Luke Gromen: The US Needs A ‘Much Higher’ Gold Price – Here’s Why
Luke Gromen, founder of Forest for the Trees, argues that the next few decades will be radically different from the last, driven by the unsustainability of Western social welfare states, massive global debt, and the end of the post-1971 dollar system. He describes a “long cycle” where decades of easy credit and overconsumption have led to a “winter” phase, characterized by demographic crises and a fragile financial system. Gromen highlights the core dilemma: the U.S. must reshore its industrial base to remain a sovereign power, but doing so requires massive inflation, which would destroy the bond market. He frames this as a choice between saving the dollar or saving the bond market, arguing the only viable path is to let the dollar fall and inflate away the debt, effectively destroying bondholders’ real returns.
Gromen explains that reshoring is nearly impossible without China’s cooperation, as China dominates critical supply chains. He uses electricity generation and auto consumption as metrics to show the U.S. has stagnated in real terms for 20 years, while China has surged. He predicts a multi-decade period of secular inflation, with gold as the ultimate beneficiary. Gromen sees gold’s rise as a necessary mechanism for the U.S. to retain sovereignty, as a higher gold price allows the country to rebuild its industrial and military base. He notes that the infrastructure for a gold revaluation is already in place, citing the indictment of JP Morgan’s gold desk, Basel III changes, and China’s gold-for-oil trade, and suggests a U.S. gold-backed bond could trigger a massive arbitrage that forces gold much higher.
Timestamps
00:00:00 – Introduction
00:00:09 – Are the next decades wildly different?
00:02:38 – Long cycles, social welfare, and overconsumption
00:05:47 – Unsustainability of Western social democracy
00:09:13 – Can reindustrialization save the West?
00:12:25 – Why can’t the US reshore without China?
00:14:27 – US vs China: Rising vs declining power
00:20:36 – Save the dollar or save the bond market?
00:26:30 – Generational bear market for bonds
00:30:01 – Will all currencies fall against gold?
00:32:14 – Foreign holdings of US debt and crisis risk
00:36:13 – Is this a multi-decade inflationary phenomenon?
00:41:29 – Could a gold reset solve the crisis?
00:48:40 – Price discovery mechanics for gold
00:57:26 – Gold miners vs bullion in current environment
Links
About the Guest
Luke Gromen began his career in the mid-1990s in Research at Midwest Research before moving over to institutional equity sales and becoming a partner. While in sales, Luke was a founding editor of Midwest’s widely-read weekly summary (“Heard in the Midwest”) for the firm’s clients. He aggregated and combined proprietary research from Midwest with inputs from other sources.
In 2006, Luke left FTN Midwest to become a founding partner of Cleveland Research Company. At CRC, Luke continued to work in sales and edit CRC’s flagship weekly research summary piece (“Straight from the Source”) for the firm’s customers.
In 2014, Luke left Cleveland Research to found FFTT, LLC (“Forest for the Trees”), a macro/thematic research firm catering to institutions and individuals that aggregates a wide variety of macroeconomic, thematic, and sector trends in an unconventional manner to identify investable developing economic bottlenecks.
Luke also provides strategic consulting services for corporate executives. He is a graduate of the University of Cincinnati and received his MBA from Case Western Reserve University and earned the CFA designation in 2003.