Massive Fed’s Gold Revaluation Ahead! If You Own Gold, Watch This Now - Luke Gromen

[00:00:00]Now, in gold terms, I think if you have an issue, gold probably goes down a bit initially, and we've seen that. And so, that that I don't have as strong a conviction in that. We've already seen gold well off the highs, and so maybe gold goes down a little bit in that initial risk-off in the dollar-denominated equity markets, but then ultimately, gold soars. And as as the decline in equity markets necessitates, you know, creates dysfunction in treasury markets again, and necessitates more dollar liquidity injected by either Fed or Treasury again, and gold goes back to new all-time highs, and you know, the currency weakens enough, and in particular against gold, the US can can pay off its debt overnight, right? At at whatever, I don't know what the number is. It's probably 20, well, it's a lot more than 20,000 an ounce, but some big number of per ounce of gold, US can, you know, the the Treasury Secretary can instruct the Fed to revalue the gold.

[00:00:56]Boom, we pay it all off with with devalued dollars, and debt holders lose, and the government wins.

[00:01:01]>> Global financial markets face unprecedented turbulence as rising government debt strains traditional central bank policies. As fiat currencies steadily lose purchasing power worldwide, hard assets are rapidly regaining center stage in global macroeconomics. Luke Gromen, a distinguished macroeconomic strategist and founder of Forest for the Trees, projects that gold will experience a minor initial dip during stock sell-offs before soaring to explosive all-time highs.

[00:01:31]He predicts that an impending equity market correction will trigger severe treasury market dysfunction, compelling the Federal Reserve or US Treasury to flood the financial system with fresh dollar liquidity.

[00:01:44]This endless monetary expansion, combined with an accelerating economic divorce between the US and China, will force central banks toward neutral reserve assets. As international trade surpluses are recycled into physical bullion and nations issue debt fueled stimulus. Gold prices remain on track for a massive long-term surge against devaluing fiat currencies.

[00:02:07]Now we present the clips from Luke Gromen's interview. Before we continue to discuss this, please hit the like button, subscribe to the channel and ring the bell icon. Thank you and enjoy the video.

[00:02:18]>> But if you just get what everyone's saying we're going to do, which is sort of an economic divorce between China and the US, uh then gold has to soar because China's not going to use the yuan uh and run deficits in yuan even if they could, uh but they're not going to. They're going to they're going to they they have set up um offshore yuan clearing banks in every major gold hub in the world. So, London, Switzerland, Dubai, Singapore, Hong Kong, and of course Shanghai, where if you end up running surpluses against the Chinese or you have excess yuan by virtue of trade with the Chinese, you can recycle those yuan surpluses into gold at any of those places. And that's how China's going to internationalize the yuan. They've been very clear about this for 10 or 15 years and and the West just continues to generally ignore this because they don't want to hear it because they don't have a trump card for it. So, to the extent this war continues doing what it's doing, I think it is initially negative for gold, but I think gold will um bottom and then and then and I think it's a really important relationship to watch, right? Because exactly what you just said is what everybody's watching for, which is okay, war on, gold down, war off, gold up. And I get that initially, but the longer it goes on, there is a day coming where we're going to see war on, gold up.

[00:03:38]And that's a really important day because that will be the day where people go, "Okay, fine. This is going to last for a while. I need to do some of my business in yuan. I need to do some of my business in dollars. All the business I do in yuan, I'm going to be buying gold for and for uh the and and shifting any surpluses in yuan that I earn into gold. And that will be a really big moment and I think that is ultimately how this war ends up um you know, it ends up backfiring on the US in terms of if if part of this was done to to enforce dollar hegemony, all it's going to do in the long run is accelerate its end. Ultimately, it's just a currency issue, right?

[00:04:18]You know, the currency weakens enough and in particular against gold, the US can can pay off its debt overnight, right? It at whatever.

[00:04:27]I don't know what the number is. It's probably 20,000 Well, it's a lot more than 20,000 an ounce, but some big number of per ounce of gold US can, you know, the the Treasury secretary can instruct the Fed to revalue the gold, boom, we pay it all off with with devalued dollars and debt holders lose and the government wins, right? So, that it can always be it can always be dealt with. It can always be floated. It's a political question. When did you know, when does the sort of you know, the preferred game plan for 40, 50 years has been slow financial repression, right? So, you know, the debt grows 8% and 8% CAGR since since 2008.

[00:05:05]We say inflation is three and we pay zero to 2% on the rates and we try to earn our way out of it. And that's that is the preferred way of doing it.

[00:05:15]The problem is is that was supposed you you you have to have some level of austerity on the back end. If you just keep spending 8% more money every year, you're never going to catch up.

[00:05:26]Um the other problem with that is you had a finite time horizon for that because ultimately, one of the great lies has been you know, the entitlements are not debt.

[00:05:39]And they're not technically until they come go from off balance sheet to on balance sheet. And them going on balance sheet is just a the of uh boomers turning 65. And 70 million boomers were born from '46 to '64.

[00:05:53]Stands to reason most of them are going to reach age 65. This is not a surprise.

[00:05:58]And so, they have uh and those, you know, so that that's the reason why the debt growth hasn't slowed down is because the off-balance sheet liabilities came on balance sheet. So, really, it's just a political question.

[00:06:14]The The preferred method is just financially repressed, but then you can do that until the politics start to get weird.

[00:06:21]And that ties back to my prior point.

[00:06:23]We're now years into the politics getting weird. If financial repression wasn't happening, Donald Trump never gets elected. If financial repression wasn't happening, Obama probably doesn't get elected.

[00:06:35]Um and if this isn't hap- So, you know, Trump would I would mark as the first like okay, we have a political issue that the financial repression playbook is beginning to drive political issues.

[00:06:46]That was kind of the the the starting point of that. Um and the acceleration of that are things like Charlie Kirk's assassination and uh the reaction to COVID and uh Brian Thompson's assassination and and Trump's three election. All of these things are warning people that the slow financial repression isn't going to work.

[00:07:06]And so, now the playbook appears to be as you look around the world, look what everyone's doing.

[00:07:11]Everyone is basically doing defense spending stimmy. Americans, the Germans.

[00:07:16]The Germans are like, wait, we want this in writing. You want us to build a bunch of weapons and point them at Poland, right? At at point them eastward at Russia. That's We have your permission.

[00:07:25]We want that in writing. Uh the Japanese are doing it, the Brits are doing it, right? So, everyone's borrowing money they don't have and increasing defense spending meaningfully. Which starts to just look like debt-fueled stimmy uh of COVID. And the hope perhaps being that hey, if we do it all together, no one will notice that all our currencies are dropping at the same time. So, the dollar will be stable, the pound will be stable, the yen will be stable, the euro will be stable against each other, but their bond markets will sell off.

[00:07:55]Check. Inflation will pick up. Check.

[00:07:59]And now you're just, you know, the basically the bet is that this will earn our way out of debt before we have to start printing money to cap bond yields.

[00:08:07]I think it's a bad bet. I think they're going to print money to cap bond yields at some point in some form. You know, that can be via regulatory action or other things.

[00:08:16]Uh but that then gets us right back to my initial point, which is ultimately is just devalue the currency. That's all.

[00:08:22]And And against what? Against gold.

[00:08:24]Yeah, I do watch it a little bit. I'm not I'm not totally uh as deep in it and as I am in the gold market. And I have I have a small position of silver I bought probably $18 maybe, I don't know, 8 10 years ago. Uh I I do think silver's wildly mispriced as an industrial metal today. Um and I also think it is it is an Achilles' heel of sorts of the of the credit gold and credit silver system that does support the post-1971 dollar system. So, it does have monetary elements. And when I mean credit gold, I mean the unallocated uh silver and gold derivatives that you basically when when some when when demand kicks up for something, there's two ways you can address it. And And And in particular, when there's demand for gold and silver that picks up, there's two ways you can address it. You can allow the price to rise and physical to move, or you can allow unallocated derivatives to expand and address that supply and let price stay still. And And generally speaking, over the last 50 years, the latter has been how increases in demand for gold and silver have been addressed. Uh I think physical holders of silver will be rewarded over time just because again, when you when you look around at everything we're trying to do, we're trying to build redundancies to the industrial base that China has built around the world. Us, Japan, Korea, uh maybe the Europeans will will really finally get their act together in certain energy stuff, too. Who knows?

[00:09:50]But, the point is is that all of that stuff can't get built with paper silver. It's got to get built. There's There's Silver is just used in so many different places, especially as as it relates to um anything EV {slash} electric uh you know, solar panels, et cetera.

[00:10:08]>> A major structural transformation is quietly reshaping international trade as offshore clearing hubs in London, Switzerland, Dubai, Singapore, Hong Kong, and Shanghai process non-dollar settlements.

[00:10:21]Foreign nations accumulating excess yuan from commercial trade are actively converting those surpluses into physical gold, effectively dismantling post-1971 dollar dominance. Simultaneously, governments globally are borrowing heavily to fund massive defense spending increases, echoing debt-fueled COVID stimulus packages that drive inflation higher and trigger bond market sell-offs.

[00:10:47]In response, central banks will inevitably print money to cap rising bond yields, further eroding paper currency values. Within this shifting landscape, physical silver represents a severely mispriced asset. Paper derivatives cannot meet real-world industrial demand across electric vehicles, solar panels, and power grids.

[00:11:08]Physical silver investors are predicted to reap substantial rewards over the next 2 years as physical shortages force a dramatic revaluation of tangible commodities over paper promises. Now, let's get back to the interview.

[00:11:22]>> Gold has begun its return into the system as a neutral reserve asset. We're at least 12 years into that shift, at least. And you can see that. You You at global effects reserves, dollar reserves have not really moved in 12 years. Treasury Treasury bond reserves have been flat for 12 years and gold reserves have risen meaningfully.

[00:11:40]So, central banks have been growing holdings of gold and and not growing holdings of Treasuries while Treasury supplies have been growing exponentially for at least 12 years. So, this is this is already 12 years underway. And I've been very clear that I think the post-1971 structure of the dollar system is ending, but the dollar's not ending and I don't think it will in my lifetime or really even my kids' or grandkids' not that I even have grandkids' lifetimes. Uh it's changing. It's changing to a neutral reserve asset gold that floats in all currencies and everybody wants this. The PBOC came out in 2009 and said we want to move to a non- credit-based commodity-related non- currency issued not by any single country.

[00:12:28]It's gold. Uh the I and and then they started buying gold a few years later.

[00:12:32]Uh much more aggressively. Uh and you can see declassified documents about from from US State Department that China's buying gold because they see it as a way to kill two birds with one stone and and and build their own resilience. Uh the IMF came out in 2011 said we should think about uh moving away from dollar monopoly of oil and instead move it to something like an IMF SDR uh and and price gold and oil in IMF SDRs not dollars.

[00:13:02]>> [laughter] >> Say what you think what you will of it.

[00:13:04]The the the Dominique Strauss-Kahn who was in charge of the IMF when that was proposed uh ran into a sex scandal and was removed from office 3 months later.

[00:13:12]Uh moving on, World Bank former Treasury official Robert Zoellick 2010. We need to move to a system where you have the the goal or excuse me of uh euro yuan uh euro yen pound and uh dollar and a yuan that starts to open up its capital account and we should also use gold as a reference point for inflation expectations, growth, etc. And then most recently and and perhaps most importantly because we are the incumbent in control of the past system the US has been talking about Hamiltonian economics. Bessant gave a speech at the New York Economic Club four weeks ago.

[00:13:52]He same day posted a Wall Street Journal op-ed on the same topic that Hamiltonian economics back Trump's economic statecraft. Um the Hamiltonian economics theme echoes what US Trade Representative Jamison Greer said in January at Davos saying we're done with the old system, we're the United States is moving to a Hamiltonian economic system. Vance and Trump have alluded to it as well. And so the key here is that you can't do a Hamiltonian economic system with the post-1971 structure of the dollar. You just can't, full stop. Because Hamiltonian economics is we're going to put up tariffs and we are going to implement industrial policy and when you do those things you don't emit the dollars needed for the system to run. So the world goes to gold. That's what's That's So to me what Bessant said I mean four weeks ago everyone on Wall Street virtually is like Bessant is the adult in the room etc. etc. etc. Bessant's telling you we are going the gold's coming back in the system. That's what he's telling us. When he says Hamiltonian economics are are backing our Trump's economic statecraft, that's what's happening here. So uh now what does that imply? That implies much higher gold prices. That implies a much lower trade value of the dollar against the creditor currencies like the yuan, the yen to a lesser extent, the euro.

[00:15:23]Um And that would be a system that would lead to perhaps the greatest economic boom worldwide since uh since, you know, since the end of World War I. Think it's it's There's a two different sets of dynamics. So, I think there is ultimately There's there's the markets priced in dollars and there's the markets priced in gold.

[00:15:49]And if you look at the markets priced in dollars, we're at all-time highs. If you look at the markets priced in gold, we're still down about 30% from the highs of late '21. And we're still down uh like I want to say 30 or 40% from January of 2000 in the US. So, uh using gold is a way of saying how much of it is currency debasement versus how much of it's real growth, uh real real productivity.

[00:16:19]And so, with that framework I think in on the on the equities priced in dollars, I think I think the shape of the chart is going to be roughly the same. It's going to look like the old Nike symbol on your shoes, right? Which is I think uh and the war may be the catalyst for it. Uh China AI com- competitive uh gains may be the catalyst for it. Um you know, who knows what the catalyst will be for it.

[00:16:44]When your when your when your valuations are in la-la land, which equity valuations are in the US and in a lot of places, it the catalyst doesn't really matter. There can be There nothing can go wrong.

[00:16:56]Nothing is allowed to go wrong. You're not allowed to have any issues, any questions with valuations that are that that are this high on things like the Warren Buffett metric, equity market cap as a percentage of GDP, et cetera.

[00:17:07]And so, I think we're going to get, you know, uh something is going to be a catalyst and we're going to get sort of a Nike-shaped market, where you get a slight drop down. And I don't know what slight slight is. Maybe it's 10, 15.

[00:17:16]Maybe it's 20%. I I doubt it, but could be.

[00:17:20]And that will cause Treasury market disruption, dysfunction, and that will be the catalyst for more dollar liquidity, and that'll send us right back to the highs. And that's been kind of the playbook for the past you know, 5 6 7 years. Now, in gold terms, uh I think if you have an issue, gold probably goes down a bit initially, and we've seen that. And so that I don't have a strong conviction in that. We've already seen gold well off the highs.

[00:17:50]Um and so maybe gold goes down a little bit in that initial risk-off in the dollar-denominated equity markets. Uh but then ultimately, gold soars. And as as the decline in equity markets necessitates, you know, creates dysfunction in Treasury markets again, and necessitates more dollar liquidity injected by either Fed or Treasury again.

[00:18:16]And gold goes back to new all-time highs. And so on the dollar on a dollar base, I think you get sort of the Nike shape in equities.

[00:18:25]Um and then on a but on a on a gold basis, uh I think you end up with the chart, you know, more of what we've seen since 2022 and since, you know, 2000 really, which is uh you know, on a gold basis, uh equities that's where the correction in equities has been and where I think it will continue.

[00:18:44]>> The strategic pivot toward Hamiltonian economics, characterized by aggressive tariffs and state-directed industrial policy, signals a fundamental breakdown of the legacy international dollar architecture. Because tariff barriers and reshoring restrict the global emission of US dollars, world central banks will naturally shift toward physical gold as the premier neutral reserve asset to manage trillions in off-balance sheet entitlement liabilities as 70 million baby boomers retire. Policy makers face an inescapable mathematical dilemma. Rather than imposing severe economic austerity, the US Treasury Secretary could simply instruct the Federal Reserve to revalue official gold holdings to $20,000 or $30,000 per ounce. Dollar denominated stock markets are predicted to trace a distinct Nike swoosh trajectory. An initial 10 to 20% pullbacks sparking Treasury market disruption followed by an emergency Fed liquidity wave that pushes nominal equities back to record highs.

[00:19:48]However, when measured against physical gold, real stock values will continue their steady long-term correction. As synchronized global defense spending accelerates fiat debasement worldwide, tangible commodities remain the ultimate store of value. Share your thoughts about this interview in the comment section below. If you found this video helpful, please hit the like button.

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