Why did Moody's downgrade the US credit rating?

Moody's downgraded the US credit rating from Aaa to Aa1 on May 16, 2025, citing escalating government expenditures, tax cuts leading to high federal deficits, and rising borrowing costs.

which other agencies have downgraded the US credit rating?

Standard & Poor's downgraded the US credit rating in 2011, and Fitch followed suit in August 2023.

What is the current level of US public debt?

In Q1 2025, the US public debt totaled $36.2 trillion,which is approximately 122% of the gross domestic product (GDP).

How much does the US spend on interest payments?

Interest costs on the US public debt amounted to $1.1 trillion in Q1 2025, representing 3% of GDP and roughly 16% of total government expenditures.

What are the potential consequences of rising US borrowing costs?

Rising borrowing costs can destabilize the debt pyramid, potentially leading to severe turbulence in the global financial and economic system.It can also increase bond yields in other countries.

What are some potential solutions to the US debt problem?

Potential solutions include cutting government spending, increasing revenues through tax hikes, or interventions by central banks to control interest rates. Some advocate for abolishing the US central bank.

How has the price of gold been affected by the economic situation?

The price of gold has surged, increasing by 45% in the past 12 months and 84% in the past three years, as investors seek safe havens amid economic uncertainty.

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Silver Price Forecast: Interest Rates and Outperformance

by Priya Shah – Business Editor September 30, 2025

written by Priya Shah – Business Editor

Silver poised to Outperform as debt Concerns Escalate, Analyst Predicts

NEW YORK – Silver is positioned to be the primary beneficiary as global debt levels raise concerns of a potential collapse, according to analysis from Hubert Moolman. The precious metal is currently undervalued relative to gold and is expected to surge as investors seek safe-haven assets and a rebalancing of the gold/silver ratio occurs.

Moolman’s analysis, detailed on his blog, suggests silver remains closer to a peak in its current cycle and has significant upside potential before reaching a bottom in the gold/silver ratio. This anticipated movement is rooted in technical chart patterns, specifically key channels and fractal analysis, indicating silver will likely return to the upper boundary of its current trading channel. A debt-driven crisis typically fuels demand for precious metals, but Moolman’s research points to silver as uniquely positioned for substantial gains due to its current relative undervaluation.

The forecast is based on tracking key charts and indicators, with Moolman noting silver is expected to “get back in the channel and reach the top border of the channel as a minimum.” Investors tracking the gold/silver ratio – a key indicator of market sentiment – should watch for a potential bottom, signaling a strong buying opportunity for silver.

Further insights are available through moolman’s Premium Service and Silver Fractal Analysis Report, offering deeper dives into the dynamics of the gold and silver markets.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals inc. The author has made every effort to ensure accuracy of data provided; however,neither kitco Metals Inc. nor the author can guarantee such accuracy.This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

September 30, 2025 0 comments

Business

Interest Rates, Credit Card Debt & Gold: What’s Next?

by Priya Shah – Business Editor June 19, 2025

written by Priya Shah – Business Editor

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US Credit Rating Downgraded by Moody’s Amid Debt Concerns

In a move reflecting growing unease over the nation’s fiscal health, Moody’s Investors Service downgraded the United States’ credit rating on May 16, 2025.The rating fell from Aaa with a negative outlook to Aa1 with a stable outlook, signaling increased risk associated with US debt obligations. This action puts Moody’s in alignment with previous downgrades from Standard & Poor’s and Fitch, further highlighting concerns about the sustainability of US debt. The downgrade arrives as the national debt approaches $36.2 trillion.

Key Factors Behind the Downgrade

Moody’s cited several factors contributing to thier decision, primarily focusing on the escalating levels of government spending coupled with tax cuts. This combination has resulted in persistently high federal deficits. The agency also pointed to rising borrowing costs, fueled by the increasing public debt and higher interest rates in the capital markets ^[1].

Did You Know? The US national debt is now larger than the economies of Japan, Germany, and the United Kingdom combined.

Comparison with Other Agencies

Moody’s downgrade follows similar actions by other major credit rating agencies. Standard & Poor’s downgraded the US in 2011, and Fitch Ratings followed suit in August 2023 ^[2]. These downgrades reflect a long-term trend of concern regarding US fiscal policy and debt management.

Impact of Rising Borrowing Costs

The consequences of rising borrowing costs are far-reaching. As the US government’s debt continues to outpace economic growth, the debt-to-GDP ratio increases, weakening debt sustainability. This, in turn, leads investors to demand higher interest rates, creating a potentially unsustainable cycle.In the first quarter of 2025, interest costs on the US public debt reached a staggering $1.1 trillion, representing 3% of GDP and approximately 16% of total government expenditures.

Pro Tip: Keep a close eye on the 10-year Treasury yield as a key indicator of investor confidence in US debt.

Global Implications

The US is not alone in facing debt challenges. Many other nations grapple with high debt-to-GDP ratios. Such as, italy’s public debt stands at 135% of GDP, France’s at 113%, the UK’s at 96%, and Japan’s at a staggering 263% ^[3]. Rising US borrowing costs can also trigger increased bond yields in other countries, exacerbating their own debt situations.

Key Debt Metrics (2025)
Country	Debt-to-GDP Ratio
United States	122%
Italy	135%
France	113%
United Kingdom	96%
Japan	263%

Potential Solutions and Future Outlook

Addressing the US debt problem requires tough choices. Options include cutting government spending, increasing tax revenues, or a combination of both. Some analysts suggest that central bank intervention, such as interest rate controls or bond purchases, could provide temporary relief. However,these measures can also lead to inflation and further debasement of the currency.

The rising interest rates expose over-consumption and misallocations that low interest rates had previously encouraged. If economic output collapses, any lingering confidence in public debt can evaporate quickly.

Given the current economic climate, some investors are turning to gold as a safe haven. Gold’s value is not easily eroded by central bank inflation policies, and it carries no counterparty or credit default risk.

evergreen Insights: Understanding US Debt and Credit Ratings

A nation’s credit rating is an assessment of its ability to repay its debt.agencies like Moody’s, Standard & Poor’s, and Fitch evaluate various economic and financial factors to assign these ratings. A downgrade can lead to higher borrowing costs for the government, impacting everything from infrastructure projects to social programs. Historically, periods of high debt have often been followed by austerity measures or inflationary policies.

Frequently Asked Questions About US Credit Rating and debt

Why is the US national debt so high?

The US national debt has accumulated over decades due to a combination of factors, including government spending exceeding tax revenues, economic recessions, and increased borrowing to finance wars and social programs.

How does a credit rating downgrade affect the average citizen?

A credit rating downgrade can lead to higher interest rates on mortgages, car loans, and credit cards, making it more expensive for individuals to borrow money. It can also impact the value of investments and the overall economy.

What can be done

June 19, 2025 0 comments

Business

Trump’s Diplomacy: Gold’s Future After the Risk-On Rally?

by Chief editor of world-today-news.com May 12, 2025

written by Chief editor of world-today-news.com

Gold Loses Luster Amid Market Optimism, But Is It a Temporary Dip?

New York, May 12, 2025—Gold prices experienced a significant downturn today, but analysts are questioning whether this is a lasting trend or a brief pause before the next surge. The precious metal’s performance is under scrutiny as global markets react to a series of geopolitical developments and economic indicators.

the Day’s Downturn: A Snapshot

On Monday, gold prices plummeted by over 2%, influenced by a widespread “risk-on” sentiment across global markets. This shift was fueled by a combination of diplomatic progress, trade optimism, and declarations of geopolitical advancements. However,the long-term stability of these developments remains uncertain.

Trump’s Influence: A Wave of Optimistic Promises

President Trump’s recent statements have injected a dose of optimism into the markets.His announcements included:

Praising a full ceasefire between India and Pakistan.
Supporting a Russia-Ukraine summit in Turkey.
Commending China for agreeing to curb fentanyl shipments, with promises of trade concessions.
Highlighting increased U.S. domestic manufacturing following discussions with Tim Cook.
Teasing potential breakthroughs in the Middle East.
Pledging a crackdown on pharmaceutical profiteering.

This flurry of positive news has created a perception of a more stable and cooperative global surroundings, prompting market reactions.

Market Response: Equities Surge,Gold Retreats

The markets responded positively to President trump’s announcements.U.S. equities saw a notable increase, with both the S&P 500 and Nasdaq rising by over 1%. Investors shifted away from defensive assets, embracing riskier investments. Consequently, gold, traditionally seen as a safe haven, faced downward pressure.

Deeper Analysis: Fragile Foundations

Despite the initial optimism, concerns linger about the solidity of these developments. The current gold slump, trading at approximately $3,212 per ounce, is viewed more as a result of market positioning than a genuine resolution of geopolitical issues. experts suggest that traders are prematurely pricing in peace.

Pro Tip: Geopolitical events can significantly impact market sentiment.Always consider the underlying stability of these events before making investment decisions.

While the ceasefire between India and Pakistan is encouraging, historical precedents indicate that such agreements can be precarious. Similarly, discussions between Russia and Ukraine may lack substantial impact without robust enforcement. China’s commitment to curbing fentanyl shipments, while symbolically vital, does not fully address the broader tensions related to technology, tariffs, and global power dynamics.

In essence, the global landscape remains uncertain, and gold’s function as a hedge against risk has not diminished; it has simply taken a backseat temporarily.

Looking Ahead: Key Economic Data and Sentiment

The market narrative is poised for potential shifts as investors await critical economic data, including:

UK Claimant Count change and Average Earnings Index
Germany’s ZEW Economic Sentiment Index
U.S. Core CPI, CPI m/m, and CPI y/y
Comments from Bank of England Governor Bailey

Each of these data points has the potential to influence gold prices. Higher-than-expected inflation in the U.S. could dampen expectations for interest rate cuts, limiting equity momentum and boosting demand for inflation hedges like gold. Conversely,weaker CPI data could prolong the stock market rally and exacerbate the decline in gold prices.

Did you know? The ZEW economic Sentiment Index is a key indicator of investor confidence in Germany, reflecting expectations for future economic developments.

Beyond inflation, sentiment indicators like Germany’s ZEW and wage growth in the UK will offer insights into the strength of economic resilience. Weak wage growth and poor sentiment could reignite fears of stagflation, creating a favorable environment for gold.

Market Sentiment: A Fleeting Mirage?

The current market activity reflects relief rather than firm conviction. The rise in stock prices and the fall in gold prices are linked to rhetoric,not resolution. While markets are receptive to the idea of peace,reality frequently enough tempers this sentiment.

President Trump’s warning of new tariffs if pharmaceutical companies do not adhere to his policies, coupled with his statement that Europe is nastier than China, could strain diplomatic relations and reignite transatlantic tensions. These actions suggest that a complete withdrawal of economic pressure is not yet on the horizon.

Final Thoughts: Gold’s Enduring Relevance

Despite the current downturn, gold remains a significant asset. The recent selloff is indicative of short-term optimism rather than lasting stability. Gold’s relevance persists, particularly as the inflation landscape and global diplomacy continue to evolve.Should economic data disappoint or if President Trump’s peace initiatives falter, a return to safe-haven assets like gold is anticipated.

Gold’s value is intrinsically linked to uncertainty.Although markets may be celebrating tranquility today, historical trends suggest that such periods are often short-lived.

FAQ: Gold Market Trends

Why did gold prices fall on May 12, 2025?: Gold prices fell due to increased market optimism driven by diplomatic progress and positive economic announcements.
what economic data could impact gold prices?: Key data includes UK Claimant Count Change, Germany’s ZEW Economic Sentiment Index, and U.S. CPI figures.
Is gold still a relevant investment?: Yes, gold remains relevant as a hedge against inflation and geopolitical uncertainty.
What could trigger a resurgence in gold prices?: Disappointing economic data or a breakdown in current diplomatic efforts could lead to a resurgence.

May 12, 2025 0 comments