Analysis of Gold's Investment Case Amid U.S. Debt Concerns and China's Gold Strategy

2025-11-25 10:01:14 UTC

A Reddit post argues gold has a “strongest bull case in modern history” due to three key factors: U.S. debt refinancing concerns ($25.8T claimed to mature by 2028), Fed choosing inflation over default, and 1970s-like scenario where gold outperformed stocks. The post recommends 10%+ portfolio allocation to physical gold via PHYS (avoiding GLD). Counterarguments include defense stocks outperforming gold in a Taiwan invasion scenario, China’s new gold discoveries reducing demand, and the post being a “gold pump”.

• GLD
  : $381.36 (+1.16, +0.30%) [0]
• PHYS
  : $31.73 (+0.16, +0.51%) [0]
• Basic Materials Sector
  : Down -0.613% [0]

The $25.8T debt maturity claim (2028) is unsubstantiated by official data, though Treasury projections show rising deficits: FY2026 ($1.94T), FY2027 ($2.052T), FY2028 ($2.13T) [4].

• New Discovery
  : 1,444 tons in Liaoning Province (valued at $192B) [2]
• Import Trends
  : October 2025 imports reached 93 tons (+63% YoY) [5]
• Reserve Growth
  : PBoC added gold for 12 consecutive months (as of October 2025) [1]

Gold rose ~757% from $70 (mid-1972) to $600 (1980), while S&P500 had negative returns in 1973 (-17.37%) and 1974 (-29.72%) [6].

• Expense Ratio
  : PHYS (0.39%) vs GLD (0.40%) [3,7]
• Redemption
  : PHYS allows physical gold redemption; GLD limits this for ordinary investors [8]

• Unverified $25.8T debt claim
• No evidence for/against “gold pump” accusation
• Long-term impact of China’s new gold discovery on imports is uncertain

• Reliance on unsubstantiated debt data may lead to misinformed decisions
• Historical parallels to the 1970s may not hold (modern market differences)
• GLD exposes investors to counterparty risks