In the first three quarters of this year, entitlements, interest and veterans' affairs added up to 105% of total federal receipts, before anything else the government spends money on.
The deficit has been an argument in the gold trade for twenty years without changing very much. Trey Reik said the market has now reached the point where the question being asked is whether the federal budget and the dollar are solvent at all.
"So, we're actually getting to the point where the Treasury cannot properly finance its debt."
Reik is chief economist at GBI, has been in the business four decades, and managed money at Soros for Scott Bessent, whose behavior as Treasury Secretary is a third of this conversation.
The full interview is covered here so you can skip it. 23 minutes of audio, 11 minutes of reading.
Here are the 8 arguments that matter.
👤 Guest: Trey Reik, Chief Economist at GBI, who has spent four decades in the business and managed money at Soros under Scott Bessent
🎙️ Host: Maggie Lake, a longtime financial journalist and co-founder of The Market House
📰 Published: 14 September 2026, on YouTube (Wealthion)
🔴 YouTube | ⏱️ 23 min | ✅ Time saved: 12 min
Key Takeaways
A rate rise this week is now forced on the Fed by market pricing, not chosen on the merits
A week earlier Reik would have called it 50/50; pricing then moved to 90%
The Treasury Secretary and the Fed are working against each other, and Reik says that is 100% the case
Entitlements, interest and veterans' affairs alone came to 105% of federal receipts
That spending is growing at 7.5% a year against receipts growing at four
Seven unprecedented Treasury actions in three weeks are the signal, not any one of them
A yen intervention of 95 billion, swap-line talks with the UAE, six Treasury buyback operations instead of the four promised
None of it is money printing yet, which is exactly why gold has not moved
The hardest moment to buy gold is after a spike has faded, not during the fall
Diesel's effect on gold miners' costs is badly overstated
At Agnico Eagle a 10% move in diesel is $6 of a $1,116 cash cost
4270 is the level that decides whether gold has a rough couple of months
1. Forced Into a Rate Hike
Maggie Lake opened on the Federal Reserve's policy meeting that week, and said the consensus was that the committee would raise rates. Reik's answer was that his own view had changed in a matter of days.
He still thinks a rise is the wrong decision on the fundamentals. He named outstanding debt loads and the negative net national savings rate among the reasons a hike is unlikely to be the best call, and said he had made the same argument in previous conversations on the programme.
What changed is the pricing, not the case. Market-implied probabilities moved to "90% for one 25 basis point rate hike" over three to five days, and he said Kevin Warsh is in a position where not following through on that expectation would be a negative.
Asked the same question a week earlier, he said, he would have answered 50/50. After reading over the weekend: "I think he's pretty much forced into a rate hike."
Lake's own framing was that credibility is on the line after the inflation readings, that the market is pushing the Fed chairman that way, and that he had said he would listen to the market.
2. Fed and Treasury at Odds
Lake asked whether the central bank and the Treasury Secretary are now working against each other, given that Bessent has announced bond buybacks to push interest rates down while the Fed is being pushed to raise them. Reik's answer was one word: "100%."
He is a supporter of the change of Fed chairman, and has been a critic of the institution for a decade. He said the change is positive for the Fed's analytical framework and its treatment of inflation expectations, and that it was part of why he expected no rate rise.
The precedent Warsh cites is 2008. Reik said Warsh looks back on the $147 oil price of that year as a case where the Fed and the European Central Bank overreacted: the Fed talked up long-dated yields and the ECB actually raised rates while the European Union was in recession and the US financial system was starting to disintegrate.
On the chairman's standing: "I think Warsh's credibility is very high. The market's getting used to his definition of credibility." He added that markets reacted badly to the idea that the Fed would give less guidance about what it plans to do next.
His read of Bessent is personal rather than analytical. Bessent was his boss when he managed money at Soros, and he said he knows him well: "he's definitely in this mode of he knows better. He's going to control markets. He knows where oil should be. He knows where the yen should be."
That posture is itself pushing rates up, in his view. A US Treasury Secretary saying "I'm the house on a G7 currency" is, he said, one of the reasons interest rates have been rising as rapidly as they have.
Lake added the mechanical point that the Fed funds rate targets short-dated borrowing costs, while Bessent is trying to bring down the rates that reach consumers and mortgage borrowers.
3. The Solvency Inflection
Lake suggested the real issue is underlying weakness in the economy. Reik corrected her: the economy is solid, and the word that matters is the other one she used.
"So tension is the key." He said that in four decades in the business he has never seen so many countervailing pressures and geopolitical concerns at once.
The 10-year Treasury yield had just moved above 5% — in his words, "the 10 year just ticked above 5% which is the highest since 2023 but actually the high tick the highest since 2007. So the bond market is in complete revolt."
He attributes the revolt to the deficit and the annual interest bill, and says the gold trade has been early on this for twenty years. Gold has done fairly well over that time, he said, but there has never been the inflection point where the dollar's solvency itself comes into question.
The arithmetic he gave for why this time is different: "And as a perfect example, in the first three quarters of this year, entitlements, interest, and veteran affairs, that portion of the federal budget deficit was 105% of total receipts. And that's without everything else. And it's growing 7.5% and receipts are growing four."
What he says has changed is who is asking the question. "I'm just saying we're hitting this inflection point where after studying this stuff for so long, I think people are really starting to question the solvency of the US, the federal budget and the dollar, which is so serious."
4. Short Term vs Long Term
Lake asked why the Treasury Secretary's interventions have people talking about yield curve control, and mentioned that Stanley Druckenmiller had written an op-ed about the buybacks. Reik answered by separating two clocks.
His framing is that gold is always subject to both, and that they are pulling in opposite directions right now. The long-term fundamentals are why he comes into work; the short-term fundamentals are what has to be dealt with.
On the short-term side he is unambiguous that the setup is bad for gold: a 10-year yield above 5%, a high oil price, and a Fed that may raise. He said he could not come up with a more negative short-term fundamental, does not argue with their relevance, and expects them to control short-term performance.
The turn in his argument is that the short-term damage is what builds the long-term case. "So, we're actually getting to the point where the Treasury cannot properly finance its debt."
He said Bessent has had to resort to gimmicks, and has himself said he is not trying to reduce interest rates but to slow the rate at which they rise.
Lake framed the practical version for viewers: someone trading over the next fortnight is having a different conversation from someone building a long-term plan to protect wealth through turbulence.
5. Seven Unprecedented Moves
Reik then listed what the Treasury Secretary has done in three weeks. He counted seven actions; five are specified in the segment.
A yen intervention of 95 billion, which he said he believes was the largest ever.
Talks with the Fed about raising swap-line limits above 65 billion.
Talks with the United Arab Emirates about establishing a credit swap line, which he noted has always been limited to the top five central banks.
A promise to increase the periodic purchase of Treasuries from two to four, followed by six.
A plan to fund that from the Treasury's $950 billion account at the Fed.
His summary of the list: "These are all totally unprecedented events." Together with saying on live television that he is the house, he said, they signal to markets that the system is moving toward yield curve control.
6. Money Printing Light
Reik was careful about what yield curve control is and is not, and where the US sits on the path to it.
The definition he gave: "Now, yield curve control, as we all know, is the Fed issues money to buy long-term bonds, and that's QE, right?"
His position is that the signals are there and the act is not. "But all of these things are moving us down the pathway of yield curve control, which is essentially money printing light." He said there are more such signals now than he has seen in his career, but that the point of actually printing money has not arrived.
That gap is his explanation for the gold price. Not being at money printing yet is what is holding gold where it is: "I'm actually surprised that gold's been this resilient", given the rise in 10-year yields and the rest of it.
7. Gold's Hardest Moment
Asked where the focus should sit for a long-term holder, Reik turned to the psychology of the gold trade after this year's January spike and the correction that followed it.
Everyone in the trade is still looking over their shoulder at January, he said — gold owners, gold stock owners, all of them — and that backward look is what has to go.
He credited the framing to Rick Rule: what is happening now is an opportunity to buy gold "at under 4,300" and to buy gold miners at the levels they have fallen to since January.
The behavioral problem he described applies at every price. "And the problem with gold is when it's going up everybody thinks they missed it. And when it's going down everybody says I see I told you so. When it's not moving there's no urgency."
The specific moment he says is hardest is this one. "This is actually the period of time where it's hardest for investors to develop confidence" — the price was up there, it is now down here, and everybody is caught in between.
His conclusion: "We had the spike. We've corrected. All of these fundamentals are intact."
8. The Diesel Cost Myth
Oil hit $110 on Brent and $104 on WTI the day of the recording, which Reik said is not relevant to the gold trade and will not influence the Fed over the long run. He then attacked the read-across to gold miners directly.
"But for gold equities, the importance of oil prices and diesel is way overstated, I think."
The example he worked through is Agnico Eagle: every 10% increase in diesel was $6 on its total cash cost, so a 30% rise is $18, against a second-quarter cash cost figure of $1,116. He noted that this is cash cost rather than all-in sustaining cost.
"So my point is gold's been unduly punished. Miners have been triply unduly punished because of this rising oil price. And this is a great opportunity."
The action he drew from it is a schedule rather than a trade. "So between now and the end of the year, I think the real message is this is the time to accumulate precious metals for what's going to happen over the next two years."
Bonus Insights
The one level he is watching is 4270, and he flagged that he does not like using technicals. He said he mentions them only when they support his case and that they do not right now, but that gold is a very technical beast and enough people trade it that way to matter. 4270 is the 50-day moving average; gold went below its 200-day moving average in June and the moving averages have since reversed.
"And I'm just going to be honest and say if 4270, which is where we are, doesn't hold, we're in for a rough couple of months."
He would welcome the break rather than fear it, because it would let people buy at 4,100 or 4,000.
His advice to anyone trading gold over the next week or two was to trade something else — "if anybody's trying to trade gold in the next week or two, I would look at coffee or something else because we're right, we're on a tough spot."
Lake closed on the same discipline from the other direction: "We got to trade the market that's in front of us, not the market we want."
Reik's parting line was about temperament rather than price: everybody has to get a little bit of spine, and he said he hopes these opportunities last another month or two, because stepping in is exactly what is difficult.
Reik's bottom line is that the Treasury's emergency measures and the federal interest bill are moving the system toward buying its own long-dated debt with created money, that nothing has been printed yet, and that the gap between those two facts is the window in which gold and gold miners are still cheap.
Products, Companies & Tools Mentioned
Agnico Eagle (The miner he used to size diesel's real effect on costs: every 10% rise in diesel adds $6 to total cash cost, against a second-quarter cash cost of $1,116)
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