Macro guru Luke Gromen says two soaring assets may be the key for investors to protect wealth in the event of government capital controls.
In a new video update on YouTube, Gromen, founder of investment firm Forest For The Trees (FFTT), says that the current trade war between the US and China is most likely unsustainable for the West unless capital controls are eventually implemented.
Says Gromen,
“What is crystal clear to me – while I don’t know how and where and when – but what is crystal clear is that you can’t have a trade war with the world’s factory, China, and the world’s biggest creditor, China, who has significant capital controls, China, you can’t have a very long trade war until you have to start putting in capital controls yourself, your opponents need to start putting in capital controls.
It could start in Europe, that’s probably where it would, but America would have to do it, too. And I don’t know if they’ll be explicit if we let it go that long, but it would be things like ‘hey, to maintain the tax-deferred status of your pension or your 401K or your IRA, etc., you now need to hold 30% of the assets in 30-year Treasuries, have a good day’.
Because if they don’t do those kinds of things, the longer the trade war drags on, once shortages start to erupt, those with open capital accounts will be a source of funds for those with more closed capital accounts.”
The investor says that such a situation would require Western governments to enact capital controls, including restricting certain investments, taxing certain transactions, or blocking the flow of capital in and out of the country.
Gromen says holding Bitcoin (BTC) and gold may be an effective way to weather such an environment.
“So then that’s when you’d have to see capital controls, and once one starts, they’re all going to have to do it relatively quickly.
What does this mean? My read of it is… I’d rather be years early owning decent little chunks of gold and Bitcoin than one day late. Because when you’re one day late, too late.”
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