• As national debt creates instability, experts propose linking the dollar to gold.
• Revaluing U.S. gold reserves can give the economy an $800 billion boost.
• Adding gold to a portfolio through a Gold IRA could protect wealth as gold gains prominence in monetary policy.

U.S. Government Looks to Gold

The government is turning its eye back to an old asset, and investors are taking notice. Gold is stepping back into the spotlight, not just as a safe haven for investors but as a key player in discussions about the nation’s financial future. Over the past 12 months, the price of gold has soared by more than 40%, doubling the S&P 500’s gain during the same period. This surge is part of a larger debate on how our monetary system is managed—and it might be time for a change.¹

Dr. Judy Shelton is a Senior Fellow at the Independent Institute and former economic advisor to President Trump. She has been one of the most vocal critics of the current monetary system. She warns that the national debt and dollar instability are existential threats to the country. And urges a return to “sound money.”

Sound Money

Sound money is a concept rooted in the era of the gold standard. It means having a currency backed by a fixed amount of gold. This ensures stability, predictability, and a limited supply to help maintain value over time. Shelton argues that linking the dollar to gold could help rein in inflation. It could also tame the fiscal irresponsibility in our current fiat currency system. “The dollar used to be as good as gold,” she reminds us. Shelton proposes the government issue long-term Treasury Trust Bonds. Investors can choose at maturity to receive either the dollar value or a set amount of gold. This move would tie the dollar’s value to gold, preserving its purchasing power.²

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Driven by Debt

The urgency behind this proposal comes from the staggering national debt figures. Today, the debt exceeds $36 trillion. Debt service payments alone are costing billions of dollars each year. In just 50 years, the national debt has exploded from $400 billion in 1971 to over $36 trillion today. The Congressional Budget Office (CBO) now projects that servicing the debt from 2024 to 2033 will cost $10.6 trillion. That is double the forecast from 2021.⁴

Shelton blames runaway debt on the Federal Reserve’s “no limit” powers. The Fed can buy unlimited government debt. Hence, she believes decisions are based on financing government bills, not improving the economy. She warns the overpowered Fed can limit the economic agenda of a new president. And they could try to inflate away the U.S. government debt, eroding American purchasing power.

Revaluing America’s Gold

Adding a layer of complexity to the discussion is how the United States values its gold reserves. The U.S. holds the largest gold reserves in the world. It has 8,100 tons tucked away in the vaults of the Federal Reserve and the Treasury. Yet, these reserves are still recorded at a book value of $42.22 per ounce—a figure set by a 1973 agreement. With gold now trading at over $2,900 an ounce, this outdated valuation represents a potential windfall profit. It could earn roughly $800 billion for the Treasury Department if market values were applied.⁵

New Treasury Secretary Scott Bessent has hinted at a willingness to shake things up. He stated, “we’re going to put the assets to work,” signaling plans to “monetize the asset side of the U.S. balance sheet.” Rethinking the gold valuation could improve the Federal Reserve’s balance sheet dramatically. David Teeters is a professor at IESE Business School and former director at Barclays and BNP Paribas. He noted that an $800 billion mark-to-market gain would reduce the country’s borrowing as a percentage of its total assets.⁶

Currently, with gold valued at just $42 per ounce, the Federal Reserve’s owes-to-owns ratio stands at a staggering 179-to-1. If gold were revalued at around $3,000 per ounce, that ratio could drop to roughly 11-to-1. That figure more in line with ratios seen in major banks like Goldman Sachs. Although this revaluation would only be a one-off boost for the Treasury, it might create room for policy changes. Including potential tax cuts wanted by the Trump administration.

Stephen Miran is Trump’s nominee to lead the White House Council of Economic Advisers. He has floated a bolder idea. He suggested selling U.S. gold reserves to buy other currencies. Miran argues that this could weaken the dollar and give the U.S. a trade advantage. It could also counter de-dollarizing efforts by the BRICS nations. The sale would undermine their record gold buying spree.

David Teeters expressed the potential of gold in today’s monetary system. He said that one way to fix the money system is for countries to work together and lower the value of all currencies compared to something stable. Gold, which has been valuable for thousands of years, could serve this role. If this happens, gold could become dramatically more valuable.

Conclusion

The government is taking a fresh look at an age-old asset. Whether it’s a move toward sound money or a strategic revaluation of the world’s largest gold reserves, the yellow metal is becoming central to debates about our monetary future. With experts predicting that these trends will push gold to record heights, adding gold to your portfolio—especially through a Gold IRA—could protect and potentially grow your nest egg. To learn more about how gold can secure your financial future, call American Hartford Gold at 800-462-0071.

Notes
1. https://fortune.com/2025/02/11/adjusting-bookkeeping-america-gold-reserves-add-750-billion-treasury-overnight/
2. https://www.kitco.com/news/article/2024-10-30/linking-gold-us-dollar-how-americas-debt-and-fiat-dependence-threaten
3. https://kinesis.money/case-studies/paper-money-eventually-returns-to-its-intrinsic-value-zero/
4. https://www.kitco.com/news/article/2024-10-30/linking-gold-us-dollar-how-americas-debt-and-fiat-dependence-threaten
5. https://www.kitco.com/news/article/2024-10-30/linking-gold-us-dollar-how-americas-debt-and-fiat-dependence-threaten
6. https://www.kitco.com/news/article/2025-02-14/us-sitting-gold-fortune-can-it-actually-fix-debt-problem

 

• Inflation unexpectedly jumped again, bringing annual inflation to 3%.
• The Federal Reserve may delay interest rate cuts, increasing market volatility.
• A Gold IRA can shield retirement funds from the ‘invisible tax’ of inflation.

Inflation Unexpectedly Increases

Inflation has been a primary concern for Americans over the past few years, especially after it hit a 40-year high of 9.1% in 2022. While inflation did slow somewhat in 2023, it hasn’t disappeared. On the contrary, recent reports show it’s on the rise again. This uptick is causing anxiety for consumers, investors, and the Federal Reserve alike.

After a hotter-than-expected Consumer Price Index (CPI) report, the Dow Jones fell over 300 points. The S&P 500 and NASDAQ also dropped. Major tech stocks like Amazon, Microsoft, and Alphabet all took a hit after the CPI report.

By the Numbers

The January CPI saw a 0.5% jump, pushing the annual inflation rate to 3%, higher than economists had expected. Core CPI, which excludes volatile food and energy prices, rose 0.4% for the month and 3.3% for the year, marking its highest level in 10 months. The recent rise is mainly due to higher prices in food, energy, and housing. Key areas that impact everyday Americans.¹

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A headline issue, egg prices spiked by 15% in January, up a staggering 53% over the past year. Housing costs, which make up 35% of inflation’s overall impact, continue to climb as rents and home prices increase across the country. Gas prices are rising again, partly due to the possibility of tariffs on crude oil, even as the U.S. remains the world’s largest oil producer.³

At the same time, the 10-year Treasury yield spiked from 4.54% to 4.66%. Meaning higher costs for mortgages, auto loans, and credit cards.⁴

Inflation and Interest Rates

As costs continue to rise, the Federal Reserve’s interest rate policy is growing murkier. While the Fed had previously forecasted rate cuts for this year, surging inflation makes that less likely. President Donald Trump has publicly called for interest rates to be lowered. But Federal Reserve Chair Powell has made it clear that his decisions will not be swayed by political pressure.

Powell emphasized that while progress toward the 2% target has been made, “we’re not quite there yet.” Powell reassured the public that the U.S. economy is strong, and the country is not in a recession, negating the immediate need for rate cuts. January’s jobs report showed that while job growth slowed, unemployment fell from 4.1% to 4% and wage growth remained stable. As a result, rate cuts could be delayed until the end of the year—or even further. There has even been talk of new rate hikes.⁵

Sameer Samana is head of global equities at the Wells Fargo Investment Institute. He said, “The hotter-than-expected CPI confirms investors’ anxiety regarding too-hot inflation that will keep the Fed on the sidelines.” As inflation rises quicker than expected, analysts believe rates will stay higher for longer. Thereby keeping borrowing costs high and fueling market uncertainty.⁶

Inflation Expectations Grow

The growing expectations for sustained inflation pose a real risk, as they can create a self-fulfilling cycle. As businesses and households expect prices to continue rising, they adjust their behavior. Businesses increase prices and workers demand higher wages. These further fuels inflation and creates a difficult-to-reverse inflationary spiral.

Gold Reacts to Rising Inflation

Gold’s appeal as a safe-haven asset has held strong, even in the face of rising inflation. Gold prices initially dropped after the CPI report. But they quickly rebounded as investors sought refuge in precious metals. Despite inflation’s impact on bond yields and the dollar, gold’s status as a store of value remains steadfast. And its price is hovering at all-time highs. ⁷

Conclusion

With inflation not showing any signs of slowing down, the best way to secure your future is to make smart, informed choices now. Physical precious metals in a Gold IRA can protect the value of your nest egg from inflation’s ‘invisible tax’. Contact us today at 800-462-0071 to learn more.

Notes:
1. https://www.cnbc.com/2025/02/11/stock-market-today-live-updates.html
2. https://www.axios.com/2025/02/12/inflation-january-cpi
3. https://www.axios.com/2025/02/12/inflation-january-cpi
4. https://www.cnbc.com/2025/02/11/stock-market-today-live-updates.html
5. https://www.businessinsider.com/inflation-january-cpi-consumer-price-index-federal-reserve-interest-rates-2025-2
6. https://www.cnbc.com/2025/02/11/stock-market-today-live-updates.html
7. https://www.kitco.com/news/article/2025-02-12/gold-erases-solid-early-losses-despite-hot-us-cpi-data

 

• Central bank demand helped push gold to a record $2,865 per ounce, up 30% from the past year.
• Central banks buy gold for long-term stability, viewing it as protection against uncertainty and geopolitical risk.
• With rising gold prices, many individuals are considering Gold IRAs to safeguard retirement funds from market volatility.

Central Banks & Gold

Gold recently reached an all-time high of $2,865 per ounce, marking a 30% increase over the past 12 months. The price surge is largely due to the role of central banks. They are turning to gold as a vital safeguard against financial instability. It remains a proven stable asset, independent of government-backed currencies.¹

Central Banks Drive Record Demand

Central banks showed their influence in 2024. In 2024, central banks purchased over 1,000 tons of gold for the third year in a row. Altogether, this amounted to more than $96 billion. They made up about 20% of global gold demand. The largest buyers included Poland, India, Turkey, and China.²

In the fourth quarter, central banks ramped up gold buying. Purchases rose by 53.5% from the same period in 2023. “Central banks continued to vacuum up gold at an eye-watering pace, their buying exceeded 1000t for the third year in a row, accelerating sharply in the fourth quarter to 332.9t,” the World Gold Council (WGC) reported.³

 

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This ongoing buying trend shows that central banks invest strategically. They prioritize long-term stability instead of responding to short-term price swings. Central banks rarely sell gold, showing their strong commitment to it as a reserve asset.

Rising Demand and Market Impact

In 2024, total global gold demand hit a record 4,974 tons, says the WGC. This surge pushed gold prices to new all-time highs. The London Bullion Market Association announced that the average gold price reached a record $2,663 per ounce in the fourth quarter of 2024.⁵

This surge in demand and pricing contributed to gold’s highest ever annual market value. It reached $382 billion in 2024. Investment demand for gold soared. It hit a four-year high with a 25% increase from 2023.⁶

“When we look at central bank demand, their rationalization for owning gold remains very strong,” said a WGC strategist. “The growing government debt burdens and the dramatically changing geopolitical landscape suggest that central banks will continue to buy gold.”⁷

Geopolitical and Economic Uncertainty

The WGC anticipates that central banks will once again surpass 1,000 tons in net gold purchases in 2025. Ongoing geopolitical tensions and shifting economic strategies are expected to sustain this trend. “Geopolitical and economic uncertainty remains high in 2025 and it seems as likely as ever that central banks will once again turn to gold as a stable strategic asset,” the WGC stated in its Gold Demand Trends report.⁸

One key factor driving this shift is the move away from the U.S. dollar. The share of gold in foreign exchange reserves has increased to 34%. This rise shows fears about Western sanctions, especially for Russia. Central banks are pursuing de-dollarization to protect reserves from risk.

“In the background, there is always the BRICS project to initiate a new currency pegged to gold to be used in trade instead of the US dollar,” financial analyst Maurizio Mazziero noted. “The fact that Trump has announced 100% tariffs for those who will adopt it highlights its real feasibility and the accompanying fears.”⁹

A WGC survey revealed that 69% of central banks expect to increase gold purchases in the next few years. Also, 90% of central banks in emerging markets see gold as a protection against inflation and a safe haven.

Other Factors Driving Gold Demand

Investors are turning to gold more than ever. The shift is due to volatility in equity markets, rising ton, and slowing economic growth. Lower interest rates and a weaker U.S. dollar have also bolstered demand. Despite historically high prices, the appetite for gold remains strong.

In 2024, global demand for gold bars and coins reached 1,186 tons. This is virtually unchanged from the previous year. The WGC predicts similar demand in 2025. Meanwhile, the technology sector has also contributed to gold demand. They consumed 326 tons in 2024. The 7% increase from 2023 mainly comes from the growth of artificial intelligence.¹⁰

What’s Next for Gold in 2025?

Gold is at record highs. Safe-haven demand is behind this rise. Inflation fears and new tariff announcements are fueling the ‘flight to safety’. “Individuals are looking confidently at gold, as it has been the best asset class in 2024 with a performance of 27%, rising to 36% for euro-based investors. At the same time, money managers view gold allocation as insurance given geopolitical and trade tariff risks, with stock prices still at highs,” Mazziero explained.¹¹

Looking ahead, analysts predict even higher gold prices in 2025. Swiss bank UBP forecasts gold reaching $3,000 per ounce. Meanwhile, JP Morgan expects prices to exceed that level. Some analysts believe the rally could extend as high as $3,200 an ounce.

Conclusion

If you want to protect the value of your retirement funds, now may be a good time to look at a Gold IRA. Offering safe haven benefits and tax advantages, a Gold IRA can safeguard and potentially grow your nest egg. To learn more, contact American Hartford Gold today at 800-462-0071.

Notes:
1. https://www.forbes.com/sites/timtreadgold/2025/02/05/gold-hits-an-all-time-record-2865oz-thanks-to-central-bank-buying/
2. https://finance.yahoo.com/news/gold-appeal-central-banks-seen-060000891.html
3. https://www.forbes.com/sites/timtreadgold/2025/02/05/gold-hits-an-all-time-record-2865oz-thanks-to-central-bank-buying/
4. https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2024/outlook
5. https://www.kitco.com/news/article/2025-02-05/central-banks-buy-more-1000-tonnes-gold-2024-third-year-row-world-gold
6. https://www.kitco.com/news/article/2025-02-05/central-banks-buy-more-1000-tonnes-gold-2024-third-year-row-world-gold
7. https://www.kitco.com/news/article/2025-02-05/central-banks-buy-more-1000-tonnes-gold-2024-third-year-row-world-gold
8. https://finance.yahoo.com/news/gold-appeal-central-banks-seen-060000891.html
9. https://www.morningstar.com/funds/gold-just-hit-new-record-whats-next
10. https://www.kitco.com/news/article/2025-02-05/central-banks-buy-more-1000-tonnes-gold-2024-third-year-row-world-gold
11. https://www.morningstar.com/funds/gold-just-hit-new-record-whats-next

 

• China’s aggressive political and economic policies threaten the U.S. economy.
• Key threats include: the risk of war with Taiwan, China’s role in de-dollarization, and bursting the AI stock bubble.
• Precious metals held in a Gold IRA can offer long term protection from China’s policies.

China’s Aggressive Ambitions

China poses a multi-pronged threat to the U.S. economy and, by extension, your retirement funds. As the world’s second-largest economy, China is projected to surpass the U.S. as the global economic leader between 2030 and 2036. Key threats include: the risk of war with Taiwan, China’s role in the BRICS de-dollarization, and its ability to burst the AI stock bubble by launching cheaper, competitive AI systems. These factors could have profound consequences to your financial future.

The Taiwan Conflict: A Ticking Time Bomb

China has escalated its threats against Taiwan with military drills, cyberattacks, and diplomatic pressure. President Xi Jinping wants to forcefully annex Taiwan by 2030 if unification fails. Analysts warn that Beijing’s assertiveness raises the risk of a wider conflict. With the U.S. being dragged in since it has pledged to defend Taiwan.¹

A war between China and Taiwan would have severe economic consequences for the U.S., potentially causing a 6.7% contraction in GDP if the U.S. intervenes. Even a Chinese blockade of Taiwan could reduce U.S. GDP growth by 3.3% within the first year. These projections far exceed the 2.2% contraction in GDP seen during the COVID-19 pandemic. The global economy could lose $10 trillion. There would be major disruptions to semiconductor supply chains and financial markets.²

China’s Push to Dethrone the U.S. Dollar

China is leading de-dollarization to reduce reliance on the U.S. dollar and promote the renminbi (RMB).

China’s central bank has developed a digital yuan. It is being piloted domestically and in cross-border trade with countries like Thailand and the UAE. This initiative seeks to set global standards for digital transactions. It also aims to cut reliance on dollar-based systems. And pushes the U.S. to create its own freedom threatening ‘digital dollar’.

China has also launched renminbi-denominated commodities markets, further reducing dollar reliance. The country is leveraging its dominance in critical mineral supply chains to promote RMB use in the clean energy transition.

China is cutting its U.S. Treasury holdings and boosting its gold reserves to protect its economy from possible U.S. sanctions. By March 2024, China’s gold reserves exceeded 2,264 tons, doubling in five years.³

If China abandoned the U.S. dollar, the impact on the U.S. economy could be devastating. Growth could stall, trade would be disrupted, and a sharp decline in the dollar’s value could fuel inflation. A sell-off of U.S. Treasury securities would raise borrowing costs. It could also trigger a financial crisis due to market instability and capital flight.

The dollar’s status as the world’s reserve currency would be at risk, severely weakening U.S. global influence. Foreign investment would dry up. The U.S. could lose its dominance in the global financial system. Making it economically and geopolitically vulnerable. While an abrupt shift is unlikely, even a gradual transition could inflict lasting damage.

China’s AI Disruption: Bursting the Tech Bubble?

Chinese AI startup DeepSeek may burst the AI stock bubble, triggering massive market turbulence.

DeepSeek has developed AI models comparable to leading U.S. offerings at a fraction of the cost. The company invested only $5.6 million in its latest AI model, R1, which performs similarly to ChatGPT. This challenges the idea that AI needs huge investments. It may devalue firms that have spent billions on AI research.⁴

The revelation of DeepSeek’s capabilities led to a sharp decline in U.S. stock markets. The Nasdaq Composite plummeted by 3.6%, with the S&P 500 dropping 2% and the Dow Jones Industrial Average falling 0.8%. ⁵

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Major U.S. tech companies and chip manufacturers saw significant drops in their stock prices. Nvidia, a major player in AI chips, saw a nearly 17% drop. This loss wiped out almost $600 billion from its market cap. It was the biggest single-day loss ever in stock market history. Other companies like Broadcom and Microsoft also suffered losses.⁷

DeepSeek’s success shows China’s rapid AI progress despite U.S. chip restrictions. U.S. tech controls may not be as effective as intended. Leaving Investors reassessing AI stock valuations, potentially bursting the bubble.

Protecting Your Wealth with Gold

The risks from China are mounting. Now, more than ever, gold is a critical hedge against China’s plans. Their record gold buying aligns with a global trend among BRICS nations to reduce dollar dependency. Central banks are boosting their gold reserves. They seek to hedge against inflation and geopolitical risks. A seismic shift in the global reserve currency landscape is happening as we speak.

For individuals, the same principle applies. Adding gold to a retirement portfolio, particularly through a Gold IRA, may be the best way to protect assets from currency devaluation and market volatility. Contact American Hartford Gold today at 800-462-0071 to learn more.

Notes:
1. https://media.defense.gov/2023/Apr/24/2003205865/-1/-1/1/07AMONSON%2520&%2520EGLI_FEATURE%2520IWD.PDF
2. https://www.businessinsider.com/taiwan-war-impact-us-economic-growth-first-year-china-chips-2024-1
3. https://tradingeconomics.com/china/gold-reserves
4. https://beebom.com/chatgpt-o1-vs-deepseek-r1-comparison/
5. https://evrimagaci.org/tpg/deepseeks-ai-model-sparks-stock-market-volatility-165435
6. https://www.ft.com/content/e670a4ea-05ad-4419-b72a-7727e8a6d471
7. https://evrimagaci.org/tpg/deepseeks-ai-model-sparks-stock-market-volatility-165435

 

• Surging bond yields jeopardize Trump tax cut extension.
• Key Congressmen want spending cuts to offset the tax cuts as debt fears mount.
• Retirement funds can be shielded by moving into safe haven assets like physical gold and silver held in a Gold IRA.

Tax Cuts Jeopardized

Extending his 2017 tax cuts was a cornerstone of President Trump’s platform. Now a volatile U.S. bond market is challenging the possibility of fulfilling that promise. Rising bond yields reflect investor fears about the federal deficit and interest costs. They could derail plans to keep the tax breaks. And leave Americans facing higher taxes and a more uncertain financial future.

Bond Market Pressures Mount

In the years since the 2017 tax cuts, the U.S. national debt has ballooned to $36 trillion, with annual deficits exceeding $2 trillion. This surge in debt has caused a significant increase in interest payments. They are now the second-largest federal budget item after Social Security. Treasury yields, which underpin borrowing costs across the economy, are now at their highest levels since late 2023. For example, the 10-year Treasury yield recently rose to 4.79% before settling slightly lower.¹

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These rising yields are a concern for lawmakers and investors alike. Rep. Ralph Norman (R-S.C.) noted, “The buyers of our bonds are getting nervous that we’re at the point that we cannot pay it back. That affects every one of us.” As interest rates climb, servicing the debt costs more. Further straining the government’s finances.³

The Challenges of Extending the Tax Cuts

Congress passed the Trump tax cuts, estimated to cost $4 trillion over the next decade, using budget reconciliation. This let Republicans bypass a Senate filibuster. However, to comply with these rules, the cuts to individual income taxes were set to expire at the end of 2025. Extending them now faces formidable obstacles.

Key Republican lawmakers want big spending cuts to offset the tax cuts. They warn that ignoring the deficit could raise interest rates. Rep. Andy Barr (R-Ky.) emphasized, “The bond market is telling Congress that if we don’t get our fiscal house in order, everybody’s mortgage rates, everybody’s credit card rates, everybody’s auto loan rates are going to continue to go up.”⁴

The bond market’s reaction underscores these concerns. Stephen Jen, CEO of Eurizon SLJ Capital, explained, “The bond market has begun to express their discomfort, and inflation being sticky is also a warning for Trump 2.0.”⁵

Political Divisions Add Complexity

Republican lawmakers face pressure from within their ranks to ensure fiscal discipline. Some conservatives, including Rep. Chip Roy (R-Texas), will not support tax cuts without spending cuts. “As we speak, interest rates are going up, our debt is getting refinanced at higher interest rates, and we have more debt,” Roy said, emphasizing the need for fiscal responsibility.⁶

What This Means for You

For the average American, the stakes are high. Higher Treasury yields mean higher interest rates on mortgages, credit cards, and auto loans. Putting even more strain on household budgets.

If the 2017 Trump tax cuts (Tax Cuts and Jobs Act or TCJA) expire at the end of 2025, taxes will rise significantly for many Americans. They will jump an average of 22%. Middle-income families, such as a household earning the median income of $80,610, could face a $1,695 hike. The standard deduction would shrink, the Child Tax Credit would halve for 40 million families, and the top marginal tax rate would rise to 39.6%. Small businesses may lose a vital deduction, and AMT filings could surge from 200,000 to 7.3 million, creating widespread financial strain.⁷

Rep. Barr highlighted the potential upside of addressing the deficit: “What we need to say to the American people is, look, this is not austerity. This is not painful cuts. This is about lowering your mortgage payment.” But achieving this balance will require tough political choices. It will also need significant bipartisan cooperation, a rare thing in Washington.⁸

Conclusion

Rising bond yields and fiscal pressures highlight the need to protect your assets in an uncertain economy. The Trump tax cuts’ fate will affect the economy and your personal finances. One cannot ignore their implications, whether they are extended or left to expire. To protect your portfolio, consider diversify with precious metals. Gold and silver, held in a Gold IRA, can offer long-term security against an increasingly uncertain economic future. To learn more, contact us today at 800-462-0071.

Notes
1. https://www.foxbusiness.com/politics/trumps-tax-cut-plans-face-bond-market-headwinds-gop-lawmakers-warn
2. https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iqyCi_y8OH44/v3/-1x-1.webp
3. https://www.reuters.com/markets/rates-bonds/republicans-congress-warn-rising-us-bond-yields-could-hit-trumps-tax-cut-plans-2025-01-16/
4. https://www.reuters.com/markets/rates-bonds/republicans-congress-warn-rising-us-bond-yields-could-hit-trumps-tax-cut-plans-2025-01-16/
5. https://www.msn.com/en-us/money/markets/warning-for-trump-as-bond-markets-call-bluff-on-gop-tax-cut-plan-reports/ar-AA1xospA
6. https://www.msn.com/en-us/money/markets/warning-for-trump-as-bond-markets-call-bluff-on-gop-tax-cut-plan-reports/ar-AA1xospA
7. https://waysandmeans.house.gov/2025/01/07/millions-of-taxpayers-will-have-to-do-returns-twice-while-paying-higher-taxes-if-key-trump-tax-reforms-expire/
8. https://www.foxbusiness.com/politics/trumps-tax-cut-plans-face-bond-market-headwinds-gop-lawmakers-warn

 

• Even as optimism returns to the economy, risks to the commercial real estate sector are increasing.
• The CRE sector is threatened by massive maturing debt, high interest rates, soaring vacancies and declining property values.
• Physical precious metals held in a Gold IRA can offer long-term protection from the impact of a CRE collapse.

CRE Risks Grow

Even as optimism spreads throughout the economy, significant risks remain—or in some cases, are growing. The commercial real estate (CRE) market is on the brink of a financial abyss. The effects will go beyond property owners. The fallout threatens the stability of the broader economy, and the retirement funds of countless Americans.

Crisis in the Making

In November 2024, the delinquency rate for office commercial mortgage-backed securities hit 10.4%. It was near the 10.7% peak during the 2008 financial crisis. This marks the fastest two-year increase on record, climbing 8.8% since 2022. Persistent high vacancy rates and declining rents have accelerated the CRE sector’s severe downturn. Older office buildings have been hit hardest, with property values plummeting by 50% to 70%. In some cases, these properties are now worthless.¹

Roots of the Problem

The current crisis stems from several interconnected factors:

Bad Investments and Low Interest Rates: The pandemic’s low interest rates spurred a wave of unsustainable loans. When interest rates rose, borrowers faced soaring debt payments, often doubling or more.

Remote Work and Zoning Restrictions: The rise of remote work has cut demand for office space. Zoning rules have blocked efforts to repurpose office buildings.

Loan Restructuring Strategies: Banks have used “extend and pretend” strategies. They restructured loans to delay addressing financial distress. This “survive till 2025” mindset has dominated the market. But the hoped-for Fed rate cuts are unlikely.

Rising Interest Rates and Mounting Debt

Treasury yields, which influence mortgage rates, have soared. Rising inflation, tariff threats, and a $36 trillion national debt have caused this. The 30-year mortgage rate hit 7.76% in November 2023. It will likely stay above 6% for a while. This has dashed hopes of refinancing. Many properties now face financial distress.²

The debt cliff looms large: $570 billion in commercial loans will mature in 2025, with nearly 40% held by banks. In 2026, $1.8 trillion in loans will mature. Borrowers may see a 75% to 100% rise in debt payments due to high interest rates. This escalates the risk of delinquencies and foreclosures.³

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⁴

Systemic Risk to Banks

Regional banks, which hold nearly 70% of CRE loans in the U.S., are particularly vulnerable. CRE loans make up 38% of loan portfolios for banks with under $10 billion in assets. For larger banks, it’s only 12.5%. Tomasz Piskorski, a real estate professor at Columbia, warns of tens of billions in potential banking losses. Regional bank failures could trigger a domino effect. It might destabilize the entire financial system. This could cause deposit outflows, forced asset sales, and systemic risk. The collapse of commercial real estate could push an already fragile banking system into total meltdown.⁵

Regulatory Challenges and Insurance Costs

Regulatory scrutiny is increasing as the crisis deepens. Meanwhile, inflation and natural disasters are raising insurance costs. This adds to the financial strain. Richard Barkham, CBRE’s chief economist, notes that high interest rates may prevent a market rebound. This could further hurt property owners and lenders.

Implications for Retirement Funds

The CRE sector’s link to the banking system means risks extend to individual retirement funds. Many retirement portfolios include commercial real estate via REITs or other financial tools. Falling property values and rising defaults could harm these investments. This threatens the retirement of millions of Americans. It could also trigger failing banks and crash the stock market.

The Road Ahead

The Counselors of Real Estate, a global group of real estate advisors, projects that financing challenges will persist. Cautious buyers and sellers will keep market activity low. Cap rates, a key metric for property investment returns, are expected to climb, signaling higher risk and lower property values. Regulatory and cost barriers make it hard to convert office space to other uses.

Conclusion

The warning signs in commercial real estate are clear. The sector’s struggles could harm the economy, the banking system, and retirement funds.
In light of these challenges, diversification strategies are more critical than ever. Gold and other precious metals have long been a hedge against economic uncertainty and inflation. As the CRE sector nears a debt cliff, gold can protect your retirement. It offers stability in a volatile market. To learn how physical precious metals held in a Gold IRA can offer long-term security, call us today at 800-462-0071.

Notes:
1. https://thedailyeconomy.org/article/the-commercial-mortgage-crisis-deepens/
2. https://www.credaily.com/briefs/2025-interest-rate-outlook-and-how-cre-is-impacted/
3. https://www.businessinsider.com/commercial-real-estate-office-interest-rates-risks-industrial-trump-2024-12
4. https://www.creanalyst.com/insights/facing-cres-maturity-wall-what-investors-need-to-know-now
5. https://www.businessinsider.com/commercial-real-estate-office-interest-rates-risks-industrial-trump-2024-12