US Debt Hits $40 Trillion as Gold and Bitcoin Break Out

The recent breakouts in Gold and Bitcoin have caught investors' attention, particularly in light of the US government's debt reaching $40 trillion.

The combination of rising debt levels and pressure on long-term Treasury yields has led to a shift in investor interest towards hard assets. As total US debt has increased by around 10% over the past year, from $36 trillion to $40 trillion, policymakers may need to tolerate modestly elevated inflation as a form of financial repression.

The Treasury has taken measures to support the long end of the bond market, including doubling its long-end liquidity support buybacks for 10- to 30-year nominal coupon securities. This move is reminiscent of the Fed's Operation Twist in 2011 and aims to ease pressure at the long end and prevent long-term borrowing costs from rising further.

Technical signals also suggest that Bitcoin may be close to a cycle bottom, with August potentially confirming this trend. As US debt continues to expand, the case for investor interest in hard assets like Gold and Bitcoin is strengthening.