Veteran Investor Predicts Trillions Will Shift from US Bonds to Bitcoin, Gold, and Stocks
Luke Gromen Envisions Major Shift in Investment Trends
Veteran macro investor Luke Gromen believes that tens of trillions of dollars will move away from the US bond market and into Bitcoin (BTC), gold, and stocks. Gromen highlights the risk of holding US Treasuries and sees liquidity draining from the $130 trillion bond market.
Central Banks Hesitant About US Treasuries
According to Gromen, central banks worldwide have become wary of stockpiling US Treasuries after seeing instances of government confiscation of a country's holdings.
“Treasuries for central banks are no longer risk-free instruments. If you do something that the United States government doesn’t like, they will take your Treasuries full stop. They’ve done it to Russia. They’ve done it to others.”
Potential Shift to More Lucrative Assets
Gromen predicts that other Treasury investors may eventually sell their holdings due to the better upside potential of gold, Bitcoin, and stocks compared to bonds. He points out that the US government cannot afford to raise interest rates due to its massive debt, which makes other asset classes more attractive to investors.
“The $130 trillion bond market is the sucker at the card table, and it’s going to figure that out. As it figures that out, it’s going to sell bonds [and] buy me something that holds value. That’s something that holds value will be $65 trillion in US stocks right now, $14 trillion of gold right now [and] $1.4 trillion of Bitcoin right now.”
Ripple Effects on the Financial Market
Gromen warns that the bond market's shift towards other assets will continue until bond selling reaches such a high point that it forces Treasury dysfunction or drives interest rates to unsustainable levels for the US government. At that point, the Federal Reserve and Treasury Department will likely intervene by printing more money, which will further bolster investments in gold, Bitcoin, and stocks.
“The incentive of whatever’s left in the $130 trillion bond market to get out into those other assets faster – wash, rinse, repeat… Things could really feed on themselves very quickly.”
Investment Takeaway
For everyday investors, this shift could mean that traditional safe investments like US bonds may become less appealing, and alternative assets like Bitcoin, gold, and stocks could offer better returns. Keeping an eye on these trends and staying informed can help in making better financial decisions in the evolving economic landscape.
