Gold and Silver Surge as Fiscal Credibility Erodes

Gold and silver are entering a renewed debasement trade because investors increasingly interpret rising yields as evidence of fiscal stress and declining policy credibility rather than stronger growth or tighter monetary policy.

• In August, gold rose $391.23 per ounce, or 9.67%, to $4,437.38, while silver gained 15.59% to $66.58; gold miners rose 32.61% and the Bloomberg Commodity Index gained 7.05%.
• The U.S. 10-year yield reached 4.75%, its highest level since January 2025, while the 30-year real yield reached 3.05%, its highest since 2008; Sprott attributes the rise in long-term yields increasingly to higher term premiums, debt issuance and fiscal risk.
• U.S. federal debt has exceeded $40 trillion, including roughly $32 trillion held by the public; the government must refinance an estimated $8–10 trillion annually while running an approximately $2 trillion yearly deficit.
• Treasury buybacks financed by bill issuance, increased bill supply and possible use of Treasury General Account balances are described as “QE-light” measures aimed at containing long-term yields, creating tension with the Federal Reserve’s effort to restore market discipline.
• Central-bank gold purchases reached 289 tonnes in the second quarter of 2026, up 62% year over year and more than 10% above the 16-quarter average; South Korea also announced it would resume purchases after 13 years.

Takeaway: Whether policymakers suppress yields through financial repression or fail and face rising debt-service costs, Sprott sees both outcomes as supportive of gold; tight supply, falling inventories and renewed investment demand could make silver amplify the move, but with greater volatility.