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.
In a new Kitco NEWS interview, Gromen says that he sees liquidity being drained from the $130 trillion bond market.
According to the macro guru, central banks around the world are afraid of stockpiling US Treasuries after seeing how the government can arbitrarily confiscate 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.”
As for other Treasury investors, Gromen thinks that they will eventually sell their holdings because gold, Bitcoin and stocks have more upside potential than bonds. He highlights that the US government can no longer afford to raise interest rates because of its massive debt holdings, making other asset classes more appealing 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.
That process will continue until the bond selling gets so high that it forces Treasury dysfunction or it forces rates to a point where the US government cannot afford its debt load, and then the Fed and Treasury [Department] will come in and print more money to constrain that, which will only feed back into 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.”
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