Rising Long-Term Debt Rates: Signals of a Global Debt Crisis
Dead Markets and the Safe Haven Debate
Francis Hunt opens with a stark observation: "Dead markets." He characterizes this market stagnation as spreading apathy and disconnection, causing ripple effects on adjacent sectors like gold. In such an environment where traditional markets fail to deliver returns or excitement, investors often seek alternative stores of value. Hunt suggests that as dead markets deepen and traditional financial assets lose appeal, risk-averse capital will increasingly move toward tangible assets like gold. Gold, he explains, recently dropped through a key technical support level, igniting media narratives that its safe haven status is now obsolete. "You'll be seizing the opportunity to add more bullion," he counters sarcastically, dismissing claims of "peak gold" and insisting this is a tactical buying opportunity.
Hunt encourages listeners not to be misled by short-term price action or manipulated narratives. He emphasizes that gold remains a long-term hedge against systemic collapse, especially as financial markets grow increasingly artificial and devoid of genuine opportunity.
Japan: A Turning Point in Global Debt Dynamics
Hunt revisits earlier predictions about Japan, a country long characterized by near-zero or negative bond yields. He highlights his forecast of the end of the "sub-zero era" for Japanese debt, noting how 10-year yields moved from 0.076% to 1.6%. "That was insane talk," he says, recalling how the market dismissed it at the time. The 30-year yield, he adds, has now neared 3%.
"All the little Japanese ladies that bought it—they're losing money," he quips, underscoring the capital losses now suffered by domestic investors.
Japan's yield surge is not merely a local issue—it signals the broader unraveling of the global low-yield era. When even the most accommodative bond market begins to buckle, it’s a signal that systemic change is underway.
Global Contagion: The Worldwide Yield Shift
The climb in long-term debt yields, Hunt asserts, is not a regional oddity—it’s a global contagion. He sequentially evaluates Germany, the UK, Australia, and Canada, each illustrating the broadening scope of rising debt costs.
Germany: Hunt predicts 10-year yields hitting 4%, warning, "You might pause at the fours and come back down for a while, but rates are getting higher." Even Germany's strong industrial economy, he says, won't prevent upward pressure.
UK: Hunt expects 10-year yields to reach 5.8%. Referring to his HVF (Hunt-Volatility Funnel, a pattern recognition method for predicting breakout trends), he explains, "This is our suggestion. That’s after you made the second interim."
Australia: He warns of 6% yields, posing the rhetorical: "How’s that mortgage going to feel at 6%? Ouch, ouch, ouch."
Canada: He mocks recent bullish bond sentiment: "I would be a seller of other people’s debt to you right now."
Low-yield environments are ending. With rising long-term yields, nations face increased refinancing costs, and debt-backed assets like property become significantly riskier.
Housing in Crisis: The Debt-Financing Feedback Loop
"Debt financing is the cornerstone of higher property prices," Hunt asserts. As borrowing becomes more expensive, fewer buyers can afford homes, forcing prices to adjust downward.
He highlights that nations like Germany, Australia, the UK, and Canada are particularly exposed. Property owners with high leverage or multiple holdings will be especially vulnerable.
"Access to financing is more restrictive... the price of borrowing will continue to go up. Ergo, a debt-based collapse."
Housing markets worldwide are vulnerable to a steep correction, particularly where asset prices have been supported by cheap credit.
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Switzerland and China: Islands of Stability
Among the chaos, Hunt identifies China and Switzerland as rare outliers.
China: Despite being heavily indebted, China maintains a strong export base. "They produce and they've stacked gold," he explains. This production cushion gives China resilience.
Switzerland: Hunt highlights the negative short-term yields, describing a "flight to safety" where "you actually pay them to give it to them." Importantly, he stresses gold’s outperformance even against the Swiss Franc, a traditional safe haven. "The gold is a winning," he declares.
These countries offer relative stability due to their economic fundamentals. However, even here, rising long-term yields hint that no system is completely immune.
The Convexity Moment: Debt Collapse Becomes Currency Collapse
Hunt introduces the "convexity moment"—the tipping point where rising debt yields spiral into full-scale currency debasement.
"Bankruptcy happens slowly, then suddenly... We're on the get-quickly bit right there." He likens it to sliding uncontrollably down a mountain.
He emphasizes the steepening yield curve after inversion—a signal of rising long-term risk premiums. "Be on full alert for false flags and out-of-the-blue crises," he warns.
As the debt crisis accelerates, inflation and credit fears will devalue currencies. Investors must shift from yield-seeking to capital preservation.
The Central Lie: State Solutions Will Not Save You
"The state’s not your friend—it’s the enemy," Hunt proclaims. He forecasts confiscatory measures: pension raids, punitive taxes, and intrusive monitoring via digital currencies.
"They want to steal from you... in real-time on the blockchain." Hunt calls this state response the "scavenge mode."
Institutional solutions will not protect citizens. Instead, individuals must proactively prepare to maintain financial autonomy.
Gold as the Reserve Asset of the People
Gold is the anchor of Hunt’s strategy. "The worst thing you can do now is sell your gold," he insists.
Referencing the gold-to-CPI ratio, he projects a fivefold increase: "It goes up five times... that’s your gift during default season."
He warns against fear-based selling during pullbacks: "Fools get shaken out on pullbacks... These are loading zones."
Gold offers stability in the face of systemic collapse. It’s not speculative—it’s foundational.
Preparing for the Inevitable: Action Steps
Hunt’s advice is urgent and specific:
"Have no leverage. Zero leverage."
"No credit cards, no anything. If you do, pay it off."
"Buy a little bit of gold. Pay off some debt. Split it. Repeat."
"If you have lots of homes, reduce the number. Keep the best ones with yield."
He underscores the need to simplify: "Live within your means... keep smart, keep low."
Survival in the new financial regime depends on simplicity, hard assets, and reducing dependency on fiat systems.
Conclusion: The Tipping Point Is Here
"Hear this warning," Hunt implores. "It's time to have no leverage. Get out of debt and build your wealth independently. Your pensions and investments depend on it."
In a world of collapsing fiat confidence, gold isn’t just an investment—it’s a lifeboat.