Khaberni - The rise in gold prices is not only a result of interest rate cuts, but also the result of a cumulative effect of factors that have shaken confidence in the global economy: trade and monetary disruption, escalating geopolitical tensions, and a decline in national commitments that have weakened the foundations of globalization and free trade.
Over recent years, and more clearly in 2025, structural problems have exacerbated: rapidly inflating debts, poor productivity, and monetary policies that have lost much of their impact have gradually diverted funds away from paper assets toward tangible assets, with gold leading the way. Many now practically advocate a "move away from paper currencies."
This article explains why confidence in paper currencies is eroding, why gold has gained this momentum, through two angles: firstly, the high levels of global debt with clear examples from major economies, and secondly, an examination of the key indicators of the American economy as a global center of influence and a source of contagion for the rest of the world. In light of this, we answer simply: Why is the distrust increasing? And why is gold likely to rise in the medium and long term?
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Firstly: Global debt... The root of structural imbalance
Since the 2008 crisis, the global economy has slipped into a growth pattern more reliant on debt than on actual productivity. The efficiency of each debt unit in generating output has become lower than it was a decade and a half ago. As of the latest readings, the global GDP (at current prices) is estimated at about 113.8 trillion dollars in 2025, while the total global debt reached approximately 337.7-338 trillion dollars in the second quarter of 2025—nearly three times the global output at 300%, with a gap of about 224 trillion dollars between debt and what the world actually produces. Additionally, the world has borrowed about 21 trillion dollars in just the first half of 2025 alone.
An extraordinary leap that embodies the acceleration of reliance on borrowing, as historically, debt inflated from about 158 trillion in 2010 to 199 trillion in 2015 and then 307 trillion in 2023 before touching 338 trillion in 2025. This represents a growth of nearly 70% since 2015 and 114% since 2010, confirming that the imbalance is structural and accumulative, not circumstantial, and it is an unprecedented rise in recent history, sparing no economic bloc.
International examples indicate the depth of the debt crisis:
1- China
According to the latest estimates from the Institute of International Finance and specialized economic sources, the total Chinese debt "comprising government debt, corporate and household debts" is estimated at about 290-310% of the Gross Domestic Product, which is the highest historical level. The government debt alone is about 88% of the output, while the private sector debt "corporate and household" exceeds 200% and approximately reaches 200-220%.
For comparison, the total ratio was about 140% in 2008, meaning it has more than doubled in 15 years, indicating an increasing reliance on credit, especially through companies and local governments.
Converting to dollar values, with an estimated nominal output between 17.8 and 18 trillion dollars, the total debt is estimated at about 52-56 trillion dollars—the estimates vary with exchange rates.
With these volumes, China is considered the second largest indebted nation in the world after the United States, and its debt ratio to output exceeds most developed economies despite being an emerging economy.
2- India
The total governmental public debt is about 83% of the Gross Domestic Product, equivalent to 3.6 trillion dollars. However, it is mostly financed domestically, which gives India a degree of financial flexibility compared to other emerging economies.
3- United Kingdom
The sovereign debt is about 3.2 trillion British pounds, and the ratio of public debt rose from about 40% of the output before the 2008 crisis to about 104% in 2025. Also, the non-financial corporate and household debts exceeded 117% of the available income, which is about 3.16 trillion pounds.
In August 2025, the government incurred new debts worth 18 billion pounds, the highest in the past five years, exceeding the government expectations by 12.5 billion pounds.
In the first five months of the fiscal year, borrowing reached 83 billion pounds, the second-highest level since 1993 after the pandemic, and the public debt ratio reached 96% of the Gross Domestic Product, a ratio not recorded for decades.
4- France
The government debt stood at about 3.346 trillion euros, approximately 115% of the Gross Domestic Product, in mid-2025, compared to 1.59 trillion euros, about 82.4%, in 2010.
The private sector debt reached about 4.3 trillion euros, approximately 150% of the output, after having been between 2.7 and 3 trillion euros in 2010, an increase exceeding 1.3 trillion euros within 15 years, at a pace that embodies an unprecedented acceleration in French indebtedness.
5- Italy
The government debt reached 2.85 trillion euros, about 135% of the Gross Domestic Product, compared to about 1.85 trillion euros, about 118%, in 2010, an increase of more than a trillion euros.
The private sector debt reached about 1.26 trillion euros, approximately 58% of the output, in an economy suffering from stagnant growth and heavy reliance on government financing.
6- Germany
The government debt reached 2.69 trillion euros in 2024, about 62.5% of the Gross Domestic Product, while the private sector debt reached about 3.6 trillion euros, approximately 83% of the Gross Domestic Product, higher than the levels between 2010 and 2015, while stable growth and low interest rates helped contain it.
7- Japan
The government debt was about 10 trillion dollars, about 235% of the Gross National Product estimated at 4.2 trillion in 2025.
While the private sector debts "companies, households, and financial institutions" reached about 7 trillion dollars, about 170% of the output, Japan remains the most indebted among the advanced economies.
8- Spain
The government debt reached 1.56 trillion euros in mid-2025, while the private sector debt approached 1.4 trillion euros, making the total public and private indebtedness about 3 trillion euros, the highest level since the European debt crisis in 2012, amid rising financing costs and a slowdown in domestic demand.
9- Canada
The total public debt reached 2.5 trillion Canadian dollars, about 1.8 trillion U.S. dollars, equivalent to about 112% of the Gross Domestic Product, while household debts reached 180% of the available income, among the highest globally making the Canadian economy sensitive to rising interest rates.
10- South Korea
The total public and private debt reached about 260% of the Gross National Product, with household debts more than 104% of the output, one of the highest in Asia, putting pressure on domestic demand and consumption.
11- Brazil
The government debt reached about 90% of the Gross National Product, with real interest rates exceeding 10%, making debt servicing an increasingly burdensome expense that consumes a growing portion of the federal budget
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From Beijing to London, and from Paris to São Paulo, the contours of a deep, structural global debt crisis become clear. Today, the world lives on debt that inflates faster than its ability to produce, with interest rates being repriced at higher levels, and available fiscal space shrinking year after year.
Thus, the transition of money to tangible assets, led by gold, becomes a reaction to economies propelled by debt.
Secondly: The American economy.. the global center of influence
Historical comparisons show that gold is a mirror of the state of the American economy, as its movement has always been linked to major economic and monetary pathways.
In Trump's first term, gold rose by 54%, and during Biden's term by 38%, while it has gained about 60% since the beginning of Trump's second term "from January 21, 2025" until mid-October, with about 45% of these gains occurring before the Federal Reserve announced an interest rate cut, indicating structural motives that moved prices before the monetary decision.
From a broader perspective, gold rose from about 1210 dollars per ounce in 2017 to about 4200 dollars in mid-October 2025, an increase of about 2990 dollars, or about 247%.
These percentages are cumulative based on varying price levels, and are not a direct sum of percentages between periods, as recent weeks of 2025 recorded record inflows into gold and silver totaling 34 billion dollars, confirming that imbalances in the American economy quickly reflect in the price of gold and fuel its rising momentum.
The US debt:
This, and the total US public debt reached 37.9 trillion dollars, and the debt increases at a rate of approximately 25 billion dollars daily, or about 17.4 million dollars per minute.
Since July alone, the debt has risen by 1.7 trillion dollars, approximately 425 billion dollars monthly, with estimates reaching 40 trillion dollars by 2026.
The debt ratio to the Gross Domestic Product rose to 124%, the highest since 2021, meaning that the public debt now exceeds the size of the actual economy, a precedent warning of a financial breakout that is difficult to contain.
If we look at the US private sector debt, we find that non-financial corporate debts are close to 14.7 trillion dollars, while household debts from mortgages, loans, and credit cards amount to about 17.5 trillion dollars, making a total of 32.3 trillion dollars for US debts "public and private", nearly 270% of the Gross Domestic Product. This means that the pressure of interest rates and repricing does not only affect the federal budget but penetrates the real economy through rising financing costs and eroding the purchasing power of households.
Refinancing and interest costs
This situation intersects with a massive refinancing wall, as the Treasury and US companies need to repay or reissue about 9 trillion dollars of bonds in the coming period, meaning the issuance of new debt instruments at higher yields, thereby increasing the cost of debt service sharply. Interest payments exceeded one trillion dollars annually, equivalent to about 13% of total federal expenditures, and about 18% of government revenues, posing a heavy burden on the budget and reducing the available fiscal space for investment spending and social programs.
Every dollar refinanced at a higher yield translates to an expansion in the interest item, tightening in fiscal space, and more reliance on borrowing that weakens confidence in the sustainability of US public finance.
Other US indicators
On a real economy level, consumer credit rose by 16 billion dollars in July to 5 trillion dollars, the third highest historical level, and increased by 103 billion dollars over five months. Credit card debts rose by 10 billion to 1.3 trillion, and credit card default rates reached 12% in the second quarter of 2025, the highest since 2011. High-risk auto loans recorded a delinquency rate of 5% for the first time historically, surpassing 2008 levels, and delinquency in commercial mortgages for offices jumped to 11%, the highest ever.
Moreover, Americans' credit scores declined at the fastest rate since the Great Recession, falling two points over the year, with federal student loan delinquencies reaching 11.3% in the second quarter of 2025.
The employment rate dropped to 3%, the lowest in a decade, and the likelihood of Americans losing their jobs over the next five years rose to 22.9% in October, the second highest since the pandemic and the third highest reading since the 2008 crisis.
Additionally, 63% of Americans expect unemployment to rise over the next 12 months, the third highest level since 2009, double the ratio recorded in December 2024, while the unemployment rate for recent graduates "22-27 years old" is about 4.8%.
On the other hand, food prices and daily necessities jumped between 6% and 20% in recent weeks, putting pressure on household purchasing power, raising inflation levels, and weakening consumer confidence. The Conference Board's economic index, a composite index used to foresee future trends, fell by 6% in August to its lowest level in a full decade.
Additionally, the latest Beige Book report indicated that 5 out of 12 federal regions are experiencing a decline in consumer spending, and that some industrial and agricultural areas are affected by tariffs, both reports being relied upon by the Federal Reserve in its economic readings.
These indicators early warn of a stagflationary recession and consumption weakness with massive debts without reforms and trade disruption, which led to a decline in confidence in the future of the dollar and, as a result, exacerbated the structural imbalance in the world's largest economy, prompting investors to turn to gold as a safe haven in anticipation of further deterioration in conditions
In conclusion: What we see in the metals markets, particularly gold, is not a passing phenomenon, but a direct result of deep imbalances in the structure of the global and American economies, and an explicit repricing of the rules of the monetary game. With the widening debt gap, weakened productivity, and declining confidence in paper assets across different countries, hedging with gold becomes a logical behavior..
The question remains here amidst these imbalances: To what extent will gold continue to rise in the medium and long term as long as these challenges persist? And can the global system address its structural imbalances and restore confidence?
