The Federal Reserve is confronted with an unsolvable equation as gold indicates an impending debt ceiling

Gold Bull Market Enters New Phase Amid U.S. Credit Strains

According to Daniel Oliver, founder of Myrmikan Capital, the global accumulation period for gold has concluded, ushering in a more turbulent stage fueled by mounting stress within the U.S. credit landscape.

In a recent discussion with Kitco News, Oliver explained that the Federal Reserve is caught between the pressures of excessive private equity leverage and the ballooning U.S. national debt. He described how these forces are propelling the prices of physical gold and silver higher, exposing deep vulnerabilities in the financial system as a whole.

Rising Debt and Its Consequences

The U.S. national debt has surpassed $38.5 trillion, and the Congressional Budget Office anticipates that annual interest payments will soar to $2.1 trillion by 2036. Oliver emphasized that when unfunded obligations such as Medicare and Social Security are included, the actual debt load is far greater—making repayment under the current dollar system virtually unattainable.

He remarked, "After every major credit bubble, asset prices typically collapse. However, in this scenario, the value of the dollar must fall, causing the price of gold to rise so that asset valuations remain viable."

Private Credit Risks and Market Shifts

These systemic challenges are increasingly impacting private credit markets. UBS analysts have cautioned that, in a worst-case scenario, default rates in private credit could spike to 15 percent, largely due to rapid advancements in artificial intelligence affecting corporate borrowers.

Oliver pointed out that, unlike the 2008 crisis—when the Federal Reserve could inject liquidity to revive the housing market—rescuing the private equity sector is more complex. Companies burdened with high debt and weak consumer demand cannot simply be saved by monetary stimulus alone.

Gold’s Role in a Changing Financial Landscape

Oliver does not foresee a dramatic stock market collapse akin to 1929 or 2008. Instead, he anticipates a significant surge in gold prices as confidence in traditional financial assets erodes.

He also noted that the physical metals market is undergoing fundamental changes. Industrial demand for silver is intensifying as manufacturers shift away from just-in-time inventory practices. Concerned about supply chain disruptions, many companies are now stockpiling physical silver at their facilities, further tightening available supply.

At the same time, Oliver observed that banks are raising margin requirements for smelters and refiners, which reduces the amount of physical metal processed and restricts the flow of gold to both retail and institutional buyers.

Historical Perspective and Future Outlook

Historically, central banks were compelled to maintain gold reserves equal to about one-third of their total assets. Oliver’s analysis suggests that applying this ratio to the current Federal Reserve balance sheet would imply a much higher gold price.

He stated, "Gold must reach a price that restores balance to the Fed’s books—currently, $8,000 per ounce would cover roughly a third, while $12,000 would account for about half."