“The Debasement Trade” - Luke Gromen on Gold, Bitcoin & The 100 Year Reset
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When does the debasement trade end? The answer is never. It's it's a good time maybe take some on a dip, sure. Can you have 30% corrections? Sure. If 30% corrections the stock market all the time, no one's ever like, Oh, it's over. The stock market's over. No, it's a currency issue. It's a currency issue. The choices we have made over the last thirty years with borrowed money, they're coming home to roost. What that looks like is it's not a debasement trade. It is a debasement secular trend. And, you know, the behavior is very big. You don't sell rallies. You buy dips.
Luke Grumman, wanna start with a chart. This is a chart that, you put up not too long ago, and this is a chart of the S and P, in various denominators, let's say. One is a denominator on dollars, so cash, the way investors tend to view their portfolio. The other denominates stocks in the S and P in gold terms, and the and the third kind of denominates it in Bitcoin terms. Now in US dollar terms, over the last five years, it seems like everything is booming. We've got stocks up triple digits. We've got homes up double digits. Like, everybody is more wealthy. Right? But then you start to look at
This is the big story of our time, I think. The chart shows S and P, NASDAQ and home prices in dollars, gold and Bitcoin. It's telling you the use case of gold and Bitcoin. How often do we hear? What's the use case of gold? Gold isn't used for anything, Bitcoin isn't used for anything. When sovereigns find themselves in a position where they need to have negative real rates to keep their debt nominally money good, this is what happens. They have a printing press. And so they call it whatever they want to call it, and we've seen it this time. Can't remember, that was from COVID, so obviously we
When people call this a trade, I think in many cases, they are thinking that it's something short term of this aberration in 2025 where gold is up 60% on the year. Like, that's a trade. It's just a trendy thing that some traders, some investors are are doing. It won't last. Is this a trade, or is this something that's more measured in years, let's say, or decades? Is this a long term investment trend?
I think it is a critical and a super astute question because the first principle off which almost everybody, every American investor is operating is, Well, this will be just like 1980 when this will be like the '70s. So we went off the gold standard in 'seventy one and gold went up a bunch, then Volcker came in and raised rates and gold went back. It was just a trade. There was a debasement, but Volcker took care of it all. Well, Volcker took rates to 15%. If the Fed did that to stop that, if the Fed took rates to six today, they would literally blow up the entire not just stock market, but ho
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I think it is possibly hugely significant. I think it depends on events, two events in particular. If we think The United States is going to change its mind and suddenly say, You know what? We're okay with having China ma
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