Steelmanning the gold bull case, etc.

The 10-year Treasury yield moved from 3.94% to 4.4% in three weeks, a significant move for a benchmark rate reflecting broader market stress from war uncertainty and energy shock.

“we've seen 10-year yield go from 3.94% to 4.4% which is not is a pretty big move in in a benchmark rate like that over three weeks”

Power in the modern age is measured by factory output and industrial capacity, not just military platforms; the US won World War II because it had the biggest factory base, most men, and most oil, not because of inherent military superiority.

“There's this misapprehension that America won World War II because we're America and we're star-spangled awesome. And while I agree we are star-spangled awesome, that's not why we won the war. We won the war because we had the biggest factory base, we had the most men, we had the most oil, and we outproduced everybody else. And China's got the factory base and the most men.”

The 2019 repo spike demonstrated that the Fed was reacting to dollar shortage rather than steering liquidity, and similar dynamics are at play in current situation despite Fed claims of control.

“Inferred from context but not directly stated”

Western paper gold markets are manipulated ('fakery') by the West, and physical gold will ultimately be valued by its geopolitical arbiter—the gold-to-oil ratio set by major oil producers.

“The Western paper gold markets are fakery. There's no signal in current markets. I think the West will smash paper price to the bitter end of the war until gold's finally valued by its ultimate arbiter. What oil producers say the value is per the gold oil ratio. I do agree with that part.”

Israel is running out of interceptors as it continues to defend against Iranian missiles, and Bloomberg statistics suggest this depletion is accelerating.

“Especially if they still have them and Israel, etc. are running out of interceptors as they continue to be reportedly doing and as the statistics are starting to suggest”

Russia is helping target US military assets in Iran very effectively, and this is 'turnabout is fair play' given US support for Ukrainian strikes into Russian territory.

“Russia is helping target US assets in Iran very effectively. And I don't like it, but it's happening. It's It's uh turnabout is fair play for what we've been doing to Russia in Ukraine, and then from Ukraine into Russia.”

The US sank an Iranian boat coming back from India in the same waters where Chinese tankers are now sailing unmolested, two weeks prior to current events.

“we sank an Indian or excuse me a a Iranian boat coming back from India in those same waters two weeks ago”

The conflict resolution will be aligned with multipolarity rather than US unilateral control of the Strait of Hormuz or oil-producing regions like Iran and Venezuela.

“I think that resolution is is going to be something that is much more aligned with multipolarity than what I think some people think is going to be the US takes the Strait of Hormuz and takes Kharg Island and controls all the so I don't think that's going to happen at all.”

The only scenarios that would make Gromen bearish on gold are: (1) US takes Iran, Russia, and then finds a Yeltsin-like figure to sell Russia's mineral wealth to the US while also forcing China to impoverish itself making all US weapons cheaply; or (2) a productivity miracle that drives growth without unemployment; or (3) catastrophic death of the Baby Boom generation, eliminating entitlements overnight.

“What would change a thing for gold is if we get Iran, and then we take over Russia, and we or or or we get a a Yeltsin-like drunk in there who will sell all of Russia's mineral wealth to the US and UK for pennies on the dollar, all in dollars, and then we use that to gain complete control over China, and uh China makes basically impoverishes itself to um make all of our weapons for us dirt cheap while not taking any of our technology. That's what you need to have happened to be bearish on gold.”

If the US takes control of Iran and Venezuela and establishes a new petrodollar system, it would be forced to hollow out its industrial base to China to supply all military manufacturing, which is logically untenable because the US military would not want all its equipment made in China before attacking China.

“If the United States takes control of not just Iran and prices it all in dollars but then because let's be clear. If we take control of Iran and Venezuela and set up a new petrodollar, guess what that means? That means we have to finish hollowing out our industrial base. We have to finish sending our industrial base to China so they can make all of our military force. Not just the part they're making now, but all of it. That's how the petrodollar works.”

When the liquidity crisis shifts to a supply-chain crisis (recognition that Hormuz is still closed, supply chains are unwinding), gold will transition from a vehicle for margin calls to a vehicle for protection against sovereign debt default.

“The reason I own gold, the reason you should own gold, which is when we shift from liquidity selling to oh my god Hormuz is still closed, supply chains are unwinding, every piece of sovereign debt in the world is going to default unless every central bank in the world prints money into an oil spike in order to make that sovereign debt nominally money good.”

Chinese tankers transporting Iranian oil priced in yuan through the Strait of Hormuz unmolested represents evidence that somebody (China) is effectively controlling access at that choke point, similar to how organized crime maintains order and safety in a neighborhood without overtly demonstrating force.

“I think there's this huge transition taking place. And I would also say, have you ever been in a town or in a part of town where the mob controls safety? You know, a lot of when I was growing up uh Little Italy in Cleveland, it was a very bad general neighborhood, but it was the safest place in greater Cleveland... that's the metaphor that comes to mind as I watch Chinese tankers sailing by full of Iranian oil priced in yuan unmolested through a strait that nobody else can get through.”

Gold is going to be the world's neutral reserve asset in the new multipolar system, allowing nations to pay in whatever currency they prefer and net settle in gold.

“gold is going to be the world's neutral reserve asset, and I think people will pay in whatever currency they want to pay in. And net settle it in gold. And that's a really good outcome for the US. That's a really good outcome for China. That's That's the a a good outcome for Russia. That's the Nash equilibrium.”

Most Americans have optimized their lives for convenience and efficiency in deserts and swamps with poor public transportation, making them fragile to supply chain disruption; robustness should now guide life structuring decisions.

“Half of this country has moved to places in the here in the US. People have moved to deserts and swamps with very poor public transportation. They they've optimized their lives for convenience and efficiency rather than robustness. And at a time when robustness, we're seeing it all around the world. Robustness is how you should be structuring your life now.”

If supply chains continue breaking down and Hormuz stays closed, Bitcoin will continue to trade as a risk-on asset correlated with Nasdaq, making it less attractive than gold despite its seizure-resistance, because Bitcoin's value depends on functioning digital infrastructure.

“with supply chains breaking down, ultimately, Bitcoin is still trading like a risk-on, risk-off asset. It's trading with Nasdaq and IGV still.”

Three US aircraft carriers were initially deployed to the region; one returned to port after a '30-hour laundry fire' and the other two retreated 750-1,000 km into the Indian Ocean when shooting started.

“We had three carriers there to start. One of them's back at port after a 30-hour laundry fire. The other two went 750 to 1,000 km out into the Indian Ocean according to satellite photos when the shooting started.”

People are observing that the Strait of Hormuz is closed and saying 'we have the best military, why can't we open it', but then avoiding the logical second and third-order derivative questions about what that implies about power balance.

“Everybody knows Hormuz is closed. Everybody says we've got the best military in the world. We probably do, but why can't we get it open? No ever there's just thousand different reasons and 4D chess, 2D chess, 5D chess. Why isn't it open? People say some people say, 'Well, we want it closed.' Okay, great. Tell me about the second and third derivatives of that. You know what they say? Crickets. Not a freaking word.”

The dollar index has only moved from 98 to 99 despite the biggest energy shock in 50+ years and a war threatening to spill out of control, suggesting the market has not yet priced in the full extent of the crisis.

“we've got the biggest energy problem oil shock in 50-plus years. We've got a war that's threatening to spill out of control. And the dollar's gone from 98 to 99. Hm. I think there's informational value there, but we'll see.”

Gold tanking 10-15% since March 3rd signals that if the war is not resolved ASAP, stocks and bonds will decline by a multiple of that amount in all likelihood.

“gold getting hit this way down whatever 10% since March 3rd, maybe 15% or so from the highs. What this is telling you is that if this war is not resolved ASAP, stocks and bonds are going to go down a multiple of that in all likelihood. That's what gold is telling you.”

The Strait of Hormuz status is the only thing that matters; everything else is noise, and physical shortages and supply chain breakdowns will dictate the outcome regardless of political maneuvering.

“It's Hormuz. Is it open or not? It's the only thing that matters. Everything else is noise and the physical shortages and breakdown of supply chains will will dictate that.”

The gold-to-oil ratio will ultimately rise to 100-200+ barrels per ounce of gold, or alternatively, if the ratio doesn't rise, both the price of oil and price of gold will increase substantially.

“I do totally agree, Gail, that ultimately, the gold-to-oil ratio, I think, is going to go back higher again. And if I'm wrong there, I think it's ultimately gold and oil. The gold-to-oil ratio won't rise, but the price of oil and gold will go. But I still think ultimately this cycle ends with gold ending up um at a gold-to-oil ratio of 100, 200, uh or more barrels per ounce of gold.”

Bitcoin outperforming gold since the war started (up 3% vs down 15%) is being driven by Bitcoin trading with Nasdaq and the IGV software index, not by unseizability or superior safe-haven properties; all three assets have bounced together.

“Regarding Bitcoin being up, chart Bitcoin against IGV, the software index. Chart Bitcoin against Nasdaq since the war. They're all the same chart. So, it's not been really oh, Bitcoin outperforming gold. It's been for whatever reason, and I've been surprised by this. Full admission. Doesn't make any sense to me. I'd fade the heck out of it. But, Nasdaq and and software have bounced in this war, and Bitcoin has as well.”

Markets are pricing in a scenario where nothing ever happens ('nothing ever happens' narrative), creating dangerous complacency about imminent crisis.

“markets are basically saying nothing ever happens... In other words, markets are basically saying nothing ever happens”

Markets have been collectively delusional periodically over the last several years, similar to how COVID, government reports ('liberation day'), and other major events have been systematically misrepresented.

“Just like the last major things in this country and in any country, we've been being lied to about how things are actually going. COVID, Doge, liberation day, um you know, fill in the blank. Whatever you want.”

Gromen does not see a viable way out of the current crisis scenario except for a perfectly timed productivity miracle that increases productivity without causing mass unemployment, which he assesses as not happening based on current jobs data.

“I don't see our way out of this one. Beyond some sort of perfectly timed productivity miracle that drives productivity but it doesn't drive any unemployment, which like I said before isn't happening. And that's why I'm so concerned.”

Gromen has been researching and writing approximately 2,000 pages per year for 30 years, allowing him to steel man alternative scenarios, and has never seen a crisis scenario this cornered, multi-layered, and severe.

“I write 2,000 pages of research a year. You have to be able to steel man things to talk and write through things, to think through things. And I don't see our way out of this one... I have been doing this for 30 years and I've never seen something this cornered, this multi-layered. It's just you know, I this is not my first crisis at all... this is the worst one I've ever seen by an order of magnitude.”

Gromen has observed a 1956 Suez Crisis analogy to current events, with best-case scenario for US being a Suez 1956-type outcome, which would be 'really good for gold' and 'maybe good for stocks, maybe not'.

“More likely in two to three weeks, I think we get best case a Suez 1956 outcome for the US in which case I think that is really good for I think it's really good for gold. I think it might be good for stocks, maybe not, it depends.”

Volkswagen is building missiles in partnership with Israel, signaling that even traditional industrial powers are shifting toward military production in preparation for ongoing geopolitical conflict.

“the world's changing. I think power and managing these choke points is being taken away from naval assets and given to land powers with missiles, drones, satellites, technology, etc... you got all of a sudden Volkswagen looking at building What are they building? Missiles, right? Missiles. Uh in partnership with the Israelis.”

Market participants are currently in a moment of desperate liquidity where they are not yet thinking about the coming weeks when Hormuz closure will force central banks to print money into an oil spike to prevent sovereign debt default.

“We're in a moment of liquidity that's so desperate no one's yet thinking about the month or two or even a few weeks that we're going to get to as it relates to gold, right? Everyone's like, 'Oh, I gold gold isn't working. It's down 10, 15%.'”

Trump's ability to move markets via media announcements (like Iran deal negotiations) has a limited remaining window before market participants stop reacting and focus on physical reality (Hormuz open or closed).

“Trump has a limited number of we have a deal with Iran bumps left before the market will no longer react to that. If you had to pick a single sign that Trump's ability to move the markets via media was coming to an end, what would it be? Because the day his commentary is no longer effective, the market is melting through the floor. I agree with that and I would say it's Hormuz. Is it open or not?”

Iran's hit rate on missiles has increased to 250-300% (likely meaning dramatically improved accuracy), up from prior levels, even as the number of missiles fired has decreased, suggesting Iranian strategy is shifting from quantity to precision.

“Bloomberg today reporting that, 'Hey, Iran's firing fewer missiles, but their hit batting average is going up to, you know, 250, 300.' You know, they'd be going to the All-Star game if this was a baseball game with their hit rate now.”

Taiwan has approximately 11 days of LNG supplies remaining, and if Taiwan stops manufacturing due to energy shortage, the market cap of the Mag Seven tech stocks will be significantly impacted.

“there's only 11 days of LNG apparently for Taiwan. What's the market cap of the mag seven going to do the day Taiwan says, 'Hey, we got to stop making stuff cuz we're running low on LNG and helium.'”

Australia has approximately 18 days of diesel supplies remaining, and without diesel, food distribution will collapse due to lack of truck loads, and people will prioritize survival over copper exports to China.

“Australia down to 18 days of diesel supplies. Australia is apparently a very big country, very arid. The food's not going to move around too well there without diesel because there won't be as many truck loads. So, then when people start getting hungry there, do you think they go and work on, you know, exporting go they don't go to work to export copper to China”

It is too late for the US to negotiate a resolution with Iran (via 'taco', informal deal-making) because Iran wants its 'pound of flesh' and because US military bases in the Middle East have been degraded such that the US cannot easily intervene.

“In my opinion, yes. Uh Iran gets a say, and they want their pound of flesh, and quite honestly, if I was Iran, I would, too. And it's not going as well for the US as we're being told. I've been hearing about this for 2, 3 weeks. Right before I got on, New York Times just reported that, quote, most of the 13 US military bases across the Middle East have gotten hit uh so badly that they are all but in uninhabitable. End quote.”

Iran's stated strategy is to collapse the global economy, as declared by the former head of the IRGC two and a half weeks prior, yet markets and analysts are ignoring this explicit threat and assuming 'nothing ever happens'.

“Iran is literally saying their strategy. The former head of the IRGC said two and a half weeks ago, 'Our strategy is to collapse the global economy.' That's the strategy and no one believes it.”

The bad outcome of the multipolar transition is mutual destruction through nuclear escalation, which is not quite where the world is yet but is getting closer.

“The bad outcome is we all beat each other to death and shoot nukes at each other until there's only a few of us left. We're not quite to that spot yet, but we're getting there.”