Introduces the discussion on Iran conflict, oil prices, Treasury yields, and market volatility. Asks about the divergence between Brent crude and US 10-year yields.

I think you should be short bonds, short duration, particularly if this conflict goes longer. The world holds Treasuries but needs oil and food; they will sell Treasuries to bid up oil and food. The longer this goes, the more natural buyers of Treasuries become sellers.

Asks if Luke would be long US oil producers like ExxonMobil, given Asian reliance on Strait of Hormuz oil which is now disrupted.

Yes, I would be long oil. It's good for US domestic oil majors. Oil demand is very inelastic; they will get it wherever they can, even if it means selling other assets like Korean stocks or Treasury bonds.

Asks if Luke has repositioned his portfolio since the Iran strike.

Only added gold in my own personal investments. I came into the year with over 50% of liquid net worth in cash, T-bills, and gold miners. I didn't forecast a war in Iran, but I was already very risk-off. The only change is I've added to that already heavy gold position.

Asks if gold at $5,152 is overvalued.

Not even close. Gold is still the cheapest asset on the board. US foreign-held debt as a percentage of US official gold holdings at market price is only 13-14%, vs long-term average of 40-60% and 1989 level of 20%. Gold would need to rally 50-60% just to get back to 1989 levels.

Asks about the dollar's rise and how demand for dollar and Treasuries will change due to the Iran strike and closure of Strait of Hormuz.

Every time the dollar gets too strong, the Treasury market will dysfunction. It's a mathematical certainty. Foreigners have borrowed $13-14 trillion in USD but own $27 trillion net of US dollar assets. When the dollar gets too strong, they get squeezed and sell what they can—first Treasury bonds.

Brings up the gold-to-oil ratio as an economic contraction indicator, noting it peaked before past recessions.

I read that chart differently—the gold-to-oil ratio is a measure of the health of the petrodollar system. Higher ratio = sicker system. Gold competes with Treasuries as a reserve asset; lower oil prices relative to gold mean fewer petrodollar surpluses recycled into US markets.

Asks if Iran regime change could be stabilizing and put downward pressure on gold.

That's the $64,000 question. History of US interventions in the Middle East (Saddam, Gaddafi) hasn't been stabilizing. If this goes swimmingly and we install a Yeltsin-like figure quickly, it could be great for America. Failing that, this Iran situation is incredibly bullish for gold.

Asks about China's foreseeable reaction and whether export controls on critical minerals are expected.

China will react in a very Chinese way—passive-aggressive. They'll condemn it, say everyone should talk, and do nothing boisterous. In 2-4 weeks, Trump will start complaining about rare earths not flowing. Or China will release photos of destroyed American bases to discredit the administration.

Asks if current events have changed his view on defense stocks.

Not necessarily. It's been good for them—clearly we'll spend more. Another $200 billion for defense is good for those stocks and the deficit, but not great for long-term Treasury bonds. Defense companies can't move faster than China lets them.

Asks why US equity markets aren't pricing in any risk of escalation, noting the Nasdaq was up almost 2%.

Based on what I know, that is absolutely the wrong price. You're seeing force majeure in commodity markets, Asian stock markets tanking, oil majors pulling people out, and Hegseth admitting we can't defend against drones. The correct move is lower, quite a bit lower.

Posits that the S&P 500's heavy tech weighting might make it immune to high oil prices since tech companies' primary costs aren't oil.

It's possible, but if real rates go up due to forced sovereign selling to buy oil, I have a hard time seeing rising real rates as positive for stocks, particularly the interest rate sensitive Nasdaq. If they're capping yields behind the scenes, that changes things—then buy Nasdaq, short dollar.

Asks where he sees this going, noting reports Trump may arm the Kurds and that the conflict could be prolonged.

He knows it's a lot worse than that. The White House claimed on June 25, 2025 that we had completely obliterated Iran's nuclear weapons and anyone saying otherwise is fake news. Arming the Kurds would be destabilizing—they can't agree with each other.

Asks what an investor should do to protect against volatility and uncertainty.

The uncertainty play is to go to certainty. Have an above-normal allocation to cash and T-bills. Own things with solid fundamentals and reasonable valuations—I still have a very large position in electrical infrastructure equities. The GRID ETF and PAVE ETF are well positioned for 3-5 years.

Asks about a major geopolitical shift coming out of this conflict.

I think it's more a continuation. There's a battle for material constraints. China spent trillions subsidizing Made in China 2025 and buying finite commodities; the US spent on nonsense wars in the Middle East for 20 years. The Chinese have spent their money better. We clearly haven't learned the lesson.

Provides certainty that US debt will go up. CBO projects net interest costs will double to $2.1 trillion by 2036. Asks how this impacts the average American.

It raises living costs and inflation, regardless of what the government says. Confidence in government has fallen from 80-85% under Ike/JFK to 16-19% now—flatlined across administrations. Elevated inflation and domestic political strains will continue.

Asks what else he really doesn't like besides bonds.

Relative to expectations, long bonds are the thing I really don't like. Look at the US long bond divided by gold—bonds have collapsed in these wars against gold. They've been certificates of confiscation. Consensus thinks this conflict will be short; I have very high conviction it won't be. Best way to express that is short long bonds against gold.

Asks about US manufacturing and reshoring.

I love it. We're seeing a cyclical uptick—Chicago PMI, flatbed rejection rates spiking. War is very good for manufacturing, as offensive as that may be morally. Manufacturing is in very good shape, especially electrical equipment manufacturing.