Government Shutdown Ends, Spending Continues
As the latest partial government shutdown concludes, a couple of things are quite clear. First, Washington remains in spending overdrive. Second, Republicans have missed key opportunities to rein in that spending.
Let’s take a look at the numbers. The House has approved an additional $1.25 trillion in discretionary spending, which will lead to an annual deficit estimated at $1.75 trillion. Republicans were part of the vote, expressed their dissatisfaction, yet seemed surprised that the excessive spending would persist.
If Republicans keep overlooking chances like this, it’s likely that investors will turn to gold and silver, not out of ideology, but for self-preservation.
The confrontation over the shutdown should have led to some kind of trade-off. While Democrats aimed to slash the Department of Homeland Security’s budget, Republicans had other avenues open to them besides simply conceding. They could have pushed for genuine cuts elsewhere and taken advantage of Democrats’ political vulnerabilities to uphold a deal.
One clear target for cuts was already on the table. The Trump administration proposed slashing the Centers for Disease Control and Prevention’s budget by 50%. This should have resonated with many. Democrats criticize what they call ICE’s overreach, while Republicans are frustrated by perceived overreach and pandemic-related missteps by the CDC.
Congress had the chance to bundle both cuts together and present it as a fresh start. They could reduce enforcement, simplify the public health bureaucracy, and avoid further shutdowns. Democrats might demand caution from DHS, while Republicans could make a case for trimming the CDC’s budget. Finally, taxpayers could have seen something other than yet another blank check.
Instead, Republicans let the opportunity slip away, and voters ended up with yet another spending plan.
Don’t expect things to turn around anytime soon. Markets are interpreting Congress’s decisions as a warning sign. Gold and silver prices are soaring, driven by the belief that Congress will resist making necessary concessions. This level of deficit is likely to lead to inflation or tax increases—or perhaps both.
Central banks have been acting on this understanding for years, shifting investments from dollars and government bonds to gold. For instance, the Central Bank of Poland led global gold purchases late last year. This shift isn’t merely the cry of critics; it signals a broader recognition—even from allies and rivals—that the U.S. government is making promises it can’t keep.
This trend seems set to continue. Expectations are that central banks will acquire around 60 tons of gold monthly over the next year. Retail demand is also climbing, with gold-backed ETFs reportedly accumulating up to 800 tons in 2025, as investors look for assets less reliant on Congressional discipline.
It’s becoming increasingly clear that Americans want to eliminate wasteful government agencies. Yet Congress remains indifferent. At the very least, budget cuts should be deep enough that lawmakers can decline the demands of interest groups and bureaucracies that see every crisis as a chance to exploit the system.
The core issue in Washington isn’t a lack of authority; it’s a deficiency of restraint. A bipartisan tendency toward expanding rights, paying off debts, and pursuing militarized foreign policies is propelling the country toward instability, both domestically and internationally. Politicians prioritize upcoming elections and push legislative responsibilities onto future generations.
If Republicans continue to overlook opportunities like this, the decline of the dollar will likely hasten. Investors will keep moving into gold and silver not as a matter of ideology but as a necessary step for self-preservation.
