One Asset To Double As Global System Risks Unraveling | Luke Gromen
TL;DR
Luke Gromen warns that escalating Middle East tensions and excessive dollar strength will force foreign creditors to sell U.S. Treasuries to secure energy and food, triggering further dysfunction in Treasury markets. He positions gold—currently collateralizing only 13% of foreign-held U.S. debt versus a 40-60% historical average—as the single asset most likely to double or triple as the global monetary order restructures.
🌍 Iran & the Energy Supply Shock 2 insights
Hormuz closure forces liquidation
With 20% of global oil flowing through the Strait of Hormuz now disrupted, Asian nations import roughly 70% of that supply and will be forced to sell liquid assets—first domestic equities, then U.S. Treasuries—to bid for scarce oil and avoid starvation.
Treasury safety perception shattered
The U.S. assassination of a sitting Iranian leader signals to foreign holders that Treasury bonds and dollar-based assets are subject to unilateral seizure, accelerating the shift away from dollar reserves regardless of regime change outcomes.
💵 The Dollar-Treasury Doom Loop 2 insights
Mathematical certainty of dysfunction
Foreign entities are short $134 trillion in USD borrowings but hold only $27 trillion net in dollar assets; every time the dollar strengthens significantly, these borrowers are squeezed and must liquidate portions of their $9.5 trillion in Treasury holdings.
Strong dollar breaks equities
Due to the U.S.'s negative international investment position exceeding 90% of GDP, a rising dollar mathematically prevents U.S. stocks from gaining, creating a self-limiting ceiling where dollar strength inevitably triggers Treasury market dysfunction and risk-off selling.
📈 Gold: The Asymmetric Trade 3 insights
Deeply undervalued collateral
U.S. official gold holdings collateralize only 13-14% of foreign-held Treasury debt, versus a 40-60% long-term average and 135% in 1980; gold would need to rally 50-60% merely to reach 1989 collateralization levels.
Physical settlement of trade deficits
In 2025, non-monetary gold became the second-largest U.S. export (behind only pharmaceuticals), with metal flowing through Switzerland to China and the UAE, indicating America is already net-settling trade deficits in physical gold rather than Treasuries.
Gold-to-oil ratio signals systemic decay
The ratio has shifted from roughly 7 barrels per ounce of gold in 2007 to nearly 80 today, reflecting the collapse of the petrodollar system and the marginal settlement of energy deficits in gold at the central bank level since the 2022 freezing of Russian reserves.
Bottom Line
Maintain heavy exposure to physical gold and gold miners while avoiding long-duration bonds, as the convergence of sovereign debt stress, dollar weaponization, and energy insecurity will drive gold toward $8,000–$10,000+ per ounce.
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