Shattering the Myth That Higher Taxes Can Fix the $40 Trillion National Debt
Shattering the Myth That Higher Taxes Can Fix the $40 Trillion National Debt
Notes From the Field By James Hickman (Simon Black / Sovereign Man) August 20, 2026
In June of 1944, American soldiers were storming the beaches of Normandy, single-handedly leading the fight to defeat the Nazis.
Back home, Americans gave everything they had. Some 85 million bought war bonds. The top income tax rate hit 94%, the highest in US history. Even ordinary people paid more and more income tax to support the war effort.
Shattering the Myth That Higher Taxes Can Fix the $40 Trillion National Debt
Notes From the Field By James Hickman (Simon Black / Sovereign Man) August 20, 2026
In June of 1944, American soldiers were storming the beaches of Normandy, single-handedly leading the fight to defeat the Nazis.
Back home, Americans gave everything they had. Some 85 million bought war bonds. The top income tax rate hit 94%, the highest in US history. Even ordinary people paid more and more income tax to support the war effort.
This was the absolute peak of American patriotism and record high tax rates. And yet overall government tax revenue still only came to just 20.5% of GDP.
This matters. In the eight decades since the end of World War II, tax revenue in the United States has averaged between 17% and 18% of GDP... with very little variation.
The low was 14.2% in 1950, coming out of a recession, and the high was 20.0% in 2000, at the peak of the dot-com boom when capital gains tax rates were through the roof.
Yet throughout those eight decades, the overall average has remained quite steady— 17% to 18%... even though corporate and individual tax rates have been all over the board over the same period.
The reason is simple: as tax rates go up and down, people and businesses adjust their behavior. If marginal tax rates skyrocket, people stuff their earnings into tax shelters. Or they defer revenue. Or they come up with any number of ways to legally reduce what they owe.
It's human nature.
You probably heard that the US national debt just crossed $40 trillion yesterday. And on its current trajectory, there is no end in sight to the growth of that debt.
The federal government now routinely posts ~$2 trillion annual deficits... during periods of relative peace and prosperity.
Plenty of people (especially on the left) believe the answer is to tax the rich: sky-high marginal rates, wealth taxes, etc. But the historical data show that higher tax rates cannot and will not solve the problem.
According to IRS data, imposing a tax rate of 90% on people earning $2MM per year or more would theoretically generate $200 to $300 billion in additional tax revenue.
But remember human nature: people would very quickly change their behavior and restructure their affairs, and so the real additional tax revenue would collapse to less than $50 billion per year.
The same goes for a wealth tax. Charging billionaires and centimillionaires a percentage of their unrealized gains sounds like a nice idea to a socialist. But the consequences would offset most (if not all) of the additional revenue.
If Elon Musk were forced to sell 10% of his stock to pay a wealth tax, the share prices of Tesla and SpaceX would plummet.
Sure, the IRS would collect more money from Musk himself. But, nationwide, overall capital gains tax revenue would fall dramatically. So net tax revenue would barely budge.
The point is there are always consequences to raising taxes: less economic activity, slower growth, and higher unemployment. No country in history has ever taxed its way to prosperity.
What’s crazy is that an economy as large and dynamic as America's doesn't even need to run a balanced budget. Even a $1 trillion annual deficit would be OK— and a huge step in the right direction. The national debt would still grow, but as a percentage of GDP, it would shrink.
And it's not hard to get there. The low-hanging fruit is obvious: the Government Accountability Office, the federal government's own watchdog, estimates that hundreds of billions of dollars are lost to outright fraud and theft every single year.
Yet Congress doesn't seem to want to even try to eliminate obvious fraud.
And that's the easy stuff.
The harder part would be streamlining government operations and cutting waste and inefficiency... which could easily generate hundreds of billions in savings.
Harder still would be reforming entitlements, fixing immigration, and taking a chainsaw to the Code of Federal Regulations... all of which could trim spending and/or grow the economy (and hence increase tax revenue).
Again, the national debt is $40 trillion, yet Congress won't even do the easy stuff to fix it. Even worse, the media and the courts actively block and obstruct the people who do try.
We can hope that common sense will one day prevail, and that AI and nuclear power will supercharge the US economy to the point where America grows its way out of debt.
But in the meantime, there are now 40 trillion reasons to have a Plan B.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC
How Medicare Became a Slush Fund
How Medicare Became a Slush Fund
Notes From the Field By James Hickman (Simon Black / Sovereign Man) August 18, 2026
Four years ago this month, Washington passed a law and named it, with a straight face, the Inflation Reduction Act. Bizarrely, their plan to ‘reduce inflation’, which had been caused by excessive government spending, was for the government to spend even more money. It’s genius!
How Medicare Became a Slush Fund
Notes From the Field By James Hickman (Simon Black / Sovereign Man) August 18, 2026
Four years ago this month, Washington passed a law and named it, with a straight face, the Inflation Reduction Act. Bizarrely, their plan to ‘reduce inflation’, which had been caused by excessive government spending, was for the government to spend even more money. It’s genius!
Among its various provisions, part of the legislation authorized the government to negotiate prescription drug prices. Seems like a nice idea in principle... but in practice it’s been a disaster.
The Congressional Budget Office released the results late last month: the Medicare drug provisions that were supposed to generate $129 billion in savings will now add $700 billion to the deficit.
Sometimes it seems like this is the whole idea; given the rampant Medicare fraud that gets uncovered on a daily basis, it’s clear that politicians have an incentive to steer MORE money into the program.
Healthcare is the easiest spending in Washington to justify. Every dollar comes with the same argument: if we don't spend on healthcare, people will die!
It ends up being so much money— a giant, dark pool of corruption— and a lot of it gets funneled straight back into the political process as campaign contributions. And it’s been going on for ages.
Back in 2002, for example, America’s biggest health-care workers union spent about $800,000 electing Rod Blagojevich governor of Illinois. He later thanked them "for electing me governor."
Weeks after he took office, Blagojevich signed multiple executive orders that fattened the union’s pockets, like forcing more healthcare workers to join... and automatically deducting union dues from their paychecks. Bad for the unionized workers, but great for the union bosses.
In New York, the Greater New York Hospital Association wrote two checks totaling more than $1 million to the state Democratic Party in August 2018, at then-Governor Andrew Cuomo's campaign's request.
Three months later the state ordered its first across-the-board Medicaid rate increase since 2008, worth about $140 million a year. Great news for the hospital association.
The cycle never ends— the unions and associations scratch the politicians’ backs, and in turn get their backs scratched. No one can rationally expect those parties to walk away from their mutual benefit.
And this is just the ‘honest’ graft and corruption... it doesn’t take into account the outright fraud.
During COVID, Medicare paid for eight test kits per month, per person, in America. Yet an inspector general later found it paid up to $454 million for nearly 39 million kits over that limit.
In June, the Justice Department found over $6.5 billion in fake health-care claims. Yet agents recovered only $182 million in cash and assets, less than three cents per dollar of fraud.
In one instance, a pair of adult day care operators fraudulently billed Medicare and Medicaid $120 million over a decade. One of their centers claimed 1,041 attendees in a single day while the building's occupancy limit was 81.
Then Nick Shirley walked into the neighborhood's facilities with a camera this summer and turned up $190 million more in suspicious billing.
And yet very little of the fraud gets stopped... in large part because a portion of what they steal from the government is funneled back to the politicians (mostly on the Left) who vote for more Medicare spending.
These same politicians install activist judges at the state and federal level, ensuring that anyone who tries to stop the fraud will be sued... and blocked by the courts.
As an example, last year Congress voted to cut off Planned Parenthood from Medicaid for one year.
Planned Parenthood sued. Judge Indira Talwani, an Obama appointee in Boston, dutifully blocked the cut within weeks, and the appeals court had to overrule her twice before the law could take effect.
Feeding Our Future, the Minnesota child-meal Somali fraud network, had the audacity to sue the state for racial discrimination when the fraudulent money train slowed down.
It’s extraordinary; there are so many checks-and-balances in place to keep the graft going.
The politicians vote to keep the money moving. The judges defend it to the last Somali. And the activists and the media scream that anyone asking questions is racist; Governor Tim Walz called the fraud talk "vile, racist lies."
The teachers' unions march the kids out of school for union causes and No Kings rallies, as if the kids had any idea what they were marching for. And the universities continue the socialist indoctrination.
Media, education, courts: the whole institutional layer exists to keep the money flowing.
So of course they want more of it.
Senator Bernie Sanders reintroduced Medicare for All last year, and the movement that just made Zohran Mamdani mayor of New York wants to make this slush fund the entire health-care system.
Even the most conservative estimate puts the price at $32.6 trillion over the first decade; that’s an astonishing amount of potential fraud.
The US could get its fiscal house in order if it shut this slush fund down. But the graft is deeply entrenched... so it’s likely that US deficit spending will continue in order to pay for it all.
Foreign governments have reached the same conclusion: The US has to go deeper into debt in order to finance hundreds of billions of dollars in fraud.
That's a major reason why foreign governments and central banks are diversifying away from the dollar. And with no obvious global currency to park their financial reserves into, they buy gold.
We have been making this argument for the past few years, since gold was below $1800. This sort of news makes the case even more strongly: the story hasn’t changed... and gold remains a great hedge for the fiscal uncertainty to come.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC
PS: In this month’s Schiff Sovereign Premium, we made the case for a gold producer built for exactly this outlook: a debt-free, dividend-paying, highly successful gold company which just had the most profitable first-half in its company history. But it only trades at 2x cash flow.
If the fraud and deficits continue, gold should do very well... and successful producers can do even better.
https://www.schiffsovereign.com/trends/how-medicare-became-a-slush-fund-155635/?inf_contact_key=45b23aa345ce3789b19a50db4e04df60121216c3a82d754a88f6751e8a28a7b5
Even America's Enemies Trusted It With Their Money. That's Over
Even America's Enemies Trusted It With Their Money. That's Over
Notes From the Field By James Hickman (Simon Black / Sovereign Man) August 12, 2026
At 4:15 in the morning on November 4, 1956, Soviet artillery opened fire on the city of Budapest. And the subsequent firestorm was nothing short of devastating.
Two weeks earlier, students and factory workers had risen up against the Soviet-installed puppet government in Hungary. They pulled down Stalin's statue, rampaged across the city, and even managed to push Soviet forces out of Budapest.
Even America's Enemies Trusted It With Their Money. That's Over
Notes From the Field By James Hickman (Simon Black / Sovereign Man) August 12, 2026
At 4:15 in the morning on November 4, 1956, Soviet artillery opened fire on the city of Budapest. And the subsequent firestorm was nothing short of devastating.
Two weeks earlier, students and factory workers had risen up against the Soviet-installed puppet government in Hungary. They pulled down Stalin's statue, rampaged across the city, and even managed to push Soviet forces out of Budapest.
Moscow initially signaled that it was ready to negotiate and consider a full withdrawal. The bells of freedom started ringing. But it turned out to be a ruse— and Soviet leader Nikita Khrushchev swiftly sent in the tanks.
The Soviets brutally crushed the uprising in days, killing around 2,500 Hungarians and displacing 200,000 who fled the country.
In the reprisals that followed, tens of thousands more were arrested, and hundreds were hanged— including Hungary's prime minister, who was tricked into surrendering with a promise of safe passage.
President Dwight Eisenhower condemned the invasion and opened America’s doors to roughly 30,000 Hungarian refugees. He then made his case to the United Nations, where the UN General Assembly demanded a full Soviet withdrawal from Hungary. Kruschev ignored them.
Eisenhower was clearly opposed to Soviet aggression. But America did exercise restraint— the President did not touch Soviet money that was held in the US.
It’s crazy to think that, even during the height of the Cold War, the Soviets held a stockpile of US dollars within the US financial system. They had no choice. Global commerce (including oil sales) took place in dollars, so even America’s mortal enemy needed to hold US currency.
Eisenhower could have easily confiscated Soviet assets. Yet not one Soviet account was frozen. Not one asset blocked… even as Soviet tanks shelled a defenseless European capital.
Similarly, twenty-three years later when the Soviets invaded Afghanistan, President Jimmy Carter reacted harshly. He cut off certain trade with the USSR, including grain and technology. And most famously he led a 65-country boycott of the 1980 Moscow Olympics.
But even Jimmy Carter did not freeze Soviet assets.
Decades later, in August 2008, Russia invaded the Republic of Georgia. President George W. Bush condemned the invasion, sent humanitarian aid to Georgia, and ended support for Russia's World Trade Organization bid.
Yet he did not touch any Russian money held in the US.
Three presidents from both parties, across five decades, watched America's biggest adversary invade other countries... but they still chose to keep the money out of it.
America had become Switzerland: a neutral custodian that fiercely protected anyone's savings, regardless of politics. The trust ran so deep that through every proxy war and nuclear standoff, even the Soviet Union held their enemy’s currency inside their enemy’s financial system. That’s how confident the Soviets were in America’s financial neutrality.
That wasn’t about keeping Moscow happy. It showed the world that assets in America were safe... and that was traditionally a huge reason why foreign governments parked trillions of dollars in US government bonds... and why the Treasury Dpeartment could borrow endlessly to fund its deficits.
But this policy of financial neutrality changed in February 2022, after Russia invaded Ukraine. The US pushed its allies to freeze roughly $300 billion of Russian assets.
To be clear, this is not a moral discussion. I’m not arguing whether it was right or wrong; rather, this is about setting precedent. Russia did not attack or invade the United States; they attacked Ukraine— a country with which the US did not have a mutual defense treaty.
For years leading up to the Ukraine invasion, the US government had started politicizing its financial system, weaponizing the dollar, and levying occasional sanctions when foreign countries or banks stepped out of line.
But freezing the reserves of a major power was a massive acceleration.
Consequently, America’s reputation as a financial safe haven vanished on the spot.
Foreign governments were already worried about the gigantic US national debt, political dysfunction in Washington, and deep social divisions. The Russian asset freeze was the proverbial straw that broke the camel’s back.
The first lesson that foreign nations concluded was the importance of holding gold as a strategic financial reserve.
Rather than deposit US dollars in a big Wall Street bank, or hold US government bonds, foreign governments concluded that it was much safer to have physical gold sitting in their own country— no one could confiscate it, freeze it, or inflate it away.
That’s why central banks around the world began diversifying out the US dollar and into gold: roughly 2% of strategic reserves (above normalized annual net purchases) between 2022 and 2025 was invested in gold.
And that modest shift— just 2%— caused the gold price to more than double. As we covered earlier this week, central banks plan on investing a whole lot more into gold.
Gold was the key lesson of Ukraine. Then came the lesson of Iran.
Until this year, few governments worried much about the availability of critical assets like energy, food, fertilizer, microprocessors, etc.
But then US and Israeli forces struck Iran in late February, and Iran responded by closing the Strait of Hormuz. More than five months later, the strait is still too dangerous for most commercial traffic, and many countries are running short on those same critical resources that transit the Gulf.
The lesson of Iran is that the world runs on strategic assets, and access to them can vanish overnight.
Their conclusion is that, again, rather than stockpile US dollars via government bonds and bank deposits, it makes a lot more sense to stockpile strategic assets— like fertilizer, energy, etc.
At a minimum, whenever the situation in Iran comes to its conclusion, countries will have to buy oceans of oil just to top off their strategic petroleum reserves. Our guess is they'll go far beyond that and build the capacity to store even more.
And not just oil. Anything critical and strategic is now a candidate for the stockpile, because the old days of global cooperation and easy trade are gone, replaced by mistrust, conflict, and resource nationalism.
That means base metals, rare earths, and technology itself, from memory chips to sovereign compute capacity.
This trend is still in its early stages, and the companies that own and produce these critical assets stand to do very well.
We've featured many of them, from energy to metals, in Schiff Sovereign's investment research newsletter, Strategic Assets.
And this environment has been very good to them: several are trading at all-time highs right now; the crude tanker company we covered just reported the best quarter in its history, and a zinc producer is up almost 3x in under nine months.
In the most recent issue, we told readers about a small oil producer which is becoming a wildly successful profit machine; it has no debt, excellent management, yet trades at just three times its current free cash flow.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC
The Tax Collector Now Gets a Cut of What He Finds
The Tax Collector Now Gets a Cut of What He Finds
Notes From the Field By James Hickman (Simon Black / Sovereign Man) August 11, 2026
Arguably the most famous man on the planet throughout the 1700s was the famed writer Francois-Marie Arouet, known to history as Voltaire. He wasn't just a celebrity writer and philosopher, however; Voltaire was also a wealthy capitalist and nobleman who almost single-handedly turned the impoverished region of Ferney into a highly productive watchmaking hub.
The Tax Collector Now Gets a Cut of What He Finds
Notes From the Field By James Hickman (Simon Black / Sovereign Man) August 11, 2026
Arguably the most famous man on the planet throughout the 1700s was the famed writer Francois-Marie Arouet, known to history as Voltaire. He wasn't just a celebrity writer and philosopher, however; Voltaire was also a wealthy capitalist and nobleman who almost single-handedly turned the impoverished region of Ferney into a highly productive watchmaking hub.
Through his fame and creativity, Voltaire managed to attract a small army of Swiss watchmakers to relocate across the border into France and set up shop in Ferney. As part of the deal, he personally negotiated special tax incentives for his watchmakers, exempting them from some of the most onerous French national taxes.
Voltaire's tax incentives were personally signed off by France's comptroller general, Jacques Turgot... and all of Ferney celebrated their success.
Unfortunately, even a formal deal with the French government didn't stop the local "tax farmers" from coming to collect.
For most of the 1700s, the royal court in France had delegated the collection of its complex system of taxes and duties to private citizens who were known as tax farmers.
Tax farmers would essentially bid against each other to pay the government a fixed sum of money up front each year, which the treasury would then claim as tax revenue.
Tax farmers would then have the full authority of the state to go all over the cities and the countryside to collect.
As they were obviously running a business, their primary motivation was to generate the highest possible return on investment by any means necessary. And it didn't take long for tax farmers to turn into mafia-like organizations that would send roaming gangs across the country to threaten and extort every last penny they could get from French citizens.
Even though Voltaire had negotiated directly with the French government for his region's tax exemptions, the tax farmers still came to Ferney and brutalized the local population.
Voltaire wrote to a friend in late 1775 that the tax farmers "marched about in groups of fifty, stopped all the vehicles, searched all the pockets, forced their way into all the houses and made every kind of damage," to collect money from the citizens of Ferney.
This was not an aberration; stories of widespread abuse by tax farmers were legendary in pre-revolutionary France. In the year 1783 alone, tax farmers carried out more than 4,000 house searches and arrested roughly 20,000 people. Confiscation of property, homes, clothes, and horses was routine. And the financial incentives were perverse, with the person who ratted out a suspected tax delinquent earning one-third of the confiscated property.
Unsurprisingly, most of these tax farmers would be put to the guillotine after 1789.
Sadly, this concept is starting to make a comeback in the land of the free, where governments are outsourcing tax collection to private businesses, which have a financial incentive to be excessive and overly suspicious.
A large part of this is because roughly half of the states are in financial distress. This is a consequence of the federal government pulling the plug on certain slush fund programs that have fattened state coffers since the COVID days.
As a result, states are having to find ways to make ends meet. And that starts with keeping their tax codes deliberately complex and outdated. Doing so means that almost everybody is going to be guilty of some violation, because it's nearly impossible to remain in compliance with a tax code that often contradicts itself.
States then empower private companies to go out and collect, to find infractions wherever they may be, and extort money from productive citizens. This is a much easier approach for them than doing the hard work to balance their budgets and live within their means.
Here's an easy example: it's completely normal now for a business to have remote workers. And often those workers might be in another city, another state, or even another country.
Tax rules in many states have never caught up to this new paradigm. Hence, many state governments still want their pound of flesh, even though workers don't set foot anywhere near their jurisdictions.
Rules in New York state, for example, are completely incomprehensible. A nonresident employee who works remotely from another state can still be considered a New York worker whenever staying home is for the employee's convenience rather than the employer's necessity.
There is, of course, no guidance on how necessity versus convenience is determined. It's a gray area and leaves a lot of room for interpretation by a tax collector who has a financial incentive to extort businesses with out-of-state remote workers.
The fact is, it's impossible for businesses with several employees in several states to get all of this right.
Every multi-state business is in violation of something, somewhere, and the only question is who finds it first.
And this is only one small example. There are literally hundreds, if not thousands, of outdated tax regulations at the state and local levels for which compliance is simply not feasible.
Private companies receive anywhere from 12% to 20% of the amount they collect, and they engage in any number of creative ways to find delinquents.
They'll license proprietary location data, including cell phone tower logs, toll records, and even credit card statements, and when all else fails, sometimes they'll just make stuff up to intimidate taxpayers into writing a big check.
You will absolutely hear more about this, if not experience it for yourself. Readers of this letter know without a doubt that the US federal government is in deep financial turmoil, with a national debt of nearly $40 trillion and roughly $2 trillion in annual deficits.
But many states are in far worse shape. And they don't have the luxury of being able to print the world's reserve currency to make ends meet. Rather than make the difficult choices to balance their budgets, they will turn to milking their citizens like dairy cows and outsourcing the collection to a new generation of tax farmers.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC
P.S. Working out where your business, your assets, and your family legally belong is exactly what our flagship research service, Schiff Sovereign's Plan B Confidential, was built for.
Every month it covers second residencies and citizenships, foreign banking, legal tax reduction, and real assets, reported from more than 120 countries so the options come with real costs attached.
Central Banks Choose Between Gold and Dollars. Gold Is Winning
Central Banks Choose Between Gold and Dollars. Gold Is Winning
Notes From the Field By James Hickman (Simon Black / Sovereign Man) August 10, 2026
Every country on earth keeps a rainy-day fund: a pile of emergency savings, managed by its central bank, set aside for wars, crises, and currency runs.
These stockpiles of cash around the world are known as a nation’s “reserves”, and the people who manage those funds are called reserve managers.
Central Banks Choose Between Gold and Dollars. Gold Is Winning
Notes From the Field By James Hickman (Simon Black / Sovereign Man) August 10, 2026
Every country on earth keeps a rainy-day fund: a pile of emergency savings, managed by its central bank, set aside for wars, crises, and currency runs.
These stockpiles of cash around the world are known as a nation’s “reserves”, and the people who manage those funds are called reserve managers.
Due to America’s superpower status, managers tend to hold the vast majority of their nations’ reserves in US dollars— most commonly in US government bonds like the 10-year note.
Now, every year, a London institute called OMFIF surveys dozens of these reserve managers who collectively hold more than $10 trillion— and OMFIF asks the same question each year:
What does your central bank plan to do with its US dollars?
This year, for the first time, more reserve managers said they planned to cut their dollar holdings than increase them.
Reserve managers are the least excitable people in finance. Their job is to be boring, to hold safe assets, and to never make news. So this is not an emotional knee-jerk reaction. It is a decision that has been decades in the making and accelerated over the past few years.
The critical moment came in February 2022 when Russia invaded Ukraine; the US government froze roughly $300 billion of Russia’s reserves, i.e. assets that were held outside of Russia.
Interestingly enough, many of those frozen Russian assets were actually held in EUROPE, not the United States. But the US government still exerted control, pushing Europe to freeze those Russian-owned bonds.
Every reserve manager on the planet learned the same lesson that day: if you ever land on America’s bad side, the US government will lock you out of your national savings in an instant.
And it was at that point that central banks around the world started shopping around for more secure reserve assets that the Treasury Department cannot freeze.
Given that foreign countries collectively hold tens of trillions of assets (most of which is denominated in US dollars), they couldn’t exactly dump their holdings overnight. No one is willing to shout “FIRE” in a crowded theater; but they are, however, calmly making their way to the door.
But this process will take years, perhaps even a decade or more.
The key question is— where are they going to park their reserves, if not US dollars? There certainly have been a number of lingering options, from the “BRICs dollar” to China’s digital currency.
But the obvious answer (as we have been writing about for years here) is gold.
From 2022 through 2025, central banks bought a few hundred billion dollars worth of gold (above their normal purchases). This amounts to roughly 2% of their reserves.
Yet by parking just 2% of their reserves into gold, gold prices more than doubled from ~$1,600 back then to more than $4,000 today.
It’s important to note that the sudden spike in gold prices to $5,600 early this year wasn’t from central bank purchases— that was mostly hedge funds and retail investors piling in.
Gold prices slid back down to $4,000 as those investors exited. But central banks have started buying again; net central bank purchases amounted to 244 tonnes in the first quarter of 2026— well above their five-year average. And net purchases continued in April and May.
The big headline is that those same central bank reserve managers recently told OMFIF that they plan on moving AT LEAST another 7% of reserves out of dollars over the next decade.
Most likely the bulk of this reserve diversification will go into gold.
In other words, 2% of reserves more than doubled the gold price between 2022 and 2026. Now they plan to invest over three times that amount over the next decade. Any guesses where the gold price is headed?
These bankers also expect to pay more for gold; 61% of the central banks OMFIF surveyed estimated a gold between $5,000 and $6,000 an ounce by June 2027. And yet, even at record prices, most of them still plan to buy gold over the next two years.
Think about that. The institutions that just bought the gold price dip expect the price to go up within a year… and their stated plan is to keep buying more.
Most individual investors are very short-term in their thinking. They look at day-to-day price fluctuations and tend to follow popular trends.
Central bankers, on the other hand, ignore daily, monthly, and quarterly noise. They think strategically... and their time horizon is in years if not decades.
They’re not doing this to make money; they aren’t planning to trade their US dollars for gold, only hoping to trade their gold back for more US dollars down the road.
Rather, they’re trying to protect their national savings by purchasing strategic assets that the US government cannot confiscate.
Ultimately this is why we believe that the long-term direction of gold is still much higher— because the largest buyers in the market are still buying, and they plan to continue buying for years to come.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC
P.S.
When retail investors dumped gold this year, they dumped the gold producers too. But these companies were built to survive far lower prices, so at today's gold they are still enormously profitable, still throwing off cash, and still trading at low multiples of the cash they generate.
Schiff Sovereign's Strategic Assets is monthly investment research on exactly these kinds of businesses: already profitable, little or no debt, trading at a low multiple of free cash flow, with catalysts the market has not priced in.
The Biggest Winners Of This War Don't Pump A Single Barrel
The Biggest Winners Of This War Don't Pump A Single Barrel
Notes From the Field By James Hickman (Simon Black / Sovereign Man) July 28, 2026
How much do you think it would cost to send a supertanker, one of the giant ships that move the world's crude oil, through a narrow stretch of water that is full of mines, where missiles hit two tankers in early July, and where a crew member has already been killed?
Last month, one shipowner agreed to make that run— through the Strait of Hormuz— for nearly $470,000 per day.
The Biggest Winners Of This War Don't Pump A Single Barrel
Notes From the Field By James Hickman (Simon Black / Sovereign Man) July 28, 2026
How much do you think it would cost to send a supertanker, one of the giant ships that move the world's crude oil, through a narrow stretch of water that is full of mines, where missiles hit two tankers in early July, and where a crew member has already been killed?
Last month, one shipowner agreed to make that run— through the Strait of Hormuz— for nearly $470,000 per day.
For perspective, in the first few months of last year, before the war, the biggest crude tankers on earth were earning as little as $36,000 a day.
The ships collecting these fortunes don't produce anything at all. They don't pump oil, they don't refine it, and they don't sell it. They just carry it from one place to another.
And that is exactly why they have become the biggest winners of this war.
When Iran effectively closed the Strait of Hormuz in late February, oil spiked to $120 a barrel in March, then calmed as ceasefires came and went. But all the while, tanker rates just kept climbing.
That's because of the arithmetic that drives the shipping business; it’s simple to understand— when the strait became too dangerous to navigate, everything had to be rerouted. So instead of a quick voyage through the strait, cargo had to be transported through far more complicated means... and ships had to sail much longer routes to avoid the danger.
The end result is that oil from the region now crosses far more ocean, and every voyage takes a LOT longer. This means ships are tied up for longer... driving demand higher for shipping.
And it’s not like this problem can be eliminated by simply adding more ships to the global fleet; supertankers take years to build, and shipyards spent the past decade producing very few.
That last part matters, because it is the reason this windfall was visible long before anyone had heard of this war.
One of the largest supertanker owners earned more than $100 million in the first quarter, excluding one-off gains from selling ships, as its fleet was making roughly two and a half times as much per day as a year earlier.
The company paid out every penny of it as a dividend, extending a streak of quarterly payouts stretching back more than fifteen years. And the second quarter will be even better: by early May, it had already booked most of its available days at nearly double its first-quarter rate.
Another major tanker owner reported nearly $200 million in profit for the quarter and declared the largest dividend in its history.
Tankers are not the only winners. One owner of bulk carriers— the ships that haul iron ore, grain, and coal— has become the target of a takeover battle in which a rival has raised its offer again and again, and the board keeps rejecting bids it says still undervalue the fleet.
All three companies are on the research list of Schiff Sovereign's investment newsletter, Strategic Assets.
They were featured in 2023 and 2024, back when shipping was about as unloved as a business can be. That was the point. Shipping moves in long cycles, and the bottom is where the next shortage is easiest to see... because years of terrible rates had stopped owners from ordering ships, and a ship ordered today does not carry cargo for three years.
Counting the ships that would exist in 2026 took no view on Iran— only a public order book.
They met a strict set of criteria: profitable, little or no debt, trading cheap against current cash flow, and operating in an industry with an aging fleet and hardly any new construction on order.
The war revealed that setup; it did not create it. As of early July, one tanker owner had more than doubled since being featured, the other was up more than 90%, and the bulk carrier owner was up more than 50% on a takeover bid rather than a rate spike.
The tankers keep paying quarterly dividends, and one payout alone equals almost 10% of the share price when that company was first featured.
We expect this pattern to repeat across real assets.
The world spent a decade underinvesting in the physical things civilization runs on: ships, mines, oil fields, refineries, smelters. Now geopolitics has turned violent. When there is no spare capacity, every disruption has to be resolved by price, and the companies that own the scarce assets collect the difference.
To be clear, we are not permabulls, and rates like these will not last forever. A durable peace would bring tanker earnings down hard, and shipping has punished euphoric buyers many times before.
Our edge is not predicting wars or commodity prices. It is applying strict criteria to well-run companies, making the case to buy when they meet the bar, and to sell when they no longer do.
That discipline is working. Of the more than twenty companies currently on the research list, six are showing a loss. The companies that we closed out returned an average of 172%.
A silver producer gained more than 950% in under a year, and others returned 540%, 240%, and 150%.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC
Why They Won't Even Fix the Easy Stuff
Why They Won't Even Fix the Easy Stuff
Notes From the Fied By (Simon Black / Sovereign Man) July 27, 2026
The Department of Transportation's headquarters campus in Washington spans two complexes covering 1.8 million square feet across 11-acre of prime DC real estate. In the private sector, such a trophy office property would fetch north of $1 billion per year in rental income.
Yet for the federal government, two-thirds of the space sits empty according to the Government Accountability Office (GAO), the federal government's own internal watchdog. This is based on real data; the GAO toured the department's buildings last fall and counted the empty desks.
Why They Won't Even Fix the Easy Stuff
Notes From the Fied By (Simon Black / Sovereign Man) July 27, 2026
The Department of Transportation's headquarters campus in Washington spans two complexes covering 1.8 million square feet across 11-acre of prime DC real estate. In the private sector, such a trophy office property would fetch north of $1 billion per year in rental income.
Yet for the federal government, two-thirds of the space sits empty according to the Government Accountability Office (GAO), the federal government's own internal watchdog. This is based on real data; the GAO toured the department's buildings last fall and counted the empty desks.
And this is far from an isolated case. Of the 189 government buildings around the country that were analyzed by the GAO, 168 were underutilized— with occupancy averaging just 37%.
One of the worst offenders is One Aviation Plaza in Queens, which sits at 13% occupancy.
Ironically, Congress actually set a MINIMUM standard for all government buildings to be at least 60% occupied. This is the law of the land in the United States, set by the 2023 USE IT Act.
So, Congress was surprisingly trying to make things more efficient and save taxpayer money— potentially billions each year. They passed a law. But the government doesn't follow it.
The big consequence for the government violating its own law so far has been this GAO report. Nobody was fined, nobody was fired, and nothing was sold. Basically we got a PDF.
And all of that is just one category of waste at just one department. The bigger losses are to outright fraud.
In June, the Justice Department announced a record-setting healthcare fraud takedown: 455 defendants, the most ever charged in a single healthcare fraud operation, including 90 doctors and licensed medical professionals, all accused in schemes involving $6.5 billion in fraudulent claims.
Yet federal agents only managed to seize $182 million in cash and assets. No word on what happened to the other $6.3 billion.
By the government's own accounting, federal agencies made close to $200 billion in improper payments in fiscal year 2025 alone... $24 billion more than the year before.
That's money which should never have gone out the door, went out in the wrong amount, or can't be documented. And that was only across 64 programs at 15 agencies... a small fraction of the government's total footprint.
This keeps happening for a simple reason: the federal government's ~$7 trillion annual budget is too vast for anyone to keep track of... and no one is ever held accountable.
Bureaucrats who waste the money never get fired; in fact it is damn near impossible to fire a federal employee. And voters continue electing the same incompetent, crooked politicians to public office.
Even when there's public outcry over obvious fraud, the legacy media closes ranks around their party and insists that voters are racist for criticizing "Learning Centers".
None of this is free. The empty buildings, the stolen billions, the money nobody can track: it all gets paid for with borrowed money. And that deficit spending is what fuels inflation.
June's Consumer Price Index came in at 3.5%. By the Fed's own admission, inflation has now missed its 2% target for five years running.
And after all that failure, few in Washington will name the cause.
A lot of people blame oil, especially after the war with Iran sent crude above $126 a barrel. But oil has been all over the board for the last five years; it was under $60 a barrel just last fall. So why wasn't inflation falling when oil was cheap?
Because, through all of it, there has been exactly one constant: insane levels of government spending. Deficits keep rising, and the more money the government wastes, the more stubborn inflation becomes.
The central bank can't fix that; the Fed doesn't pass spending bills, Congress does. And as long as the spending stays out of control, inflation is not coming down.
And Washington has shown no appetite to bring it under control. They refuse to cut even the easiest, most obvious waste and fraud.
Nothing about this changes on its own. A government that can't bring itself to sell an empty building is not going to take on the spending that actually matters, and inflation is how they'll pay for the difference.
Which is exactly why it makes so much sense to own the real assets that hold their value when the dollar doesn't: gold, silver, and well-managed, productive businesses.
It's definitely time to be thinking about a Plan B.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC
P.S. Our flagship service, Plan B Confidential, is built for exactly this: real asset strategies to protect your savings from Washington's spending, and residency options in countries where your money buys far more. It's backed by boots-on-the-ground research from all over the world—
US Taxpayers Subsidized The Greatest Heist Of The Cold War The Grocery Bill Came Later
US Taxpayers Subsidized The Greatest Heist Of The Cold War. The Grocery Bill Came Later.
Notes From the Field By James Hickman (Simon Black / Sovereign Man) July 23, 2026
In the summer of 1972, a Soviet official named Nikolai Belousov stepped off a plane in New York City with a shopping list.
The Soviet Union had just finished its worst harvest in over a decade and was on the verge of starvation... and Belousov was tasked with the nearly impossible mission of buying enough wheat to feed an entire nation.
US Taxpayers Subsidized The Greatest Heist Of The Cold War. The Grocery Bill Came Later.
Notes From the Field By James Hickman (Simon Black / Sovereign Man) July 23, 2026
In the summer of 1972, a Soviet official named Nikolai Belousov stepped off a plane in New York City with a shopping list.
The Soviet Union had just finished its worst harvest in over a decade and was on the verge of starvation... and Belousov was tasked with the nearly impossible mission of buying enough wheat to feed an entire nation.
So he flew to America.
His first meeting was with Michel Fribourg, the head of Continental Grain. The two shook hands and closed a deal for Russia to buy millions of tons of American wheat.
Belousov's next stops were the other biggest grain traders in America: Cargill, Cook, Bunge, Louis Dreyfus, and Garnac.
He worked through every major American grain firm in a matter of weeks— each deal negotiated in complete secrecy... and each firm assumed they were the only American grain house that the Soviets were talking to.
In reality, Belousov was closing deals with all of them.
By the time word got out that the Soviets had been buying from everyone, everywhere, all at once, Belousov had already locked up roughly 440 million bushels of wheat, about a quarter of the entire American crop, for ~$700 million.
And here's the wild part: this was the peak of the Cold War... yet America's staunchest adversary didn't even pay full price for US wheat.
That’s because, for years prior, the US Department of Agriculture had been funding subsidies to make American grain cheaper abroad, covering the gap between the higher domestic price and the lower global price.
So the end result was that the Soviet Union drained American wheat inventory— and that’s when the Law of Supply and Demand kicked in. Wheat prices nearly doubled. Corn prices more than tripled by the following summer. Bread, beef, and eggs all followed.
Yet while Americans were suffering major food inflation at home, the US government was subsidizing the Soviet Union’s wheat purchases to the tune of $300 million in taxpayer funds.
The American taxpayer had financed the largest grain purchase the world had ever seen, for the benefit of its sworn enemy.
Then the second shoe dropped. The following autumn, in October 1973, the Arab oil-producing countries announced an embargo on the United States in response to America backing Israel in the Yom Kippur War.
Consequently, the price of crude oil roughly quadrupled... and it made the food inflation much worse.
Many people don’t realize just how much modern agriculture runs on oil and gas. Nitrogen fertilizer is synthesized from natural gas. Phosphate (another critical fertilizer ingredient) is mined and hauled with diesel. And everything from tractors to grain dryers burns fuel.
Because of the embargo, fertilizer prices more than doubled in 1973 and 1974, and food prices quickly followed. Inflation was eating quite aggressively into consumers’ standards of living.
All of this had a major impact on the stock market; as inflation raged throughout the 1970s, even America’s largest companies suffered. Their earnings shrank (especially when adjusted for inflation) and stock prices went nowhere.
The Dow Jones Industrial Average stock index closed at 1,000 in November 1972... and literally ten years later in November 1982, it was still at 1,000. The market went nowhere over the course of an entire decade.
And adjusted for inflation, of course, most stocks were losers.
The only real winners were REAL ASSET producers— especially gold and energy companies. Gold went from $35 an ounce in the early 1970s to a peak of $850 within a decade— though there were downturns in between.
Gold miners (and silver miners as well) were the best performers of the decade, with the Barron’s Gold Mining Index returning a phenomenal 1,247% in ten years.
Similarly, oil went from about $3 a barrel to nearly $40, and companies like Exxon completely trounced the S&P 500.
More than fifty years later, similar conditions are building again.
The Strait of Hormuz has been effectively closed since late February, except for the tankers Iran waves through from China and its other friends while everyone else waits outside.
Some oil is moving, for sure. But given that about a quarter of the world's sulfur and roughly 15% of its fertilizer exports normally move through that strait, there are significant implications for the agricultural sector.
Many consequences are already on the books.
Urea, the world's most common nitrogen fertilizer, climbed above $850 a tonne this spring, up roughly 80% since February and the highest price since 2022. Sulfur, an essential input for phosphate fertilizer, has doubled since January to record levels.
And in a recent American Farm Bureau survey, 70% of farmers said they cannot afford all the fertilizer they need this season.
Here's why that matters: spring planting is over. Farmers either paid those high fertilizer prices... or they skimped. And skimping means smaller harvests this fall.
Either way, higher food prices are already locked in. The shock has already happened. The impact just hasn’t been felt yet in the grocery stores because the harvest hasn’t taken place yet.
Meanwhile, agricultural markets are trading as if nothing has changed. Crop prices haven't come close to keeping pace with energy and fertilizer costs, and governments are already hoarding: China has temporarily banned phosphate fertilizer exports to keep supplies at home.
The last time this happened, the people who owned fertilizer production made money. Everyone else just got the grocery bill.
The featured research in Schiff Sovereign's investment newsletter, Strategic Assets, already includes a potash producer, a phosphate producer, and a palm oil grower, and we're watching a fantastic fertilizer company for the right entry point.
Our palm oil grower has nearly doubled since we published the research. The potash producer is up more than 16%... with a lot more room to grow. Our phosphate producer, which we recently featured, is still trading inside our suggested buy range.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC
https://www.schiffsovereign.com/investing/us-taxpayers-subsidized-the-greatest-heist-of-the-cold-war-the-grocery-bill-came-later-155507/?inf_contact_key=8cd7ad83678493f71c22eed58f86b402464dbfbc1801014bcbec243a32905af2
Why Britain's New Marxist Leader Suddenly Loves Oil
Why Britain's New Marxist Leader Suddenly Loves Oil
Notes From the Field By James Hickman (Simon Black / Sovereign Man) July 21, 2026
On November 27th in the year 176 AD, Marcus Aurelius promoted his 15-year old biological son Commodus to be Co-emperor of Rome. Marcus Aurelius never realized it, but he was sealing Rome’s fate… and essentially marking an end to the Empire’s golden age.
Why Britain's New Marxist Leader Suddenly Loves Oil
Notes From the Field By James Hickman (Simon Black / Sovereign Man) July 21, 2026
On November 27th in the year 176 AD, Marcus Aurelius promoted his 15-year old biological son Commodus to be Co-emperor of Rome. Marcus Aurelius never realized it, but he was sealing Rome’s fate… and essentially marking an end to the Empire’s golden age.
Commodus was quite popular in his youth— reportedly handsome, athletic, and gregarious. But after Marcus Aurelius died a few years later, the popularity and support that Commodus had enjoyed for so long began to wane.
It didn’t help that he heavily debased Rome’s currency, contributing to widespread inflation and economic decline. He spent lavishly at taxpayer expense, ignored even the most basic affairs of imperial administration, and murdered his enemies.
Finally, on New Year’s Eve in 192 AD, Commodus was assassinated, kicking off a period of political instability in which five different men would sit on the throne in a single year; in fact 193 AD became known as the Year of the Five Emperors.
Eventually Rome landed on Septimius Severus, who ruled for nearly two decades with an iron fist. His reign— though stable— is regarded as one of the cruelest in Roman history. And he, too, contributed immensely to inflation and rising taxes.
His successor, Caracalla, ruled briefly and incompetently. Soon came Elagabalus— history’s first transgender emperor who promised to give away half of the empire to any physician who could turn him into a woman.
Along the way the infamous “Crisis of the Third Century” became worse and worse: migrant invasions, economic depression, hyperinflation, plague, and unprecedented political instability— including the year 238 AD in which six different men claimed the title of Emperor.
It was as if Rome lost the ability to produce a decent, capable leader anymore.
I thought of this historical lesson yesterday morning watching Andy Burnham, the former mayor of Greater Manchester, become Britain's seventh prime minister in a decade.
That’s an unprecedented level of instability for a modern, major power. Even worse, Britain’s leaders have become more incompetent over time, each one chipping away at the country’s economy and social stability.
Liz Truss lasted just 49 days, the shortest tenure of any prime minister in British history. Her plan for £45 billion in unfunded tax cuts set off a panic in the bond market, launching the pound into freefall.
And government borrowing costs spiked so violently as a result of Ms. Truss that the Bank of England had to step in to prevent British pension funds from collapsing.
Prior to Truss was Boris Johnson— a one-man scandal machine who was fined for quite hypocritically throwing big parties in Downing Street during his own COVID lockdowns.
Then came Rishi Sunak, who threw Britain's doors wide open to immigration. Sunak seemingly woke up every morning and said: Give me more Somalis. Give me more Islamic terrorists.
Along the way, Britain imported some of the worst ideas of the American Left and made them its own.
Britain is now the wokest place on the planet, and to an Orwellian standard; British police arrest people over tweets, and the England flag itself is now treated as a symbol of racism.
To cap it all off, Sunak was succeeded by Keir Starmer, probably the worst leader of a major power in modern history— and that includes Joe Biden.
When Parliament took up a national inquiry into the grooming gangs that had raped thousands of English girls over decades while local officials looked away, Starmer's party voted it down, and Starmer dismissed the calls as "the bandwagon [of] the far right."
Starmer spent his tenure finishing off the oil industry, taking the headline tax rate on North Sea producers to 78% and banning new exploration licenses.
By the time Starmer resigned last month, the UK had a tax burden heading to its highest level since records began in 1948. Borrowing costs are higher than any other major economy, with 10-year government bond yields well above those in the US, France, Germany, and Japan.
Plus, wealthy Brits are heading for the exits in record numbers after Starmer abolished the centuries-old non-dom tax regime.
Starmer was so widely despised that his own party finally threw him out. Their solution? A slightly younger, slightly less vapid version of Starmer.
His name is Andy Burnham, and all of his ideas come straight from the Communist Manifesto.
In his opening remarks as prime minister, Burnham said not one word about the national debt or Britain's borrowing costs. Nothing about the migration crisis. Nothing about justice for the grooming gang victims. Nothing about turning the economy around.
His first order of business, Burnham announced, was taking care of homeless/migrants with a new £340 million benefit program.
To his credit, Burnham has sense enough to know that he cannot throw around that kind of money without a way to pay for it. Borrowing more money is out; in fact he spent the past year complaining that Britain must get beyond "being in hock to the bond markets."
That only means one thing: higher taxes.
So, days before taking office, his team began preparing approvals for two North Sea oil and gas fields— the same ones that his own party spent years trying to shut down.
This is not because Burnham suddenly cares about energy security. He’s just looking for more money to steal.
All of those homeless migrants need handouts, so Burnham needs a new revenue stream, i.e. something else to tax.
So he’s allowing two new North Sea fields— with the existing 78% rate in place.
In short, Burnham did not decide that energy matters. He decided it hasn’t been milked entirely dry yet.
This is a cannibalist mentality. Britain is sliding into its own Crisis of the 21st Century, and the "conservative" politicians who presided over the first half of the decline were anything but. Starmer and now Burnham are straight-up Marxists.
We wrote about Argentina just yesterday, where nearly every asset in the country is surging. It’s not hard to understand why: Argentina hit rock bottom, threw out the people who destroyed the country, and started climbing under new leadership.
Britain can reverse its fortunes the same way. Unfortunately, it is probably going to have to hit rock bottom first. And we can already see the shape of how this ends.
First the money will run out, the benefits will be cut, and the people who came for free stuff will go home.
Then, with markets in the dumps, this highly educated and productive country will eventually reverse all of its idiotic policies from the past and one day become among the most interesting places in the world to invest.
There’s an old saying credited to a Rothschild about investing when there’s “blood in the streets.” He may turn out to be right. But he probably wasn't picturing London when he said it.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC
Why Central Banks Love a Gold Sell-Off
Why Central Banks Love a Gold Sell-Off
Notes From the Field By James Hickman (Simon Black / Sovereign Man) July 14, 2026
On July 7, Bloomberg published an article with the headline: "Gold's Bull Market Has Ended and Now All Eyes Are on Bears," explaining how many retail investors have headed for the exits.
That same day, the People's Bank of China, the country's central bank, reported its largest monthly gold purchase since 2023.
Why Central Banks Love a Gold Sell-Off
Notes From the Field By James Hickman (Simon Black / Sovereign Man) July 14, 2026
On July 7, Bloomberg published an article with the headline: "Gold's Bull Market Has Ended and Now All Eyes Are on Bears," explaining how many retail investors have headed for the exits.
That same day, the People's Bank of China, the country's central bank, reported its largest monthly gold purchase since 2023.
Of course, June marked its twentieth consecutive month of adding gold to its reserves. Central banks are relatively price insensitive. They buy gold as a long term hedge to preserve value, not to trade back for more paper.
But they aren’t stupid either, and this shows they are buying the dip.
Gold peaked at $5,589 per ounce on January 28 and trades around $4,000 today, roughly 28% below the high. The second quarter was gold's worst since 2013. Investors have pulled about $18 billion out of gold ETFs since the peak, much of it late money that piled in during last year's frenzy and bolted the moment momentum broke.
But the price is not the story. The story is what central banks are doing.
Central banks have been the dominant force in gold since 2022, when Russia invaded Ukraine, the US froze $300 billion of Russia's central bank reserves, and every finance ministry on earth learned that dollar assets were not the safe havens they’d believed.
In 2024, central banks bought 1,090 tons of gold, close to an all-time record.
That massive demand made gold expensive. The price nearly doubled from its 2025 low, and central bank buying slowed to 863 tons. That was still higher than historical averages, but down 21% from the year before.
The slowdown was not fading interest; it was price discipline. Central banks are not traders chasing momentum. They are savers accumulating a reserve asset, and like any sensible saver, they buy less when the thing they are saving in gets expensive.
And they speed back up when it goes on sale. In the first quarter of this year central banks bought 244 tons, more than the previous quarter and above the five-year average. China alone has added about 40 tons in the first six months of 2026, compared to just 27 tons in all of 2025. The People's Bank of China bought more gold last month, with the price down nearly 30% from its high, than in any single month of the entire run-up.
The Reason Is Simple: Nothing Has Changed About Why They Buy
The World Gold Council, the industry group that tracks official gold demand, surveyed 76 central banks this year. Seventy-four percent said they expect the dollar's share of global reserves to be lower five years from now.
These are the institutions that actually hold the world's reserves, and they are telling you, on the record, that they plan to keep moving away from the dollar.
None of their reasons went away when the price fell. The US national debt keeps growing by trillions, Congress has no plan beyond borrowing more, and Washington keeps proving it will continue to weaponize the dollar.
A central bank holding dollars is holding the liability of a government that is both overextended and unpredictable. Gold sitting in its own vault carries neither risk.
That calculus was true at $5,589, and it is just as true at $4,000.
A trader who is down 28% has a problem if they are trying to quickly turn a profit, and accumulate more paper dollars.
But a saver who plans to accumulate gold for the next decade just got a better price. That is why the sell-off did not scare away the biggest buyers in the market.
It may be exactly what they were waiting for.
We made this argument to our subscribers of our investment research newsletter, Strategic Assets, in January.
With gold near its all-time high, we said that this was no longer the early stage of a bull market, that a major drawdown was a real possibility, and that it was time to take some profits.
In fact, subscribers who took action on our research locked in gains of more than 950% on a small silver producer and 540% on a gold and silver producer, both in under a year.
Now the sell-off has come for the miners too. Even solid, debt-free producers are trading as much as 50% below their highs from earlier this year.
But again, as nothing had changed about the long term gold thesis, little has changed about the profitability of these companies. They are still wildly profitable at $4,000 gold, which is far above projections they had planned for.
Some of these companies are still pulling gold out of the ground at a cost of just $1,000 an ounce, which is an amazing margin.
So We Are Starting To Buy Again.
It is the same discipline the central banks just demonstrated: slow down when the asset is expensive, step up when it gets cheap, and never confuse a price correction with a change in the story.
Nobody knows where gold trades next month. But the biggest buyers on earth just showed you what they do when gold gets cheaper. They buy more.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC
The Latest Flashing Exit Sign for the US Dollar
The Latest Flashing Exit Sign for the US Dollar
Notes From the Field By James Hickman (Simon Black / Sovereign Man) July 13, 2026
Washington has a comforting story about Social Security: yes, the trust fund is running out of money, but not until 2032. That leaves six more years to form the commissions, schedule the hearings, and study a problem that has been obvious for decades.
But last week, a man who used to run the numbers for Social Security itself explained why even a measly six years is optimistic.
The Latest Flashing Exit Sign for the US Dollar
Notes From the Field By James Hickman (Simon Black / Sovereign Man) July 13, 2026
Washington has a comforting story about Social Security: yes, the trust fund is running out of money, but not until 2032. That leaves six more years to form the commissions, schedule the hearings, and study a problem that has been obvious for decades.
But last week, a man who used to run the numbers for Social Security itself explained why even a measly six years is optimistic.
Jason Fichtner is the former chief economist of the Social Security Administration, which means he spent years inside the building watching the program's finances deteriorate.
According to the latest annual report from Social Security's own trustees, the program's main trust fund will be empty by late 2032. From that moment, incoming payroll taxes cover only 78% of scheduled benefits, which means an automatic 22% cut for every retiree in America.
But Fichtner recently told CNBC that the real deadline has nothing to do with 2032, because the bond market will move first.
He said that well before 2032, “the bond market looks and says, ’Well, you guys have 12 months to get your act in order; you’re going to be looking for another $600-plus billion a year,” which is why, “Fiscal strain could come earlier than trust fund depletion.”
Cutting grandma's check by 22% overnight is the closest thing to guaranteed electoral suicide that exists in American politics. So they'll do what they always do and borrow the difference. Fichtner and economist Veronique de Rugy calculate that filling the gap means roughly $600 billion in new borrowing in the first year, growing to about $700 billion a year by 2036.
And that money doesn't appear out of thin air. The Treasury borrows from the same pool of savings that everyone else uses, the pool that funds mortgages, car loans, and business investment. When the world's largest borrower suddenly demands another $600 billion a year from that pool, the price of money goes up for everybody.
Markets are forward-looking. An investor buying a 10-year Treasury today is holding paper that matures years after the trust fund runs dry, so the question of whether Congress will fix Social Security is already priced into that bond, every single day. Investors won't wait politely until the checks shrink in 2032. They will reprice the moment congressional inaction looks locked in, a year or more ahead of the deadline, exactly as Fichtner describes.
And inaction is the base case. Nine months into fiscal year 2026, the federal deficit has already reached $1.4 trillion according to the Congressional Budget Office, running ahead of last year's pace. This is happening with no major crisis draining the coffers, with the economy growing and unemployment low.
Meanwhile, the lenders who would have to fund all this new borrowing are backing away.
The dollar has fallen roughly 8% from its early 2025 peak. In March alone, foreign holdings of US Treasuries fell by about $240 billion, with Japan selling nearly $48 billion and China unloading another $41 billion. China's holdings now sit at their lowest level since 2008. The single largest pools of foreign capital on the planet are quietly reducing their exposure to the very asset Washington needs them to buy more of.
Worse, they are actively looking for the exits.
And on July 9, the European Parliament voted 416 to 169 to push the digital euro into final negotiations, and the stated goal is to reduce Europe's dependence on non-EU payment providers like Visa and Mastercard, which currently handle 61% of card payments in the eurozone.
That is a bureaucratic way to say: Europe no longer wants its money to be forced to move through American companies.
Consider how deep the dollar's dominance runs today: when France-based Airbus sells a jet to Air France, the price tag is in US dollars. A French company selling to a French airline, and the invoice is still written in Washington's currency.
That is the system Europe's political class just voted, by a two-to-one margin, to start engineering its way out of. Every step in that direction shrinks the pool of foreigners who need dollars, and fewer people who need dollars means fewer natural buyers for US government debt.
The real deadline for the fallout from Social Security’s 2032 depletion is whenever the bond market decides Congress won't act. And every lender heading for the exit moves that date closer, because a thinner pool of buyers means the repricing, when it comes, will be sharper.
Higher interest rates arriving years ahead of schedule would hit an economy that runs entirely on cheap debt. The government's interest bill, corporate borrowing, mortgages, the whole structure assumes money stays affordable. And the foreign lenders who could soften that blow by absorbing the new supply are already leaving.
Congress, in other words, is planning around a deadline that exists only on paper.
The bond market keeps its own calendar. And nobody in Washington seems to have asked what happens if the market's calendar runs faster than theirs.
To your freedom, James Hickman Co-Founder, Schiff Sovereign LLC