What this hour covers
- $3 billion a day. The interest bill, what it passed, and the record it broke.
- The same Tuesday. Why lenders in Japan, Germany and Britain all sent the same message at once, and what it means at your house.
- The Fed minutes, released that morning and opened on air.
Full transcript
- Welcome, welcome in everyone. Good afternoon and welcome to the gold hour on this hump day, Wednesday. We're almost halfway through the week and boy have I got a lot of news for you today. I'm Alan Johnson. I'm gonna give you a full hour today. As always, no breaks. It's just you and me at our kitchen table. And I'll tell you right up front, this is one of those weeks where the news actually did half of my job for me. Now, if you're new to the show, welcome in. I know we're bringing in a lot of different stations around the country now. As well as starting this weekend, I will be doing a 50 second spot with news channels all over the country, giving you the weekend wrap up or the weekday wrap up.
Anyway, I have 40 years in finance, 28 of those are in precious metals. And the role of this program are simple. Here's what I do. I take the week's financial news and then I put it all on the table. That's why I call it the kitchen table. And I go through it with you the way I go through with all of my clients. I make sure that the good is the good and that the hoax is the hoax and I don't bring it in. In other words, the good, the bad and the parts that nobody else will say out loud. And here's what's coming this hour so you know where we're actually headed. First, I'm gonna give you one number. And that number is $3 billion a day.
Now that's not a typo, it's not an opinion. And by the time I'm done explaining it, you'll understand most of what already has happened in the financial world this week. Second, what I'm going to do is show you something that's never happened quite this way in all my 40 years on the very same Tuesday. Listen to this, the lenders of the entire world, I'm talking about America's lenders, which are Japan's lenders, Germany's, Britain's. They all sent their government the same message at the same time. And we're gonna talk about what that message was and why I'm mentioning it and what it means at your house. And third, later in the hour, the Federal Reserve released the notes from its last meeting just this morning.
And I actually have gotten them and we'll open them up together and find out who inside that building was arguing for what. Plus a new contest word, number six, word number six. And it might be the best one yet because today's whole show is hiding right inside that word. And I'll also tell you about a loan officer named Earl, who has taught me more about this week's news 40 years ago than any economist did this whole week. And by the way, there's a listener and I'm gonna give the answer, who wrote in the single best argument, listen to this, against buying gold. And this came from his banker. It's his banker's argument.
And boy, is it a good one. And I'm gonna read it live on air and I'm gonna answer it honestly because if I can't answer the best argument against my own product, then I've got no business being even behind this microphone. So that's the hour, so let's get started. And let's first take a look at the board before we dig in so that you've got your bearings, you know exactly where you're at. Gold right now is almost at $4,500 an ounce. And I'll tell you that's as we have come live to the air. And after a 2% drop Tuesday and $130 rebounding this morning, or should I say today, we'll spend real time on that ride because it's today's best lesson.
And silver is mixed 60s riding that same wave right now. And the 30 year treasury, listen to this, 5.19% today after touching 5.33% on Tuesday, the highest since 2007. And the 30 year mortgage, 6.75% and leading towards seven. Oil is it's mid 80s and climbing up around 50% this year with that Iran standoff still unresolved. And the odds of a federal reserve rate hike next month, about one chance in three now. And every one of those numbers is connected to every other one. And by the end of the hour, you're gonna see the wire that actually runs through them all. And I wanna start with the number because everything else this week grew out of it.
I'm talking about that $3 billion number. This week we learned that the United States government's interest payments on its debt have now hit the highest level in history. And now people say highest in history, that's a lot of things. And usually it's kind of like a trick of inflation. You hear these different, I don't wanna call them conspiracy, but you hear other people saying things. Everything's the highest in history if you count it in shrinking dollars. So let me give it to you the honest way. Measured against the size of the whole economy, the entire economy. This year, the government will spend around 3.3% of everything this country produces.
The entire economy, not just on interest, the entire economy. And the old record was 3.2%. And that was set in 1991. And a lot of you remember 1991, it was a double digit mortgage rates, which were still in the rear view mirror. And we just fought a war then in the Gulf and Washington's interest bills got so heavy that it scared both parties into a decade of actually doing something about it. Well, we just passed it. We passed that time. And let me break that number down to you in pieces that you can understand. The interest bill this year crosses $1 trillion. That's Congress's own budget saying so. And that works out to about $23.8 billion a week.
Let's call it, let's just call it 3 billion a day. Every day, weekends, holidays, Christmas, you name it. $3 billion a day before one dime even goes into the military, the roads, the schools, or even anybody's social security check. And here's the milestone that got my attention. For the first time in American history, the government, listen to this. And I was talking to a client this morning about this. She called me in fact. The government is now spending more on interest than it spends on even Medicare. Think about that. The healthcare program for every American over 65, one of the two biggest things the government does and the interest bill just walked past it.
Only social security is bigger. And that's it. That's the whole list of things ahead of interest right now. And one more way for you to hold on to this. Out of every dollar of taxes this country collects this year, almost 19 cents goes straight to interest. Nearly one in five of your tax dollars, not to a program, not to a service, but to interest on money already spent, some of it before you were even born. And it's not slowing down. Through 10 months of this budget year, interest payments now are running more than 10% higher than last year. And you'll hear people on the radio and on news calling this what they call a death spiral.
And I saw that word attached to this very number this week and I'm not gonna use it. And here's why. A spiral, and this is like what Jim Rickards and all them say, a spiral is a prediction. The number, and you know I like this, is a fact. And the fact is bad enough without having to dress it up. And the fact is this. Interest is now the fastest growing thing the government pays for. It just passed Medicare and it broke a record that stood since 1991. And you don't need me to add scary music to that. You just need to understand what it caused this week because that number is the reason everything else has happened.
Now, before I move on from that record, I wanna tell you what happened the last time we got here because it's the most hopeful thing I'll say all hour and it's very true. In 1991, interest rates, or should I say interest hits 3.2% of the economy. And the bond market gets restless. That sound familiar to you? And here's what happened next. Washington got scared and Republican President George Bush, HW George Bush, he cut a budget deal that helped him, actually that helped cost him reelection. And he knew it might and he did it anyway. And then you had old Bill Clinton, the Democrat president, working with the Republican Congress that fought him on everything else and kept squeezing the deficit year after year.
And believe me, it wasn't pretty. And nobody involved got a parade. But by the end of that decade, the budget actually got balanced and the interest burden fell for 20 years straight. And that record stood for 35 years until guess what? This year. So when I tell you this isn't a spiral, I'm not just being gentle. I'm telling you the country has stood at this exact spot before, read the same warning label and then they fixed it. And it took both parties getting scared at the same time. And history says the thing that scares them is exactly what you watch this week. The lenders raising the price. And whether this Washington has that in it, I don't know.
And I'm not gonna pretend to know, but it's been done. And that belongs in the record too. Let's talk about America's credit score. And let me explain what happened this week using something every single person listening already understands. And we all know what a credit score is. You know how it works in your household. When your credit is strong, banks are happy to lend you and they lend you at cheaper money. But when your credit slips, you miss a payment, your debts pile up against your income. Nobody at the bank yells at you and nobody sends a nasty letter. They just start to charge you more. And then the next loan costs more and the card rate goes up and it goes up quietly politely.
The price of borrowing them begins to rise because the people lending the money, they now have started to wonder a little. Now understand this, the United States government doesn't have a credit score like we do. Nobody mails Washington a number, but it has something that works exactly the same way. And it's called, if you're writing this down, it's called the bond market. It's the collection of everybody on earth who lends America money, pension funds, insurance companies, foreign governments, maybe your own retirement fund. And this week, those lenders raised the price. Here's what I'm talking about. On Tuesday, the interest rate on the 30 year treasury bond, which is the loan that America takes out, has been taken out for 30 years at a time, it touched 5.33%.
That's the highest it's ever been since June of 2007, 19 years ago. Now, why does that matter? Well, let me tell you why. Because that rate isn't set by the federal reserve and it's certainly not set by Congress. No official anywhere decides it. It's set by an auction and the government shows up at that auction needing to borrow and the lenders of the world, well, they decide what they're gonna charge. And lately, the auctions are actually telling us a story. And the last big sell of 10 year loans only sold at the highest weight in 19 years. Now, don't get lost here, follow me on this. The last 30 years sell, which is the highest since 2021, the lenders are still showing up, nobody's refusing to lend to America, but they're showing up with their handout at a little further each time.
In other words, wanting more. And here's the part that I find most important. And it's the part that the headlines mostly skipped. You'd think rates are jumping because everybody's terrified of inflation. That's the usual story. But the bond market publishes its own inflation forecast every single day. It's built right into the prices and that forecast barely moved. And the lenders guess about future inflation is sitting right about where it is or where it was. So if it's not inflation that they're charging for, the question is, what is it? The answer, it's the borrower. Listen to this, the July deficit came in at $432 billion.
That's the biggest July shortfall in years. And the debt is now closing in on 40 trillion. And we just spent 10 minutes on what the interest bill, the interest bill did alone. The lenders can read and they're looking at a borrower whose debts are growing faster than the income. And they're doing what any lender does with a borrower like that. Not refusing them, what are they doing? They're charging them. And there's one more wrinkle to this. The treasury department reported this week that some of America's biggest foreign lenders like Britain, China, Japan, they all trimmed their holdings of our debt in June, not dumped, but trimmed.
But when your three biggest lenders all take a small step back in the same month, the remaining lenders, they notice that. And the price of the next loan, guess what? It reflects it. Now I keep saying the auctions. And I realize most folks have never even or had anybody explain what that actually means. Let me tell you, I'm gonna read you the financial news differently forever. Here's where I'm gonna go with this. The government doesn't get money from a bank. When Washington needs to borrow, which is constantly, the treasury holds an auction. And it announces, and this is what they're saying, we're selling, let's say $40 billion of 10 year loans next Tuesday.
And then the lenders of the world show up, which is the pension funds, the insurance companies, the foreign governments, the big banks, and they all bid. And each one says, I'll lend if you pay me this much interest. And then what the treasury does, the treasury takes that money at whatever rate it takes to sell the whole batch. And that's it, that's the whole mystery. No committee sets America's borrowing costs. It sets the same way a farm auction sets the price of a tractor by whoever shows up and what they're willing to pay for it. So which is why the recent auctions are the complete story. When the 10 year batch only sells at the highest rate in 19 years, that's not an opinion from a television analyst.
That's the actual result of the actual sell. That's the lender's verdict in writing with actual money standing behind it. And when demand comes in weak, when the treasury has to sweeten the rate more than expected to move the batch, traders have a word for it. They say the auction tailed, T-A-I-L-E-D. And a couple of the recent long-term auctions, they've all tailed. It's nothing dramatic, but a borrower notices when the room gets quieter and so should you. And that's why the auctions went on my watch list today because it's the country's credit score published in real time by the only judges whose opinion is backed by their own money.
Now here's where this week goes from interesting to historic. It wasn't just America. Listen to this, on the very same Tuesday, listen to what happened around the world. In Japan, the government's 10 year borrowing rate climbed to 2.945%, knocking on 3% for the first time since 1996. Now let me have you sit on that for a second because I don't think Americans appreciate what it means. For 30 years, Japan was the country where interest didn't exist. Their central bank bought up bonds by the trillion and pinned rates to the floor. And a whole generation of Japanese savers never even earned a meaningful dime of interest in their lives.
Japan lending money at 3% was until recently unthinkable. Their 10 year rate has more than tripled in just two years. It rose seven days in a row heading into Tuesday and demand at a recent Japanese bond auction was the weakest in a year. Why? It's the same recipe as ours. Inflation from expensive oil, a government that's spending big with debt already more than twice the size of Japan's entire economy. And lenders deciding, again, they wanna be paid for the risk. Same Tuesday, Germany, highest borrowing costs since 2011. France, another one, highest since around 2008. And let's not forget Britain, 30 year rates near their highest since 1998.
Point I'm making, every one of those governments got the same letter from its lenders on the exact same day. We still trust you, but trust is gonna cost you more now. And there's a fellow at Deutsche Bank. He said something about Japan this week that I thought was the most honest sentence of the whole news cycle. He said, "Rising rates that carry a physical risk charge are the market's way of disciplining future spending." It's like getting spanked. And he called the whole thing, quote, "A normalization with a warning label, not a crisis." So normal with the warning label, I think that's exactly right. And notice it's the same thing I told you about interest bill, not a spiral, it's a warning label.
But here's the piece of the Japan story that circles back to your money and almost nobody in the American press even connected it. For decades, Japanese savers earning nothing at home, what did they do? They sent their money abroad. And a great deal of it came right here to the United States. And Japanese investors have been some of the biggest lenders to the United States government for a generation. So if Japanese savers can finally get paid 3% at home, think about this and their own currency with no exchange risk, some of that money is gonna go where? Gonna go back home. Money goes home, which means one more big thing.
Steady lender, stepping back from the American auction. In the same season, Britain, China and Japan's governments, they're already trimming. So fewer lenders are showing up, a borrower who needs more than ever. These lenders, fewer of them are showing up and you don't need 40 years in finance to see what that does to the price. And here's the plain truth of how it walks right inside your front door and lands up at your kitchen table. Every loan in your life is priced off those government rates. Every single loan that you've ever taken out in your life is always priced off those government loans. The lenders who set America's borrowing costs set yours too because if the safest borrower on earth has to pay 5%, then everybody's riskier, which is all of us.
And we pay for that. So this week, while the 30 year treasury is hitting a 19 year high, here's what happened down at the street level. The average 30 year mortgage rose to 6.75% climbing back towards seven. And if your kids or grandkids are trying to buy a house right now, that number is the reason for the look on their faces. On a $300,000 loan, the difference between the rates of a few years ago and today is hundreds of dollars a month, every month for 30 years for the same house. Car loans around 7% on a new vehicle. On a used one, about 10 and a half percent. Credit cards, home equity lines, all of it drifts up to that same river.
Now the other side of it, because there is one and you know I always give you both sides, if you're a saver and most of I hope this audience is, higher rates are the first good news you've had in years. CDs I'm talking about, certificates of deposit, money market funds, treasury bills. They're paying more than they have in a very long time. In fact, a retiree with cash savings is finally getting paid something for it. And that's real and I'm not gonna pretend otherwise. And later in the hour, I've got a piece of homework about it because a lot of banks are hoping you won't notice the difference between what rates are and what they're actually paying you.
But keep the two sides in proportion. The savers gain shows up in small monthly interest. The borrower's pain shows up in the biggest bill of a family's life, meaning the house, the cars and for the country as a whole, there's no both sides about it. And the biggest borrower on earth is us, all of us together and our collective interest bill, it just set a record. That is the receipt of this week's story. Now, let me bring you right up to this morning because the story moved again while you were having breakfast. And this morning, the treasury department announced it will double the size of its bonds paybacks. I'm sorry, buybacks.
Stepping into the market to buy back some of its own longer loans. And you know what, the lenders liked it. And what happened, rates came down. The 30 year, which touched 5.33 on Tuesday, pulled back to around 5.19 today, which is a meaningful retreat. So what actually happened there? And well, let me give it to you straight. I'm gonna give you both halves. Like I said, the generous reading that the government saw its lenders getting restless and did something to steady the market, at least for today they did. And this is not a debt pay down, not $1 of debt disappeared. The treasury buys back long loans and replaces them with shorter ones.
It's rearranging when the debt comes due, not shrinking what's owed. It's just rearranging things. And at your kitchen table, that's the family that pays off the 30 year loan by putting it on a short term credit. The monthly picture looks a lot calmer. The total owed didn't change. It's still owed the same amount. And now the bill comes around more often. And notice the deeper thing it tells you. When the lenders asked for a raise this week, the borrower kind of like blinked first and Washington moved within a day to calm the bond market. And remember when I told you nobody votes on interest? Well, this week you watched the interest bill start making decisions all by itself.
So with all of that going on, what did gold do? Well, it did something perfect. Tuesday, gold dropped almost 2% trading down below $4,350. Why? The very rule I repeat every single week on this program, rising interest rates are bad for the gold price. Don't let them tell you otherwise. A lot of these gold companies will try to hoodwink you and tell you when the interest rates go up, gold goes up. Don't fall for that. Gold pays no interest. That's its cost. So when the safest loans on earth suddenly pay 5.3% holding the metals cost you more. Tuesday with the whole world's rates jumping at once, gold paid the price.
And I've told you that rule now for quite a long time. Tuesday, the market demonstrated it actually in public. And then came Wednesday, came this morning. The treasury announced the buybacks. What happened? The rates pull back. And what does gold do? Jumps more than $130 an ounce, back up around 4,500 an ounce. Most of Tuesday's damage undone before even lunch. Same rule, run the other direction, rate pressure eases. And then what happens? Gold takes a breather. It breathes. $130 round trip in about a day. And not one bit, no manipulation, no destiny, just the seesaw between interest rates and gold working in plain sight on the exact day we happen to be talking about it.
Two honest things now before I move on. One, we all know gold can fall. It fell Tuesday and it fell 16% in a quarter this spring. And anybody who tells you it only goes up is selling you something. I heard a guy, I couldn't believe, I was listening to a guy named Kenny Michaels on the radio. And he was talking about buy gold, buy gold. It's the only thing you can buy, buy, buy, buy, buy. And I was listening to this guy and I'm like, you're just thinking about how much you wanna put in your pocket. Well, this week proved it inside 48 hours, two days. Two, and this is the second one. And this is the bigger one. Noticed what knocked gold down Tuesday and what lifted it today.
Both times it was the same force. What the world's lenders think of the world's borrowers, gold is now trading day to day on the credit score story. Remember this, which tells you the market has now figured out what this program has been saying all summer long. Meaning me, that the real story of 2026 isn't inflation and it isn't the Fed, it's the debt. And what the people who fund it are starting to charge. Now there's a fast check on silver before we go on because silver rode the same seesaw. Silver's trading in the mid sixties this week. I think I looked at it last, it was 65. It dipped with gold on Tuesday when the rates jumped and bounced back with gold today when they eased off.
Same rule, same lesson, smaller metal, bigger swings, silver always swings harder and it's a smaller market and half its demand comes from factories, not savers. And the ratio that I watched, how many ounces of silver, remember I've talked about this, to buy one ounce of gold is now holding around 68. So silver has been quietly gaining on gold now for a few weeks and the six year supply shortage hasn't gone anywhere. In fact, the world keeps using more silver than it digs up. Remember we talked about this. About 46 million ounces short this year. And the higher price isn't gonna fix it quickly because most silver comes out of the ground as a side effect of mining and other metals.
Remember copper, platinum, they all come together and silver's just in that compound, it's in that mixture. So if the swings would cost you sleep, silver's not your metal. I'd rather say then that, you know, the sell you something you'll hate owning. I wouldn't want to do that, but it's earned its spot in the giveaway and it's earned a small spot in a lot of plans I help people build. Now, the Federal Reserve released the minutes from its last morning, I'm sorry, yeah, last meeting this morning and the detailed notes of who argued for what was behind closed doors from the meeting. Let's see, here's the, okay. So the vote was nine to three to hold the rates where they are, here we go.
Three regional Fed presidents, Cleveland, imagine this, Minneapolis and Dallas all wanted a quarter point hike. But here's the part the vote count doesn't tell you. The raise rates side was bigger than three. Many of them say higher rates would likely be necessary if inflation doesn't come down. And a few said they have raised right then because doing it now beats nothing more of it later. And they called inflation, they called it inflation elevated and in their own outlook, highly uncertain with the risk pointed up, not down. And I'll tell you the next real word is gonna come a week from this Friday and it's coming right out of Jackson Hole, Wyoming when Chairman's, Federal Chairman Warsch is first big at the Fed's annual gathering.
And I'll have more on that here later. So look, we're about halfway through the hour. So if you just found out, found me on the Dow, wherever you're at, let me just catch you up real quick in like the last 45 seconds here that I have. So first of all, America's interest bill hit a record $3 billion a day, bigger than Medicare for the first time in history. And the bond market answered it with a 30 year borrowing costs that hit a 19 year high Tuesday along with Japan, Germany and Britain, they all saw their lenders demand even more the very same day. So it reached your street immediately where mortgages are now near 7%.
And then this morning, Washington blinked and the treasury, what it did was it doubled its bond buybacks and then the rates eased and then gold dropped 2% Tuesday on the rate jump and roared back at $130 today when the pressure came off. So that's the exact seesaw that I teach every week actually demonstrated live just within these 48 hours. So which brings us to the giveaway. And today's word picked itself. And if you're new to this and you're coming from Facebook or wherever it is that you're coming from on the radio, this is if you've been listening all through August, I've been given away two full rolls of silver American Eagles.
That's 40 ounces of American silver. It's actually struck by the United States mint and it's going to just one listener. And I don't require you to make no purchase, there's no obligation and nobody even calls you afterwards to sell you anything. And my last July winner, you can even vouch for that. If you go on, by the way, if you go on to Facebook, he didn't send his face, which I don't blame him, but he put the coin in his hand and it was showing it on the, we showed it on Facebook. And by the way, you can find Heritage Gold Partners on Facebook as well. We have our Facebook presence there as well. Join our community, say whatever you want to say, reach out to me, you can reach out to me at 833, what is the number?
833-577-4653, anytime, I pick up the phone anytime. 833-577-4653 or go to heritagegoldpartners.gold and you can write to me, it's hello, I'm sorry. Hello@heritagegoldpartners.gold. Anyway, every show I give out one word and then I ask you to send me the word. And once you send me that word, you're in the drawing. And every word you've sent this month is another slip of paper that I put in a paper bag. And when I draw the winner, it comes out live on air and that'll be the end of this August. And we're getting close now, we're on August the 19th. So the words so far have been work, grit, thrift, honesty. And on Sunday, the last word was family.
Today's word, word number six is promise. P-R-O-M-I-S-E and you already know why. Everything we've talked about this hour is a promise. A treasury bond is America's promise. A Japanese bond, well, that's Japan's promise. Your mortgage is your promise. And this week the whole world sat down and repriced what everybody's promises are worth. And the reason this is the gold hour and not the bond hour is one sentence. And I've said it before and I'll say it again. I'll say it again before we're done. Gold is the one thing in the ball that isn't anybody's promise. So send promise to contest@heritagegoldpartners.gold. Remember that's heritagegoldpartners.gold.
Contest@heritagegoldpartners.gold. Six words down, drawing at the end of the word. And by the way, I want you, as you send that word promise in 250 words or less, I want you to tell me who taught you the value of a dollar. And then at the end of the month, I'll reach into that bag and I will pull out that name and I'll read that name live on air. Now I wanna read something because this week, a financial journalist at Reuters, a fellow named Jamie McKeever, who is not a gold salesman and owes nobody in my industry a thing, sat down and asked the question, this program has been circling all summer. Why are the world's central banks piling into gold while they quietly trim their dollars?
And he came up with four reasons. And I wanna walk you through them because you've now lived through the evidence for every single one and most of it in the last hour. Reason one, geopolitical risk. You've heard me talk about it. The war with Iran, the Strait of Hormuz. Oil, that's up around 50% this year. When the world gets dangerous, governments want savings that no missile, no blockade and no enemy's bank can even touch. And reason two, and you longtime listeners know this one, the weaponization of the dollar. You've heard me talk about it. Jim Rickards talks about it. We did a whole segment on this earlier in the month.
The world watched the dollar reserves get frozen by what? Sanctions. And every finance minister on earth learned the same lesson that day. A bond is a promise and a promise depends on the fellow making it and on whether he's still friendly with you. Gold in your own vault doesn't have that problem. Nobody can freeze it. Nobody can put sanctions on it or even vote on it. And reason three, worries about America's deteriorating money situation. And I wanna stop right there because reason three is not a theory. Reason three is the first 30 minutes of this show. $3 billion a day in interest, a record measured back to 1991, the lenders of the world raising the price on the same day Tuesday, and the central banks aren't reading different news than you are.
They're reading the same news and they've been acting on it month after month. Reason four, plain English. Nobody's sure what the rules will be next year. Who runs the central banks? What gets frozen next? What the dollar policy is after the next election, here or anywhere else. And when you can't predict the rules, you hold the one asset that doesn't need any. Now here's the honest part. And McGeever said it himself. So let me give it to you the way he framed it. No single one of those four would necessarily even do it. And anyone alone, you could just shrug off. So if you throw all those four together, he wrote, and it's pretty compelling checklist, and the buying matches the checklist, you'll remember because I actually reported it honestly on this program that the first quarter of the year was actually weak for central bank gold buying.
And the revised number was small. And I even told you so. Then the second quarter set a record for spring and the buying ramped up exactly as the checklist got heavier. And as the war dragged on and as the deficit numbers worsened and as the freeze orders piled up. And then China, 20 months in a row now buying every single month, most recently their biggest month in nearly three years. And the biggest, most patient, best informed savers on planet looked at the same week you just lived through and they've been quietly acting on it since before most people even noticed. And I'm not telling you a central bank's reasons are your reasons because they're running countries and you're running a retirement.
But when the people with the best information on earth all reach for the same asset for four separate reasons, it's worth knowing which asset it is. And I'm gonna tell you real quick about a fellow. I think about every time we do like auction tells and I'll call him Earl. Earl was a loan officer at a small bank for 38 years. He did farm loans, truck loans, house loans. And if your family needed money in that county, you sat across from the desk from Earl. You remember those days, a lot of us do. And Earl used to say the file always knew first, not the borrower, but the file. You know what he's talking about. He would sit, a person would sit across from Earl, confidence as ever, same firm handshake, always had that firm handshake, as always asking for the same loan as last year.
And what would Earl do? He'd open up the file and the file would whisper, debt's up a little, income flat, a payment came in late. Back in March, just one, just late, just once. And nothing you'd refuse a man over. And Earl almost never said no to that person sitting across the desk. You know what he did? He just adjusted the rate a half a point a year, a little more collateral there, politely, respectively. And the borrower barely even noticed. And Earl told me once the rate I charge a man is the most honest thing I'll ever tell him. He said, my mouth might spare his feelings, but the rate never does. Now think about that.
Think about this week. Nobody refused to lend the United States of America and nobody yelled, the auctions all sold and the handshake as firm as ever. And the rate, what did it do? It jumped up quietly, politely to the highest since 2007. You didn't even know it was coming. So somewhere in the world's file on the biggest borrower in history, there's a late payment in March and every Earl on earth just adjusted the rate. And the rate is the most honest thing the lenders ever tell a borrower. This week, guess what? They just told us. All right, let's get to the mailbag. This is one of my favorite ones here. And there was a question that came out and it's such a good one and so perfectly aimed at today's show that I'm giving it the whole mailbag.
It's just one story. A gentleman wrote in after you heard me on Sunday's program. And he said this, he said, Alan, my banker points out that gold pays no interest. And now my CDs are finally paying four and a half percent. Why on earth would I put a nickel in something that pays nothing when the bank is finally paying me something? And that my friends is the single best argument against gold. And your banker, my friend is right about every fact in it. So I'm gonna answer this honestly, because if I can't answer the best argument, then I shouldn't even be on the radio. So let me tell you first, you're right. Gold pays nothing.
And I say it every week and that's the cost of owning it. And you're right that savers are finally getting paid. If you've got money that you need in the next year or two, I'm talking about the roof money, the car money, the cushion, a CD or a treasury bill paying four plus percent is exactly the right place for it. And I'll never ever tell you otherwise. And today I'll even give you homework about squeezing more out of it. But now let's look at what four and a half percent actually is. It's a promise. It's the bank's promise backed by the government's promise to give you back your dollars plus interest. And this week you just heard and watched the entire world sit down and reprice what government promises are worth.
Not because anybody expects to default, but that is, so I want you to just to put that out of your mind because there's no risk there. The risk with a promise based savings plan is quieter than that. It's that you get paid back every dollar right on schedule in dollars that buys less than the ones you actually lent. Four and a half percent interest with inflation at 3.4 leaves you about 1% ahead before taxes. And then after taxes on that interest, listen to me, you're about even. Your statement grows, your groceries grow faster. You've already seen that. So here's my actual answer to you. And it isn't gold instead of the CD, it's both doing different jobs.
Here's what I'm talking about. The CD is your income and your near money. And right now it's finally doing that job decently. Gold, you won't ever hear any gold guy tell you this, you'll get it from me though, is the small portion standing outside the whole promise system. The part that doesn't depend on what a dollar buys in 2036, because it isn't a dollar and it isn't a promise. What your banker is describing, what pays this year, I'm talking about what holds up over the rest of a retirement. And both things can be true. And in a well-built plan, both things are. So keep these questions coming. It's the best part of my week.
I love these questions and yeah, that's that. So here's some homework I want you to do. There's three things and none of them as always cost you a dime. And none of them involve buying anything from me. And every one of them comes straight out of today's show. Number one, I want you to find out what your savings are actually earning. Not what the banks are advertising, but what you are actually getting. I want you to pull your statement, find the interest line and check the rate on your savings account, your money market account and your CDs. Here's why, the national average savings account still pays a fraction of 1%.
While banks are out advertising 4% and better on CDs and money markets, the banks are counting on long time customers never asking. And if your money is sitting in an account paying half a% while inflation runs 3.4, then you're losing buying power in the safest account that you actually own. Here's what you do, one phone call, what am I earning? And what's the best rate you'll give me on this money? If that answer disappoints you, banks compete for deposits now. So check with different banks. Number two, if you own bond funds in a retirement account, and if you have a 401k with a balanced or target date fund, balanced or target date fund, target date fund, I'm sorry, target date fund, which you almost certainly do, find out this week how they did over the past three years.
And not to scare you, it's to inform you. And a lot of folks think of the bond side of their account as the safe side, and this week you just watch 30 year bonds get repriced to 19 year highs. And when rates rise, existing bonds lose, they lose value. Some very safe bonds, or should I say some safe bond funds have had a rough few years and their owners have looked, haven't looked at it. So you look, and then you can decide with your eyes open. Number three, the notebook. If you've started it, after Sunday show we talked about it, first Sunday of the month, 10 items in your kitchen drawer, you're two and a half weeks from your first second entry, don't quit before it gets useful.
And if you haven't started, tonight's a fine night to start. 10 prices your house pays every month, written in your own hand. Statement can be bond funds, notebook, there's no charge, and you're better off wherever you ever, call me or not, anyway. So let's put the whole hour together because I'm losing my thoughts here. Put the whole hour together because at some point, every honest hour or financial radio has to answer the question. So what do I do? And here's this week's actual established, question number one, the interest bill on the national debt hit a record bigger than Medicare now, huge. One in five tax dollars, $3 billion a day.
Two, the lenders of the whole world responded by raising the price on America, on Japan, on Germany, on Britain, all in the same week. And it wasn't inflation fear driving it, it was the borrowers themselves. And three, it landed at street level immediately, talking about mortgages near 7% now, car loans, and at seven and above right now. And four, the biggest savers on earth, the central banks, were already positioned for it, buying the one reserve asset with no borrower behind it for four documented reasons, month after month. Now, what does that mean for your money that you've saved? It means the question of the next 10 years probably isn't the question of the last 10.
So for a decade, the question was, how do I earn anything at all in a world of zero rates? Well, that world is gone. And the new question is, the one this whole week has been shouting when everything you own is somebody's promise, the bond is the government's promise, the stock is a company's promise, the dollar in the mattress is a promise about what it'll buy and what part of your savings, if any, stands outside of these promises. That's the honest case for gold, not a prediction that it goes up next month, it fell 2% Tuesday, and it can fall again. Not a replacement for the CDE that's finally paying you or the stocks that fund your income.
If any of this reasoning makes sense to you, here's the practical path briefly for the folks who are new. If you have a retirement account, an old 401k, a traditional IRA, a thrift savings plan, the tax code has allowed since 1997 that you can move a portion into physical gold and silver inside what's called a self-directed IRA. And if you do it properly as a direct transfer from custodian to custodian, the money never touches your hands. It's handled that way and it's a non-taxable event, in other words, you're not taxed by moving the funds over. But I'm not your tax advisor and I don't play one on the radio, so you might wanna run it by your tax advisor first.
That's not me covering myself, that's how it should work. The metal is real, it sits an insured audited depository in your name. Two warnings, the same as every week because I'd rather lose a cell than skip a warning. One, you cannot store, and I had been telling people this last week, many people were asking me this question. You cannot store IRA metal in your house no matter what some advertisement says, that pitch has hurt people, coins in your own self or in your own safe, that's a fine thing. That's a separate purchase with different rules. Everything has a cost. Number two, set up fees, custodial fees, storage fees, and a spread between what you pay and what you actually get selling back.
Small but real and the spread is the one most dealers won't bring up because they're gonna rob you. Ask every dealer you talk to, what is their spread? 20% is too much, 10% is too much. And anybody who says free is charging you somewhere that you cannot say, that you can't see. And I'm gonna only ask you to do one thing today. Ask for my kit. The gold IRA explained honestly. Every one of my numbers is printed in plain figures. I've got set up custodial storage and the spread free, not free with a catch, but free and asking obligate you to absolutely nothing. Again, that number is 833-577-GOLD or 833-577-4653. Well, we've got three minutes left.
I could go on, but let me land where this started. $3 billion a day, that's the interest. And this week it broke a record that had stood since 1991. And the lenders of the entire world answered on the same Tuesday with the same message to every big borrower on earth, your promises now cost us more. And Washington heard it and what did they do? The buybacks this morning were the proof. Your mortgage and your kids' loans heard it, gold heard it twice. Once in each direction, even the contest word heard it because everything in this hour was about promises, what they cost, who's making them and who's quietly deciding to hold something that isn't one.
You don't need to panic about any of it. You heard me refuse the scary words all hour long and I meant it, warning label. It's a warning label, not a crisis, but a warning label is still worth reading. And the folks who get hurt by slow moving stories are never the ones who read the label. They're the ones who were told everything was fine right up until the repricing reached them. You read the label, you're here on a Wednesday doing the work. And I wanna leave you with Earl one more time because his rule is the takeaway of this whole week. The rate is the most honest thing a lender ever tells a borrower. Not the speeches, not the press releases, not the reassurances, but the rate.
And this week the world's lenders told every big borrower on earth, the honest thing and the honest response for a country or for a family isn't fear. I'm Alan Johnson. This has been the gold hour. Take care of each other. I'll talk to you on Sunday. I've got a special full show again for you on Sunday. God bless you. God bless your family. And God bless America. And remember go to Facebook. We've got ground zero plots. You can go right there on Facebook or you can go to the Heritage Gold Partners on Facebook. Say hello to us or say hello at heritagegoldpartners.gold. I'll see you this Sunday. Thank you for listening.