UNBELIEVABLE! You Don't Know What's About to Hit Gold & Silver in Next 2 Days – Luke Gromen

[00:00:00]So, I think there's a possibility that he will try to ride two horses with one ass again as Powell did in a different manner next week by rolling out this same fairy tale that we can have disinflationary growth, that we can have higher growth, but that the higher growth won't necessarily drive higher rates. I think it's total BS. I think it's a fairy tale. So, let's see what he does. One way or another, we're going to find we're going to find something out next week. And so, I think they're going to have to show us a bit. They're going to have to show us some cards next week and I think that's that makes it an important meeting and an important set up for the back half of the year.

[00:00:36]>> Financial markets are at a critical juncture as investors try to understand the future of inflation, interest rates, economic growth, and the global monetary system. With central banks facing difficult choices and geopolitical tensions adding uncertainty, many analysts believe the second half of the year could bring major changes. Luke Gromen, a respected macroeconomic strategist known for analyzing global liquidity, sovereign debt, and monetary policy, argues that policy makers are trying to convince markets that strong growth can coexist with falling inflation and stable interest rates.

[00:01:10]He explains that the real challenge is balancing economic expansion, government debt burdens, and inflation pressures without damaging bond markets or weakening confidence in the financial system. According to his view, expectations surrounding upcoming Federal Reserve decisions could reveal whether policy makers have a realistic solution or are simply delaying a larger reckoning.

[00:01:32]He also highlights concerns about global trade realignments, rising energy costs, and pressure on major economies that could benefit hard assets such as gold.

[00:01:42]Now, we present the clips from Luke Gromen's interview.

[00:01:45]Before we continue to discuss this, please hit the like button, subscribe to the channel, and ring the bell icon.

[00:01:51]Thank you and enjoy the video.

[00:01:53]>> I think next week is is going to be a big card flop, if you will, to use poker term. Um he's going to have to show us our cards.

[00:02:02]And there's a consensus on Wall Street that he's going to be hawkish.

[00:02:07]Uh and and certainly when he was at the Fed in 10 and 11, what have you, he was very hawkish. Uh what I find is not as well known is that he co-authored an op-ed in the journal in December of 2018, essentially begging the Fed to stop hiking rates. People don't seem to remember that as much, you know, with the S&P down 10% off the highs and you know, you know, please stop hiking rates.

[00:02:28]Now's not the time. So, I think we're going to get a big card flop in terms of getting his view. Now, that big card flop might be, you know, he wrote another op-ed in the journal about the Fed last fall, uh that I think was kind of his job interview, uh so to speak, for Trump, in which he said essentially, one of the thing I you you criticized the Fed, but from an economic policy standpoint, one of the things he said that I thought might be important as it relates to next week is essentially, we can grow out of this in a disinflationary manner. And he he basically said, if we invest in AI and technology, uh that will drive growth up and growth that will not it will be disinflationary like the 1990s.

[00:03:13]And that way, that's the way we can sort of square the circle between what otherwise seems to be a completely untenable need to either sacrifice the dollar, inflation, or the bond market, higher rates.

[00:03:27]And so, I think there's a possibility that he will try to ride two horses with one ass, again, as as Powell did, in a different manner, next week by rolling out this same fairy tale that we can have disinflationary growth, that we can have higher growth, but that the higher growth won't necessarily drive higher rates. I think it's total BS. I think it's a fairy tale. So, let's see what he does. One way or another, we're going to find we're going to find something out next week. And so, I think they're going to have to show us a bit they're going to have to show us some cards next week.

[00:03:59]And I think that's that makes it an important meeting and an important setup for the back half of the year. I again, I think next week's going to be really important cuz we're going to get some semblance of where we are. Because to your point, this looked like a relatively easy job when he said yes.

[00:04:14]Now, [laughter] it is a flaming bag of dog poo that he's got to try to put out without getting his shoes dirty. Two biggest Asian trading partners heading since last October toward a debt crisis, which will pull down everything else in the world and certainly in the West, but China's going to be hurt by that, too.

[00:04:33]Um and it just keeps getting and and then you layer the oil situation on top of it, which is worst for Japan, certainly way more than China. And then the Chinese don't like the what's coming out of the Japanese in terms of the more sort of military militaristic rhetoric. And so, they're cutting off rare earths.

[00:04:54]Uh they are doing some other things uh that that put upward pressure on inflation in Japan, as well. And that's where I come to the part about being of two minds about it. Um is this is this is is you know, Occam's razor is Japan and and Korea are heading towards debt crises that are going to sort of it's not good for anything except maybe the dollar in the short run and ultimately really really good for gold.

[00:05:17]Or was there some sort of deal agreed to was was sort of the you know, the divorce papers between the US and the Chinese manufacturing base sort of put in front of both parties in Busan in October and general framework around the divorce. And then the US went to Japan and Korea and said, "Listen, we're talking about reshoring, but there's no freaking way we can reshore to America.

[00:05:41]It's all You know, we're going to do some stuff here, but we can't we can't reshore that much here. We don't have the labor, we don't have the infrastructure, we don't have the grid, we don't have, you know, we don't have any of it. So, we don't have the engineers, we don't have the welders, we don't So, we're going to do what we can, but the lion's share of American reshoring is actually going to be, you know, make Japan great again and make Korea great again. But, but, Japan and Korea, if we switch manufacturing from China to Japan and China to Korea, our costs go like this.

[00:06:16]So, we can't without blowing up our bond market. Unless we do a deal with you, Japan and Korea, which is you guys kill your currencies. Kill them. And in return, we will give you sweetheart no-bid deals for factories here in the US, preferential market access, etc. And that is sort of financial warfare in the other direction, right? That's, "Hey, we're going to cut China out of the mix everywhere we can, and we're going to move it to Japan and Korea." And the only way that works is if they kill their currencies, so, you know, the cost pick up isn't like this, it's, you know, here. Maybe. Maybe. I mean, that's that's at the very high level. There's still practical things, uh, supply chain things that make that highly challenging at best. And certainly anytime soon.

[00:07:03]That's how I think about the other Financial warfare is absolutely happening, whether it's US sanctions here, there, and everywhere, whether it's China sort of, you know, doing what it does. I, you know, they've weaponized gold 3 years ago to defend the yuan, in my opinion. You can see them still buying it. That's another sign. China's buying just more and more gold as gold goes down, which is again, 100% 180° opposite of what everyone said was going to happen 3 months ago. Oh, China's screwed, they're going to file, they're going to sell all their gold. Well, they're just buying more and more. So, you're wrong about something the same way I was wrong about, um, you know, the fact that Hormuz being closed for 3 I was right about Hormuz being closed for much longer. I was wrong that how quickly it would break. I'm sorry we're right about that, but I I wrong about that, to to to be clear. So, um >> anyway, that's it's not an answer, but it's a framework of sort of how I'm thinking about it cuz I I don't know that there is an answer yet. Yes, there's warfare going on.

[00:07:52]>> Yeah.

[00:07:52]>> What are the terms and conditions? And you we can see signs in the markets.

[00:07:56]None of it's great for risk assets in my opinion, but you know, let's see.

[00:07:59]>> A key concern is the belief that technology investments in artificial intelligence can generate enough productivity gains to offset inflationary pressures.

[00:08:08]While this narrative has gained popularity, skepticism remains about whether such growth can occur without pushing interest rates higher.

[00:08:16]If economic activity accelerates while debt levels remain elevated, governments may face increasing financing costs that challenge fiscal stability.

[00:08:25]Another important factor is the changing structure of global manufacturing.

[00:08:29]Efforts to reduce reliance on existing supply chains could increase production costs and push prices higher. At the same time, tensions between major economies continue to influence commodity markets, energy flows, and industrial production. These developments create uncertainty for policy makers attempting to maintain financial stability while supporting growth. As markets evaluate these forces, investors are paying close attention to signals from central banks, bond markets, and precious metals for clues about the next phase of the economic cycle.

[00:09:00]Now, let's get back to the interview.

[00:09:02]>> Look, you can buy dollars or you can buy oil. And you can't put all your My wife's truck doesn't run on dollars, it runs on oil. And last week I put $158 in it. So, you know, the issue is ultimately, you know, you need you need energy and food. They're higher on Maslow's hierarchy of needs than you need Treasuries, US dollar stocks, et cetera. And so, um market action of dollar down, bonds down, stocks down is capital flight.

[00:09:30]That's money leaving the dollar. Where's it going? Well, it's probably either, you know, buying commodities or or, you know, paying down basically paying down debt. I'm I'm really surprised. It's Or alternatively, some of it might be, you know, if you look at the volumes of CIPS, China China's international international payment system interbank payment system. I can't remember what the I is. Anyway, I think it's interbank payment system. Point is is the volumes in this war have exploded higher.

[00:10:00]In other words, to get around US dollar sanctions et cetera, there's a lot more volume going through that. Now, is that enough to drive the dollar like down with with risk off as sharp as it is? Boy, I'd I'd be surprised. So, it is at the end of the day capital flight. It's it's capital flight price action. Dollar down, bonds down, stocks down.

[00:10:24]Again, we're flat to on the dollar. So, it's not quite there. But we saw this in liberation day. We saw capital flight, you know, dollar down, stocks down, bonds down in liberate post liberation day for a week or two. And then, you know, Trump Trump was left, you know, had to come to Jesus from, you know, or the hey I'm effort call as we used to talk about on the sales desk, you know, hey I'm effort knock it off. And 7 days later he paused. But it is as it relates to Warsh, it makes his job infinitely harder. Because again, all there's all this noise, all this food or all this word salad, all this It's a very simple choice. The dollar or the bond market. They have to make that choice. They're going to have to sacrifice one. All of this really just brings it forward. It's now it's you know, it was you know, 3 months ago before this silliness, Warsh like you said was pricing cuts.

[00:11:12]Warsh had some time to think about it.

[00:11:14]Now next week he's going to say something and it's going to become you know, what do you want? You're going to You're going to let rates rip or you're going to let the dollar fall? What's going to happen? First principle about Donald Trump is what? He is going to pimp that thing like it is the greatest deal since the Magna Carta or the signing of the Declaration of Independence. So, if, you know, as you said correctly, since then it's just faded away to nothing, what does this tell us about how that meeting went? The next data point that we can point to factually, China's imports of oil are collapsing. They're down like 4-5 million barrels a day. So, like the, you know, all of this stuff about we can get around it, we can get around it, the number one driver to making the the reason why the oil markets have not done this already has been China's ability to drop its imports by a staggering 4-5 million barrels a day and not economically collapse. If you'd have told someone, "Hey, China's China's going to drop oil imports by 4-5 million barrels a day, what's their GDP do?" If you'd have said that three three three months ago, they'd be like, "Oh my god, China's going to have a severe recession." I just read something from Jeff Currie earlier today that I believe the amount of charging I don't know if it's charging stops or wattage used or what it was. I'd have to go reread it.

[00:12:29]But, the bottom line is it's up 55% year-over-year in China. So, basically, they've got the grid, they've got the EVs, they've got the infrastructure, and so they're like, "We'll just drive electric. We don't care."

[00:12:40]>> And they've been stockpiling like crazy.

[00:12:41]>> They've been stockpiling like crazy. So, I think that's part of it, too, that they probably had more, you know, I think they had a billion eight barrels in an SPR, billion four barrels in an SPR, which is way more than anybody, but they may have had more than that even.

[00:12:52]But, we can we can see what they've imported. We can see they're not collapsing. We can see, you know, the the the adjustments they've made in terms of what they're driving, but I don't think people have thought hard enough about the potential implications of that. Just particularly in the context of China's screwed more than anybody, which was overwhelming consensus three months ago. Overwhelming consensus. Which is China wants to sing the last longer. China's fine. China's playing a strategic game here rather than sort of some sort of tactical game, which is leave it closed. Leave it closed. We know what's about to happen to the US bond market, to the British bond market, to the EU bond market. It's all about to blow up. Leave it closed.

[00:13:34]Great. Now, would that explain why they sat down and nothing came out of it after from Donald Trump? Oh, I bet it might.

[00:13:41]Um so, to me, the these are both huge non sequiturs, right? The fact that Trump didn't say anything about it, brag anything about it ongoing. So, we know that it was not a great meeting for Trump. And this drop in Chinese imports without China collapsing tells us A, they have more flexibility than even I would have thought, but certainly more than everyone that said that China was screwed 3 months ago by the US actions vis-a-vis this blockade, that they might be happy letting it go on. I would I would add a third one sort of in the context of that blockade that you're mentioning, which is they think that I believe it was the the F-15 might have been shot down by a shoulder-fired missile, Chinese shoulder-fired missile, which was another non sequitur, right? What do we hear when this started? Oh, Chinese weapons are crap and the Chinese didn't do anything to help the Iranians. Well, that F-15 didn't kill itself, right? It didn't shoot itself down.

[00:14:36]Um you have Pentagon officials again citing NBC See NBC citing Pentagon officials saying it was a Chinese shoulder-fired missile. And that the Chinese had provided high-end radars, long-range radars that were detecting US stealth technology. That was at the bottom of the article. And then we layer in things like, hey, the Russians are shipping stuff into Iran from the Caspian, and that the Chinese are doing it via the rails. And again, the Caspian volumes, the rail volumes, they're not nearly enough to to overcome the entire blockade, but this is all a relative game. It's a pain contest, and those are essentially morphine shots to Iran in a pain contest with the US. And so, you know, I look at that China meeting in the context of all of that. I think they talked about some things, but I don't think um I I I don't think it necessarily achieved what the US was hoping that it would. And I think what we've seen since is I think the the Chinese basically said, "Listen, you made your bed, now sit in it. You know, you you you're now lying in it. You You want that straight close, keep it close.

[00:15:40]Great. Let's see what happens first."

[00:15:42]>> The debate centers on whether policy makers can successfully navigate a world of rising debt, geopolitical fragmentation, and persistent inflationary pressures. Many investors believe the traditional economic playbook may no longer be sufficient because government deficits, aging demographics, energy constraints, and supply chain restructuring are creating challenges that did not exist in previous cycles. If growth slows while debt continues to expand, authorities may eventually be forced to choose between protecting financial markets and preserving the purchasing power of currencies.

[00:16:16]Such an environment has historically increased interest in tangible assets, particularly gold, as investors seek protection against monetary uncertainty.

[00:16:25]Any disruption in global trade or energy markets could further complicate efforts to control inflation.

[00:16:31]The coming months may therefore prove decisive for both policy makers and investors. Decisions made by central banks, combined with developments in international trade and fiscal policy, could determine whether markets experience stability or renewed volatility.

[00:16:45]Understanding the interaction between debt, inflation, growth, and monetary policy will remain essential for anyone following the global economy and precious metals markets. Share your thoughts about this interview in the comment section below. If you found this video helpful, please hit the like button, subscribe to the channel, and ring the bell icon.

[00:17:04]Thanks for watching.

[00:17:25]>> Mhm.