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DEEP RESEARCH · ASSET ALLOCATION

How to Think About Government Bonds and Gold When Sovereign Debt Is Back at 1945 Levels

A short asset-allocation memo revisiting government bonds issued by highly indebted countries and the role of gold

Published: 2025-04-21 · Asset-allocation observation memo · Naver Blog

Investment decisions are your own responsibility. This material is research and is not a recommendation to buy or sell.

0. Bottom line first

This is a note I am leaving for later. If sovereign debt has grown back to 1945 levels, I need to reconsider whether I should keep holding bonds from highly indebted countries, and I should also review gold as an alternative or complement.

Interpretation: The core question is when government bonds begin to look like risky assets, and when they become worth buying again. I want to watch bond-vigilante warnings, whether government bond yields become unbearable, and whether Congress responds with policy measures such as tax increases.

1. The concern: should I keep holding the bonds?

The source begins with the question, “Do I need to keep holding the bonds of countries with a lot of debt?” Government bonds are traditionally classified as safe assets, but when the debt burden becomes excessive, interest rates and fiscal-policy changes need to be watched together.

Debt

Debt at 1945 levels

The key number in the title is the 1945 level. The source gives no more detailed figure, so I keep this as a directional observation.

Bond

Recheck bond holdings

The memo questions whether bonds from highly indebted countries should still be held.

Gold

Role of gold

Gold is being reviewed as a possible alternative or complement if confidence in government bonds weakens.

2. My sequence: from market warning to policy response

How debt pressure feeds into the bond decisionThe thinking sequence in the source memo
Debt burdenSovereign debt at 1945 levels
Market warningBond vigilantes pressure yields
Policy responseCongress responds, including tax hikes
Re-entry reviewConsider buying bonds then
Rather than rejecting bonds outright, the point is to check whether yields and policy responses have moved far enough.

Interpretation: If government bond yields rise to an unbearable level, the market has already issued its warning. If Congress then responds with measures such as tax increases, the source leaves open the question of whether buying bonds at that point could be reasonable.

3. Execution memo

  • Do not keep holding bonds of highly indebted countries just because they are called “safe assets.”
  • Keep gold on the checklist as a complementary asset when confidence in bonds weakens.
  • For bond purchases, first check whether the market warning has been sufficient and whether policy action is actually appearing.
  • This post is a record for later review, not a buy or sell recommendation.

Sources

Naver original