and a petrodollar in open shift in the wake of the Iranian fiasco.
As a result of these changing facts, and after decades of exporting US inflation to the rest of the world, the increasingly diluted and unloved dollar is no longer just the world’s problem, it’s America’s problem as well.
Which means that what Bessent and Trump (as well as Judy Shelton) are subtly suggesting is that gold is no longer our “enemy.”
Instead, and quite ironically, gold is now one of America’s last options to de-deficit at least a portion of its fiscal nightmare.
Rather than Repress Gold, Let It Run
Or stated even more simply, it is now in the USA’s best interest to let gold run rather than to price fix it lower on a COMEX which has lost both its gold and credibility as China and Hong Kong move from paper-based exchanges to physical precious metal exchanges.
Gold at $4,000/oz., for example, won’t help the USA de-deficit nearly as much as it could if gold were at $17,000/oz., $20,000/oz or higher (in fact much higher) in the years to come.
And if you are wondering why central banks are stacking more gold than USTs today, it’s partly because that is precisely where they see gold heading: Much higher…
Absolutely critical point. Once the USG flips from suppressor to supporter, price dynamics could switch rapidly...but before you let it rip ..would you not keep prices suppressed until you amassed the gold you needed. Is it only China that's buying?
Keep stacking with each paycheck you get. Round 2 is just getting started.