Axel Merk: Treasury Is Patching the Problem—and Gold Loves It

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Axel Merk argues Treasury’s plan to more than double buybacks of longer-dated U.S. government debt is a meaningful signal for rates, the dollar and gold, even if the program’s mechanical size is limited. Gold reportedly rallied on the announcement as the market read it as another sign that Washington is trying to patch a deeper fiscal problem rather than solve it. The key takeaway for metals desks: the policy impulse may matter more than the immediate flow impact if it keeps long-end yields elevated and reinforces demand for hard assets. The discussion frames the move against a backdrop of 30-year Treasury yields climbing to levels not seen in nearly two decades, with persistent deficits pushing up the cost of capital. Merk distinguishes Treasury activism from the Fed’s post-crisis Operation Twist, implying this is less about monetary easing and more about debt management, but still potentially supportive for gold if it weighs on real rates or weakens confidence in U.S. fiscal credibility. He also notes that the signaling from Washington could be as important as the scale of the buyback itself. On the equity side, the interview suggests generalist investors may be starting to pay more attention to gold miners as profitability remains historically strong. Near term, the market focus is likely to stay on long-end yield behavior, real-rate sensitivity, and whether Treasury’s actions are interpreted as a bullish workaround for an ongoing fiscal strain. That keeps the setup constructive for gold, particularly if the policy backdrop sustains demand for hedges against higher-for-longer deficits and rate volatility.