BofA Warns: Gold May Now Be the Safest Haven Over U.S. Bonds

Analysts at Bank of America warned that the surge in federal debt could make gold the safe haven par excellence compared to US Treasuries. And honestly, it makes sense. The Treasury Department has to issue more bonds to cover the rising deficit, but as bond yields climb, the market value of those bonds drops. If you’re holding bonds, that’s not what you want to see.

Bonds vs. Gold: What’s Changing?

Traditionally, when bond yields rose, gold prices would struggle. After all, gold doesn’t pay interest or dividends. But lately, that relationship has started to break down. Bank of America is still holding firm on its $3,000 per ounce target for gold, and they believe higher yields won't crush the yellow metal like they used to. In fact, gold could become the ultimate safe-haven asset.

The logic? As investors grow more concerned about the U.S.'s ability to manage its growing debt, gold starts looking more attractive. Right now, gold prices are up more than 30% this year, topping $2,700 an ounce for the first time ever.

Meanwhile, bond yields have been rebounding, and the numbers behind the U.S. deficit are... well, scary. The government posted a $1.8 trillion deficit for the fiscal year that ended on Sept. 30. Worse yet, interest payments on the national debt hit $950 billion—more than what we spent on defense—and that number jumped 35% from last year, thanks to rising interest rates.

Debt Crisis Brewing?

Unfortunately, there’s no easy fix in sight. Whether we’re talking about another Trump presidency or Kamala Harris taking over, the deficit isn’t going anywhere, though the spending might vary a bit depending on who’s in charge. Groups like the Penn Wharton Budget Model and the Committee for a Responsible Federal Budget say we’re likely to see even more spending ahead.

With more bonds hitting the market, the big question becomes: Who’s going to buy all this debt? If investors start backing away from Treasuries, central banks around the world might keep shifting their reserves into gold instead. After all, it’s no secret that countries have been diversifying away from the U.S. dollar for a while now.

And keep in mind: the U.S. isn’t the only country drowning in debt, but what makes this situation unique is that our debt is exploding during good economic times. Typically, deficits balloon during wars or economic crises. But right now? We’re racking up debt even without a global emergency—and that’s before factoring in additional spending pressures like climate change, an aging population, and rising military needs.

So, Is Gold Safer Than Bonds?

Bank of America believes we could hit a tipping point where gold becomes the last safe-haven asset standing. If the bond market gets overwhelmed with too much debt and investors start questioning how sustainable this all is, gold could emerge as the safer, more reliable choice.

“Ultimately, something has to give,” the analysts said. And I agree—if markets get jittery and refuse to absorb all that debt, gold might be the only thing left standing.

If you’re worried about where things are headed, this could be the time to look into diversifying into precious metals. Protecting your wealth is more important than ever. And if you need a solid guide, check out Bill’s book or the Seven Steps to Protect Yourself from Bank Failure—both are available through my trusted resources:

• Seven Steps to Protect Yourself from Bank Failure
• Bill’s Book & Innercircle NEWSROOM

At the end of the day, the math doesn’t lie. If debt keeps piling up and interest payments swallow a bigger chunk of the budget, we could see more volatility in bonds—and that’s when gold may shine the brightest.