The trigger event which sent the U.S. 30-year Treasury bond over 5.3% for the first time since 2007 was confirmation that total U.S. government debt had risen above US$40 trillion on its way to a forecast US$50 trillion by 2029.

A panicked U.S. Government response through a “liquidity support buyback program” rubbed 0.1% off the 30-year bond but otherwise failed to impress traders who see rates continuing to rise while governments run up massive budget deficits.

Australia had its own debt wake-up call this week when total government debt rose above A$1 trillion for the first time, piling pressure on federal and state governments to rein in their uncontrolled spending which have led to policies of taxing everything, anywhere, dead or alive.

Total state and federal government debt in Australia is forecast to pass the $2 trillion mark by the end of the decade as the country follows near-bankrupt Victoria down a hole dug by politicians who love spending other people’s money.

The 10-year bond, which is the benchmark for government debt around the world, rose in the U.S. to 4.65%, up from 3.9% earlier this year, while the Australian 10-year hit 5.04% before easing to 5.01%. The yield was 4% at this time last year.

Exploding debt bombs dampened investor interest in the stock market as they weighed the risk/reward ratio of exposure to equities versus the sideline safety of a bank deposit.

The vigilantes, a tag applied to bond investors who sell government paper to force yields higher, are in no doubt that a global debt crisis is brewing as governments scramble to raise cash to feed their spending addiction.

That hardening attitude towards government debt is a prime reason why there is a search for safe havens with gold a beneficiary, rising this week by $190 an ounce to an intra-day high of US$4516/oz, taking its increase over the last month to UD$502/oz, or 12.5%.

Cryptocurrencies joined in the flight from government paper. Bitcoin rose by 9.8% over the week to US$69,632.

The event which could determine how quickly gold returns to the peak price of US$5400/oz reached earlier this year is the next week’s annual meeting of central bankers at Jackson Hole in Wyoming where debate about debt will dominate.

Locally, the gold sector started slowly this week with the ASX gold index up a modest 1% over the first three trading days before soaring yesterday by 8%, taking the recovery of the gold sector over the past month to 37%.

The rotation of funds out of the industrial and financial stocks into mining, especially gold, can be measured by a flat all-ordinaries index (down 0.1% over the week) and a falling bank index which dropped 6% this week to be down 15% over the last six months.

Gold news and price moves this week included:

  • Northern Star, up $1.42 (6.3%) to $24.01 thanks to the combination of the higher gold price and a 24% net profit increase for the June 30 year to $1.7 billion and a final dividend of 55c. The company also announced the start of commissioning at its troubled Kalgoorlie expansion project.
  • Evolution, Australia’s second biggest gold producer, joined the party with a 63% increase in underlying net profit to $1.56 billion. Its shares rose by $1.58 (12%) over the week to $14.92.
  • Ausgold rose by 6c to $1.38 after accepting a share swap takeover bid from Canada’s OceanaGold. The complex terms might need reworking because brokers such as Bell Potter value Ausgold shares at $1.50.
  • Minerals 260 added 11.5c (15%) to 86c after reporting fresh high grade intersections from drilling at its Bullabulling project in WA with a best hit of 7.8 metres at 9 grams a tonne from 15.7m.
  • Astral Resources rose by 4c (26%) to 19c after reporting progress on the development of its Mandilla project near Kalgoorlie. Shaw and Partners has a 30c price target on the stock.
  • Hamelin Gold rose by 3c (16%) to 22c after announcing a successful $8 million fund raising for work on the company’s Day Dawn and West Tanami gold projects.
  • Genesis Resources, not to be confused with Genesis Minerals, rose by 1.1c to 1.6c (up 220%) after reporting encouraging surface rock chip samples at its Attunga project in the Northern Territory though that rise needs to be seen against the stock’s market value of around $3.6 million.
  • Other eye-catching gold moves included Genesis Minerals (the bigger Genesis), up 65c (8.8%) to $7.96. Catalyst, up 41c (6.5%) to $6.69, and Greatland, up 80c (6.6%) to $13.28.

Copper weakened over the week after a powerful rise earlier in the month driven in part by the shuffling of copper stockpiles which have been moving out of Europe and China into the U.S. ahead of the next tariff attack by the U.S. President Donald Trump.

BHP’s well telegraphed flip from being a business powered by iron ore into a copper star sparked increased activity in the broader copper sector though most moves were modest after BHP’s rise of $3.84 (6.3%) to $65.40 sucked most of the cash out of copper investors.

Sandfire was the second-best copper stock, rising by 92c (4%) to $21.69, while Capstone added 1c to $15.42, and True North managed a 2c increase to 39c after raising $20 million via a placement and share purchase plan to finalise the acquisition of the Mt Oxide project in Queensland.

Iron ore stocks performed well with the price holding around US$95 a tonne, helping Fortescue post a solid underlying net profit of U$3.5 billion for the June 30 year, and pay a final dividend of A46c a share taking the annual payout to A$1.08. On the market, Fortescue rose by 50c to $18.26.

Arrow Minerals, a mining minnow with stock market value of just $24 million, made a splash with a deal to acquire a potential direct shipping orebody in a re-run for company boss David Flanagan who did it before with Atlas Iron. Arrow rose to a high of 1.8c during the week before slipping back to where it started at 1.1c.

Other news and market moves of interest included:

  • Broken Hill Mines rose by 10c (14%) to 87c after reporting a thick and rich intersection of silver, lead and zinc in the Centenary zone of its exploration project at the home of Australian base metal mining, Broken Hill in NSW. Best hit was 17.8m at 10.1% zinc equivalent and 280 grams of silver equivalent.
  • Viridis Mining added 48c (12.8%) to $4.27 after announcing that it had raised US$120 million in funding to proceed with the development of its Colossus rare earth project in Brazil.
  • Almonty rose by $1.53 (7%) to $22.42 after announcing a share buyback program because the directors do not believe the market is fully pricing the company’s tungsten assets.
  • NexGen Energy added 7c to $14.66 after reporting that it was working with BHP on the technical aspects of its Rook uranium project in Canada. Other uranium stocks also gained ground with Paladin up 15c to $10.45 and Bannerman up 32c to $3.83.
  • Whitehaven slipped 24c lower to $7.49 after reporting a less-than sparkling profit of $227 million for the June 30 year, down $92 million (28%) on the previous year. The big coal miner said it was looking to expand its interest in rare earth mining, and
  • St George Mining rose by 1c to 8.9 as its makes progress with its Araxa rare earth project in Brazil. Macquarie Bank sees the stock rising to 23c.