Gold

With $9 trillion of U.S. debt maturing this year, there's a growing question on everyone's mind: will governments and the public continue to have faith in U.S. debt the way they once did?

I've been following Ritesh Jain for quite some time now. He's bullish on gold for the long term, and has convinced me of the same. I've compiled some notes on why I have a high conviction. Note that most of this is paraphrased from Ritesh.

1. The China Shock and the Decline of American Manufacturing

In 2001, the U.S. allowed China into the WTO—despite its not being a market economy. This wasn't just a diplomatic gesture; it was a turning point. Manufacturing jobs were offshored en masse. Today, China accounts for 35–40% of global manufacturing, dwarfing the next five countries combined. The U.S., in contrast, now exports dollars—not goods. Manufacturing makes up just 10% of its GDP.

3. A Broken System: When Debt Becomes the Story

U.S. debt has surged from $6 trillion in 2006 to over $36 trillion today. Debt-to-GDP has exploded from 50% to 130%. Historically, 51 of the 52 countries that reached this level defaulted. Endless wars and inefficient spending haven’t translated into long-term growth, just more debt. The U.S. is increasingly unable to refinance, and appetite for its bonds is fading.

3. No Safe Havens Left

The old rulebook said that when equities fall, money flows into bonds or the dollar. But today, equities are falling, bonds are falling, and even the dollar is under pressure. This is not what developed markets are supposed to look like. It’s a sign that the U.S. is now behaving more like an emerging market, with all the risks that come with it.

4. Gold in a Time of Transition

Gold doesn’t perform during good times. It performs when the system is breaking down. And right now, we’re living through a global transition. It becomes valuable when trust in institutions, governments, and currencies weakens.

5. The Shift from Wall Street to Main Street

Both India and the U.S. are attempting to reindustrialize. That means a pivot from financialization to manufacturing. It’s a move from Wall Street to Main Street. FII money is quietly flowing into India’s factories and industrial growth, even if we only see the exits from tech and finance. The rotation is real.

6. The Rise of the Hard Asset Era

In inflationary regimes, capital flows from variable assets (tech, digital, services) to fixed assets (commodities, infrastructure, hard currency). The future is less about cloud computing and more about concrete, steel, and energy. From Nasdaq to Dow Jones. From growth at any cost to resilience at any price.

7. The Indian Case for Gold

India holds $3 trillion worth of gold (households + RBI), compared to a $5 trillion equity market cap. That’s not a niche. it’s a core holding. Demand continues to rise, driven by weddings, savings culture, and distrust of formal financial systems. Rural India dominates gold consumption, especially in conservative southern states.

8. Gold as Currency: China's Quiet Move

China isn’t just stacking gold, it’s using it to trade. With countries like Saudi Arabia, they’re offering renminbi, and allowing partners to convert it into gold. It’s a direct challenge to the U.S. dollar’s dominance and a clear signal: the global monetary architecture is shifting.

9. The MOVE Index and the Fragility of the West

When bond volatility (as measured by the MOVE index) crosses 150, systems start to buckle. In the UK, it brought down Liz Truss. In the U.S., similar spikes could trigger market-wide dislocations. If bond yields keep rising, American manufacturing becomes unviable, and recession risk soars. Gold is the hedge.

10. The Emerging Market Trap

Emerging markets that convert productive spending into unproductive spending usually see two outcomes: inflation or currency collapse. The U.S., for the first time, may face this same trap. When credibility erodes, and paper loses trust, gold steps forward.