Clean up.

luke-gromen/qa.txt

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 Q: Do you think we are now close to a point where the West's manipulation of gold, among other markets, begins to fail as physical overpowers their leveraged financial tools as it relates to gold specifically? Yes, I do. If so, do you think prices are more likely to return to equilibrium gradually, or would you expect something similar to what happened in the LME nickel market, where there's a discontinuity, basically a gap up in price? In other words, do you think investors would see it building, or would you just position now and patiently await the inevitable?
-A: I think it could go either way. I think the key takeaway is that based on what China has done, what Russia has done, yuan oil, yuan gold based on the flows that we have highlighted in recent weeks, the reversal of flows, gold outperforming real rates, gold outperforming, treasuries in terms of downside, volatility, you're seeing it in markets. A change has happened. Most people want to ignore it or are ignoring it. But what does that mean in terms of how price will adjust? I could make an argument that it could be linear or nonlinear. In my opinion, it's more likely to be **nonlinear** for multiple reasons. I think it'll be tough to chase, even if it is linear. So I would just rather be there with a good sized position in physical bullion ahead of time and not try to get too cute. I think it's really important to remember the context of what we're in, which is a series of factors that are unprecedented.  1. Global bursting, sovereign debt bubble.  2. Ending of a 50 year currency system.  3. Rising of another competitive power. 4. The incumbent trying to defend their turf peak. 5. Cheap oil (which has never happened in the way in which it has, trying to transition to a new, less efficient energy system).  It's complicated. And when it's complicated, I like to operate with low levels of leverage and large margins of error.
+A: I think it could go either way. I think the key takeaway is that based on what China has done, what Russia has done, yuan oil, yuan gold based on the flows that we have highlighted in recent weeks, the reversal of flows, gold outperforming real rates, gold outperforming, treasuries in terms of downside, volatility, you're seeing it in markets. A change has happened. Most people want to ignore it or are ignoring it. But what does that mean in terms of how price will adjust? I could make an argument that it could be linear or nonlinear. In my opinion, it's more likely to be nonlinear for multiple reasons. I think it'll be tough to chase, even if it is linear. So I would just rather be there with a good sized position in physical bullion ahead of time and not try to get too cute. I think it's really important to remember the context of what we're in, which is a series of factors that are unprecedented.  1. Global bursting, sovereign debt bubble.  2. Ending of a 50 year currency system.  3. Rising of another competitive power. 4. The incumbent trying to defend their turf peak. 5. Cheap oil (which has never happened in the way in which it has, trying to transition to a new, less efficient energy system).  It's complicated. And when it's complicated, I like to operate with low levels of leverage and large margins of error.
 Q: A lot of US gold and gold mining investors have been suffering the last ten years. Everyone has seemingly been getting rich, while US. Gold investors are waiting for that imminent price explosion that doesn't ever seem to get here. What are your thoughts about timing, conviction on the price of gold and miners one, three and five years out? Will we finally get paid for all this patience?
 A: Yes, I think we're all going to get paid for patience, particularly as it relates to gold bullion and certain miners. I don't know about all of them broadly, but certain miners. And the question, of course, is when. Again, it's a function of rates.  It's a function of energy. Interest never sleeps, and depletion rates on energy don't sleep either. And both of those things are very supportive of goals.  Secularly. When can it happen? I think it will reprice. I think it will reprice in a relatively compressed way.  And when it does, I think a lot of people are either going to be there or they aren't. And I think once that repricing happens, I think people will be very they'll feel very good for being there ahead of time and it'll have made the waiting worthwhile. But I agree it has been frustrating at time.  I will say the way Gold has performed with real rates, doing what they're doing over the last 18 months has been extremely encouraging.
 Q: You talk about the recapitalization of gold as a potential outcome of US. Fiscal turmoil. Can you provide a rough back of the envelope math to the three revaluation scenarios?
@@ -22,7 +22,7 @@ Q: If the total amount of US debt is pushing the economy to the point where it's
 A: What I'm asking really is what it means. As the interest burden mounts on debt that exceeds over GDP, at what point does it become a house of cards and who pushes it over? Because if we are in need of funding, we satisfy that need by buying our own debt. What's really happening, what we're really talking about is deciding who gets hurt in the restructuring of the debt. What I'm talking about doing is you're basically taxing bondholders via inflation and financial repression to finance government programs. If the government programs are for ill advised wars or for low productivity social programs and entitlements, that's a bit problematic. If you use some of that money to invest into productivity enhancers like I just described upgrading the electrical grid, training young people to really be able to produce in the trades and have the US stimulus filter through to a middle class and have it feed on itself for years and decades like it did from the 50s through the 80s, then it's very productive. But that's ultimately what we're talking about here is this whole everything is all about deciding who takes the loss. The loss has already happened. The money's already been spent. It's been wildly unproductive. We spent $8 trillion in the Middle East. It's gone. And it was completely useless. We spent it in blood and treasure to secure the Middle East's oil for China. And we transferred a quorum, our industrial base to China to help pay for it. It was a galactically bad decision compounded by more galactically bad decisions. And then when it blew up the banking system, we backstop the banks, but not us homeowners. And so that money's gone, it's lost. So right now we're just debating. It's all a big debate about who takes the loss. Do the bondholders take the loss or do the bondholders get paid in real terms? The bondholders get paid in real terms. We have a great depression. If the bondholders take the loss, we have a sustained period of high inflation. The latter tends to be the more politically palatable outcome. Not that it's pleasant, but just more politically palatable.
 Q: On or near September 17, there was a large and sudden spike in the two year treasury yield, perhaps best summarized by Nothing Special Finance, as this occurred during pre market trading on a day following Quad Witching and with japanese markets closed for a holiday. It appears there may have been a liquidity transient in one of the most important financial assets in the world. And the financial press is radio silent on the issue.  Do you have a view as to what this may have been?
 A: It's a good question. I saw it. I watched it. I saw it described and explained away as nothing or an accident or a fat finger or a data feed error. And I was inclined to believe that until I saw treasury markets that week be very sloppy all week. And so maybe it wasn't nothing. What was it? I don't know. But the takeaway I took from that is if it was nothing, treasury markets shouldn't have been as sloppy as they were last week. And yet they were very sloppy and they've continued to be sloppy this week. So as I like to say, let's watch. But after watching how treasury markets traded, I'm not willing to completely dismiss it as purely a fat finger. I think there may have been some signal there.
-Q: **What percentage of interest stimmies are going to foreign countries? Isn't this a difference when compared to government handouts during COVID Yes, it is a difference.**
+Q: What percentage of interest stimmies are going to foreign countries? Isn't this a difference when compared to government handouts during COVID Yes, it is a difference.
 A: Around 25% of US treasuries outstanding are held by foreigners. It's also a political question. 5% interest on short term Treasuries. If China's 800 and whatever $50 billion in holdings were all in short term Treasuries, they're getting 5%. That's $40 to $45 billion we're handing to China. By way of comparison, that is enough to pay for about 15 to almost 20% of China's defense budget. Think about that. Isn't that nice? We're paying for our defense budget and 15% to 20% of theirs. Great job, Powell. Nice job. So, yeah, it is different. It's different in some less inflationary ways because it is going to foreigners and it's different in some politically challenging or tricky complicated ways, like I just described.
 Q: Could you expand on your Bitcoin enthusiasm a bit more specifically? What do you like about it as an asset? Unlike gold, the physical properties are not there, and mass acceptance as a medium exchange store of value does not seem anywhere on the horizon. For me, Bitcoin is a function of market liquidity and will rise as liquidity expands again, which you believe is on the way, given the structural deficits the US government's running.
 A: So from the end first, yeah, I think it's a great liquidity metric. It's very sensitive to that, as it's shown. And I do think that liquidity is going to have to come for reasons we've discussed. For me, the proof of work dynamic. The energy that has to be expended both to mine the Bitcoin and then to keep the network running and to validate the various transactions is the attraction. It requires you to spend a lot of energy to produce and maintain. And that's like the real world. Me doing my job, me living my life, me having my house, all requires me to spend a lot of energy, finite energy, to produce and to maintain. And so I would rather own a reserve asset that does that than a reserve asset like a treasury bond that can just be created out of thin air and printed dollars printed up by the Fed to buy when they don't like the price, which they've repeatedly done. That's my thought process on it. In terms of the adoption, I would encourage you to take a look around and just sort of start digging into that. The lightning network there is a still quiet, for the moment, not very highly visible, but rapidly growing ecosystem that is facilitating the usage in a lot of really creative and value added ways. And so, yes, there's not medium exchange or mass acceptance right now. I think that's going to change. I think we're going to wake up in five years or seven years and find that that has changed a whole lot