Treasury safety questioned as government debt strains put gold and silver in focus

A government debt crisis could weaken the role of long-term U.S. Treasuries as a haven, leaving gold and silver as alternatives for investors, according to market analyst Michael Oliver. He argued that expanding money supplies and declining purchasing power matter more to precious metals than war headlines.

In an interview shared on Mario Nawfal’s X account on November 8, Oliver, founder of Momentum Structural Analysis, questioned the durability of the recent rebound in long-term Treasuries. If bonds cease to serve as an alternative to equities, he said, investors are left with gold and monetary metals.

Oliver said the central issue was the erosion of purchasing power in the dollar, euro and yen, rather than their exchange rates against one another. Increasing the quantity of those currencies reduces their value, he argued, with gold reflecting that deterioration. He described M2 money supply as a more useful guide to gold’s behavior than news headlines.

He pointed to U.S. 30-year Treasury futures as evidence of stress in government debt. Prices fell from 190 in 2020 to 117.5 in October 2022, then spent an extended period attempting to establish a base, according to Oliver. That pattern failed as futures dropped from 114 in April to 101 about a month before the interview, breaking through price lows stretching back decades as yields rose.

The subsequent recovery to 109 over roughly four weeks, followed by trading around 108, may have reflected asset managers shifting money out of equities, Oliver said. He questioned whether the rebound could last, arguing that a failure of bonds to provide protection would undermine a familiar refuge for investors reducing stock exposure.

Oliver also cited the relative strength of Newmont and Wheaton Precious Metals as possible evidence of portfolio reallocation. Both recovered to their previous highs during the August rally, while gold and silver remained below theirs, he said. Their subsequent declines were also more limited than gold’s. He suggested large portfolio managers could be moving 5–10% of their equity portfolios into alternatives, presenting that explanation as his interpretation of the price action.

The recent retreat in gold and silver did not, in Oliver’s assessment, establish that their longer-term advance had ended. He said his analysis emphasizes long-term momentum and allows for short- or intermediate-term weakness within a broader positive trend. As an example of a contrary assessment, he said he turned bearish on gold in January 2012 after its long-term momentum structure broke and maintained that stance through the 2015 low.

Oliver separately warned of the risk of a prolonged U.S. equity downturn. He said monthly closes below levels he was monitoring in the S&P 500 and Nasdaq could signal a multiyear bear market, but did not disclose those thresholds.

Government debt distinguishes the current environment from earlier gold cycles, Oliver argued. He said efforts by governments and central banks to contain a debt crisis through additional money creation would further erode currency purchasing power. His broader concern was that repayment of a bond’s principal does not necessarily preserve its real value, making purchasing power an essential part of assessing its safety.