LUKE GROMEN | We don’t have the stuff (copper, silver, uranium +) & it will take years to get it!

Summary

Luke Gromen argues that critical-material shortages are structural: mining and refining capacity will take years—possibly decades—to expand, so higher prices may be needed to bring supply forward. He recommends focusing on longer-term conditions rather than short-term volatility and managing leverage conservatively.

Macro, rates, and sovereign debt

• Gromen views the recent decline in U.S. Treasury yields as a bear-market rally, potentially driven by short-term safe-haven demand and positioning. He says yields could fall further, but not sustainably without lower real rates, a weaker dollar, or substantially higher gold.
• His central thesis is that the U.S. and other Western governments need sustained negative real interest rates to make their fiscal positions manageable. He expects sovereign debt’s real value to be eroded through inflation rather than conventional austerity or default.
• He says interest costs, entitlements, and veterans’ benefits together amount to about 105% of trailing 12-month federal receipts. He also cites roughly $4 trillion a year in spending on entitlements and veterans’ benefits.
• In his view, austerity would weaken growth and tax receipts, worsening debt dynamics. He sees inflation, redistribution, or financial repression as more likely responses and warns that materially higher rates could intensify the fiscal problem.
• He describes the recent bond rally alongside falling gold as inconsistent with a healthy, durable improvement and says sharp gold declines may signal a liquidity problem. If policymakers do not address such a problem in time, he expects a more severe risk-off period; if they do, he expects gold and silver to resume rising.
• His broad market framework is nominal asset prices rising in dollars while losing value in gold terms. He sees a more serious bear market in real or gold terms as possible, even if U.S. equities continue to rise nominally.

AI investment and equity valuations

Gromen calls the AI investment complex “too big to fail” but financially and fiscally problematic:

• He estimates AI-related investment represents roughly 50% or more of capital markets and 30–35% of Treasury issuance.
• He says AI firms are borrowing heavily and competing with the Treasury market for capital, while AI-driven job losses could weaken the employment-based tax base.
• If AI succeeds, he argues that white-collar employment and tax receipts could fall. If it fails, debt and off-balance-sheet obligations could trigger losses across equity markets and the broader economy.

He also:

• Cites a CAPE/Shiller P/E of roughly 38–40 and says the “Magnificent Seven” average about 8–9 times sales, which he considers unattractive valuations.
• Notes that, since ChatGPT launched in November 2022, gold had underperformed the Nasdaq by only about 15%, despite a recent gold decline. He presents this as evidence that gold had held up relatively well versus the AI trade.
• Says he is wary of the AI trade at current valuations and suggests government support for AI, if needed, could further weaken the dollar and raise inflation.

Metals, mining, and electrical infrastructure

Gromen’s preferred “chicken plays”—assets he sees as benefiting across multiple scenarios—include gold, silver, copper, and electrical infrastructure.

• He says institutional investors often avoid miners because the sector is small and volatile, which may delay capital flowing into new supply. Given long development timelines, he argues that price increases are the likely mechanism to resolve shortages.
• He describes copper as strategically scarce and recounts executives at an electrical-equipment company saying they would rather hold copper inventory than cash because of supply concerns.
• He says he has bought physical silver and added to holdings when prices were in the $60s, $50s, and low $50s. He stores it in a vault and frames it as a long-term, unlevered holding, while cautioning that silver is more volatile and should be a smaller holding than gold.
• He also discusses uranium and lithium as critical materials, noting that they are harder for individuals to buy directly.
• He says the U.S. added essentially no electricity-generation capacity from 2004 to 2024. He sees a long runway for grid and electrical-equipment investment, even if AI data-center construction slows.
• He identifies PAVE and GRID ETFs, along with electrical-infrastructure companies, electrical steel, iron ore, copper, and machinery, as areas of interest. He says these may remain relatively expensive but look cheaper than AI-related equities.
• He expects supply constraints in metals and electrical infrastructure to take years or decades, not months.

China, commodities, and the dollar

• Gromen says China has increasingly used the yuan to buy commodities, including oil, copper, and iron ore, and that some non-dollar trade is ultimately settled in gold. He sees this as reducing China’s need to accumulate dollars and U.S. Treasuries.
• He cites Chinese non-dollar trade volume rising from effectively zero in 2015 to about $7 trillion annually, and gives a figure of roughly 45–50 trillion yuan in annual volume. These figures are as stated in the interview.
• He says China has been reducing Treasury purchases since around 2014, recycling dollar surpluses into equities, commodities, factories, and gold instead.
• In his view, reduced foreign demand for Treasuries pressures U.S. financing and contributes to higher yields and dollar-market stress. He expects yields and the dollar to rise initially, but eventually sees yields constrained by affordability, with adjustment coming through a weaker dollar and higher gold.
• He argues that geopolitical conflict and restrictions on critical-material supply could accelerate the shift toward Chinese trade, yuan settlement, and gold.

Housing and employment

• Gromen sees a risk of a prolonged housing downturn, potentially in both real and nominal terms. He describes a gap between what older homeowners believe their houses are worth and what younger buyers can afford, compounded by aging homeowners becoming motivated sellers.
• He expects demographic pressures and AI-related job insecurity to weigh on younger buyers’ willingness to take on mortgages.
• He cites reported workforce reductions or planned cuts linked to AI at Microsoft (27,000 jobs, as stated), American Express (5%), Barclays (5%), and Kroger (37% of corporate headcount over three years). He uses these examples to illustrate potential labor-market pressure.
• He cites an AI capability-tracking estimate that the share of white-collar jobs AI could perform at a professional level rose from about 2.8% to 16% in roughly eight months, with the pace of capability reportedly doubling every 3.7 months.

Solar, batteries, and a personal investment example

Gromen describes installing new solar panels, a lithium battery system, and a bidirectional EV charger. He says the system generated about 1,000 kWh in September and October in Cleveland, Ohio.

He estimates an unlevered, first-year cash-on-cash return of roughly 8–14%, potentially rising as electricity prices increase. He presents the system as a productive alternative to bonds and as another way to gain exposure to physical lithium and electricity infrastructure.

Market performance and risks

• He says U.S. equities had recovered substantially in dollar terms after the Fed began raising rates, citing the S&P 500 as roughly 80% higher than at the start of January 2022. In gold terms, he says the S&P was still down about 15% over roughly five years, even after gold’s recent decline.
• He notes U.S. home prices are far higher in nominal terms but says housing measured in gold had returned to levels last seen around 1980.
• He says U.S. federal debt-to-GDP is about 120%, the federal deficit is around 7% of GDP and rising, and the current infrastructure-investment boom is taking place without the manufacturing base present in earlier investment booms.
• He cites a historical comparison in which 53 of 54 countries reaching debt-to-GDP of about 130% had defaulted, mostly through inflation; he says Japan had since joined that group. This is Gromen’s characterization.
• He expects higher inflation over time, elevated geopolitical risk, and possible grain-price inflation the following year, citing apparent shortfalls in planting.

Methodology and stated portfolio approach

• Keep a longer-term investment horizon—one, two, five, and ten years—rather than reacting to every market move.
• Manage leverage conservatively because volatility may increase.
• Favor assets with structural demand and constrained supply, including gold, silver, copper, and electrical infrastructure.
• Gromen says he holds physical metals without leverage and treats silver as a smaller, more volatile position than gold.
• Consider productive infrastructure—such as solar panels and battery storage—as an alternative to conventional fixed-income exposure. His return estimate is based on his personal installation and assumptions.
• Watch gold’s behavior during market stress as a possible liquidity warning, rather than treating a gold selloff as proof that conditions are normal.

Assets, sectors, and instruments mentioned

• Metals and commodities: Gold, silver, copper, uranium, lithium, iron ore, electrical steel, oil, sulfuric acid, fertilizer, and grains.
• Currencies and fixed income: U.S. dollar, yuan, U.S. Treasuries, Chinese bonds, and real interest rates.
• Equities and funds: Nasdaq, S&P 500, “Magnificent Seven,” mining stocks, electrical-infrastructure companies, PAVE ETF, and GRID ETF.
• Other assets and industries: Bitcoin, real estate and housing, AI/data centers, electricity generation and grid modernization, solar panels, battery storage, EVs, and machinery.
• Companies mentioned: BYD, Microsoft, American Express, Barclays, and Kroger.

Disclosures and caveats

• Gromen recommends conservative leverage and describes personal holdings, but no explicit “not financial advice” disclaimer appears in the subtitles.
• The host promotes Metals and Miners’ Substack and Mine Vantage mining-stock research software. Mine Vantage is described as being in beta, with access for Founders-level subscribers.
• Some figures and phrasing in the auto-generated subtitles may be inaccurate or unclear. Numerical claims above are attributed to the speakers rather than independently verified.

Presenters and sources

• Presenters: Gary Bow, host of Metals and Miners; Luke Gromen, founder of Forest for the Trees.
• Other sources or people referenced: Michael Every, Ray Dalio, Glenn Alden, and unnamed company executives and military contacts.