Daniel Oliver, founder of Myrmikan Capital, stated that the international accumulation phase of the current gold bull market has officially ended, giving way to a volatile second stage driven by stress in the U.S. credit system.
Oliver explained that a combination of over-leveraged private equity and expanding U.S. national debt is trapping the Federal Reserve. He outlined the mechanism driving physical gold and silver prices higher, pointing to fundamental weaknesses in the broader financial system.
U.S. national debt currently exceeds $38.5 trillion. Meanwhile, the Congressional Budget Office (CBO) projects that net interest expenses on the national debt will more than double to $2.1 trillion by 2036. Oliver noted that if unfunded liabilities such as Medicare and Social Security are included on a net present value basis, the true debt burden is significantly higher. He believes that, at current dollar valuations, such debt levels are mathematically impossible to repay.
"After every major credit bubble ends, prices collapse. Instead, the dollar price of gold must rise to make asset valuations meaningful," he said.
This systemic stress is increasingly linked to the private credit market. Analysts at UBS recently warned that, in a worst-case scenario, private credit default rates could surge to 15% due to rapid disruption from artificial intelligence affecting corporate borrowers.
Oliver explained that, unlike the 2008 financial crisis—when the Fed could stimulate the housing market by printing money—rescuing the private equity sector presents a different challenge. He pointed out that highly leveraged companies facing bankruptcy due to lack of consumer demand cannot be saved simply by injecting liquidity into the banking system.
"I do not expect a stock market crash like in 1929 or 2008. Instead, I anticipate a sharp surge in the price of gold," Oliver stated.
Due to these macroeconomic pressures, confidence in paper financial instruments is waning, and the physical metals market is undergoing structural changes. He observed that industrial silver demand is tightening as manufacturers move away from standard inventory models. Due to concerns over supply chain disruptions, companies are now hoarding physical silver directly at factories, depleting available market inventory.
At the same time, Oliver emphasized that strained banks are tightening margin requirements for smelters and refiners. This, he said, is forcing these entities to process less physical metal, creating a bottleneck that limits the flow of gold into retail and institutional markets.
Historically, central banks have been pressured by markets to hold gold reserves equivalent to about one-third of their balance sheets. Applying this historical ratio to the current Fed balance sheet implies a much higher gold price, according to his analysis. He stated, "The price of gold must reach a level that rebalances the Fed’s balance sheet. Currently, $8,000 would achieve about one-third, and $12,000 would reach roughly half."
As of February 27, spot gold was trading at $5,187.65 per ounce.