In this week's Stansberry Investor Hour, Dan welcomes Luke Gromen to the show. Luke is the founder and president of the Forest for the Trees ("FFTT"). He looks at the global macroeconomic trends to provide his clients with unique and insightful research.

Luke kicks things off by sharing how multiple forces are straining the global markets and putting pressure on a "fragile equilibrium." As a result, the balance that has been maintained could be irreparably toppled if policymakers aren't careful with how they handle things. Luke then says that the U.S. is attempting to repeat the "Imperial Dollar" cycle that occurred in the 1980s. However, the advantage that we had in net international investments (how many net assets a nation has versus other countries) is gone. Many countries hold more assets in the U.S. than we do abroad, and the Federal Reserve will have to make a choice as the dollar's dominance continues to be questioned...

The Treasury market is going to break. You're going to get Treasury market dysfunction... [Fed Chair Kevin] Warsh is going to have to make a choice... Is the U.S. in fiscal dominance? Technically, by the purest definition, no. But the only way that's functionally true is when [Warsh's] little hike drives the market to dysfunction again... He or [Treasury Secretary Scott Bessent] is going to have to make a choice [to intervene]... If you cannot stand aside and let the Treasury market dysfunction, that's fiscal dominance.

Next, Luke covers gold and the important role it's playing for the U.S. China is "taking a page" out of the U.S.'s playbook and could demand that America pay its debts in yuan or gold. Luke says if this scenario does fully play out, this would be the day that the "dollar dies." And he states that if America wants to win, it needs to build up a neutral reserve asset. If gold is going to be that asset, its value needs to skyrocket so the U.S. can pay off its deficits in gold. Luke sees this as a possibility if the dollar can be weaker against gold...

I think [gold] can be more [than 4 times]... People have been complaining about China. "China's unfair. They need to revalue the yuan. They need to strengthen it against the dollar. They're cheating." The Chinese retort has been, "America, if you want a stronger yuan against the dollar, the problem is too strong a dollar against gold." And why is it too strong? It's because American authorities have been managing the price of gold going back since forever.

Finally, Luke explains why it's important that we have a financial reset and that it's inevitable. While U.S. debt is high, the main issue is the interest on the debt. Once the Fed needs to print money to cover the interest, that's when Luke says it's all over. And if the Fed allows the Treasury markets to become dysfunctional, confidence in Treasurys will disappear and money will move into hard assets like gold instead. Luke warns investors to stay mentally flexible as these events play out...

[Be] underlevered or unlevered and very mentally flexible and tough. There's a lot going on that has never happened before... We've never seen debt to GDP this high... We've never seen supply chains this fragmented, ever. We've never seen derivatives on the debt, on the interest rates, on everything this high... We've never had the pace of technological change overlaying [all these events]... Things are going to keep getting weirder... I think it's super-important for investors to be unlevered, not too concentrated, and very flexible of mind.

Click on the image below to watch the video interview with Luke right now. For the audio version, click "Listen" above.

(Additional past episodes are located here.)

The transcript is coming soon.

This Week's Guest

Luke Gromen is the founder and president of the Forest for the Trees ("FFTT"). Before founding FFTT in 2014, he was a partner at Midwest Research, where he worked in equity research and sales for 10 years. He later was a founding partner of Cleveland Research in 2006 and edited the company's weekly flagship research piece. When he founded FFTT, he wanted to take advantage of the opportunity he saw in the markets.

Luke Gromen holds a Bachelor of Business Administration in finance and accounting from the University of Cincinnati and received his Master of Business Administration from Case Western Reserve University. He earned the CFA designation in 2003.