Executive Global
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Yes, over great spans of times gold always holds its real value. Something few investors realise. With ebb and flow trends, but continually holding value vs. the ongoing decay/collapse in buying power of the various fiat pieces of paper that are called money.
Historically the uptrends in gold are usually most eagerly pursued by investors when the stock market category is not seen as a good risk/reward place to be. It is also during those times that U.S. Government bonds have also been regarded as an “alternative” category to the stock market. Remember the old portfolio orthodoxy of 60% stocks 40% government bonds? In recent months Morgan Stanley replaced that orthodoxy with 60% stocks, 20% bonds and 20% gold. Even if perhaps too small of an adjustment, it was a major admission of reality. An asset allocation concept that should have been in place many decades ago.
But this particular bull trend in gold and silver should not be regarded it as just another monetary metals bull move in some long-term inhale/exhale pattern of behaviour. Too many macro fundamental factors (and macro-technical factors from Momentum Structural Analysis’ vantage point) are likely to be far greater in their wave effects and outcome than any prior move by gold.
This time the crisis at hand is not merely an overdone stock market that likely soon (in 2026) will inflict pain on investors. This is not just another dot-com bubble type excess as in 2000-2002. Nor like the painful economic/market situation sparked by en masse individual mortgage failures, as from 2007 to 2009.
This time there is a government debt crisis, make no mistake. And not just in Japan where the crisis is fully underway. But the U.S. is also now entering a clear phase of government debt (bond) crisis. And other Western governments are sitting on equally unsustainable debt bubbles with debt instruments that can and likely will soon loose investor respect. And therefore will engender emotion and panic in many markets, which will further fuel the already massive gains in gold and, yes- in silver.
Also we have a major bear trend once again in the dollar vs. other fiats. Not merely in its ongoing decay in real buying power, as exhibited in an M2 chart going back decades, but in the world’s prior acceptance of it as the reserve core currency. Meaning its loss of value even vs. other decaying fiat money units.
These are the sort of crises that are not so isolated or manageable. And we fully know that central banks will and are responding to this major crisis. For example, back in mid-November President of the New York Fed, John Williams, stated that the Fed would now begin buying bonds. The reason he provided was simply to provide “liquidity” to that market. Avoiding the real issue. Since their buying efforts began, T-Bond prices have oozed lower (yields higher) steadily, despite that support.
And yet another major asset category is now re-emerging from the depths of long term undervaluation against other assets and even undervaluation to its own prior history—the category of commodities. Our long-term technical assessment argues that the new uptrend in commodities commenced at the October close, with other key components joining in as of the January close—wheat and oil being examples. Expect this event to be an upset and surprise to the administration, which promised the opposite. This is also an upset to the broader public which cannot afford another wave of upside price inflation in their groceries and gasoline. Upset and emotion will be a factor that enters the overall process of trends within the markets.
WHAT REMAINS AS THE PLACE TO BE?
Gold and Silver have already been speaking, and recently quite loudly, that something major is underway. Something is driving them. And as is often the case with many major trends, the factors that have been driving the trend from below, only become ‘in-your-face evident’ to analysts and the public late in a trend. This time we expect (via our increasingly recognised, but unorthodox methodology) that price levels that will be seen, and likely during this year, will be far greater than most orthodox analysts might assume based on historical prior norms.
Old norms will be shattered. An example. Gold’s prior two major bull trends, since being “legalised” in the U.S. in 1975, consisted of price advances that were eightfold gains—from bear low to bull high. So far this bull trend, measuring from the December 2015 bear low (end of a 50% bear market from 2011 high) has been only a five multiple gain. Even just producing yet another eightfold gain would mean $8,500 for gold- something we have noted over the past year. And rather interestingly, JP Morgan has just recently arrived at the same number.
However, we only identify that $8,500 level as a “routine” or yet another “eightfold” bull. A ‘ho hum’ event almost. It would not be breaking the norms set by those two prior bull trends. Expect far more price upside, and likely with the sort of speed in the coming few quarters that leaves investors and analysts simply stunned. Yes, there will be shakeouts along the way, that is almost a norm in any major bull trend, so expect that.
Also, during this monetary metals’ bull trend, silver will outpace gold this time around- and by much. Over the half century while gold has produced massive eightfold upward price waves, each vastly exceeding the prior bull market peaks, silver has been restrained/capped off. Within an old price reality from $4 to $50, back and forth, over a half century. Lateral and confined. That old reality is no more. A new reality is coming.
A thorough multi-factor assessment of silver provides ample reasons (both fundamental and macro-technical) that this silver bull is likely to see price rise to the several hundred dollar level (we assess broadly $300 to $500 this year). The rationale for that, begins with the fact that silver, (like gold) has been acknowledged by man for thousands of years as money. “Poor mans gold.” That status is highly likely to return as the other macro fundamental factors previously mentioned increasingly come into play throughout this year. (Note that India has already taken steps to remonetize silver - effective this year. They will not be alone as these major dark trend factors come into play.)
So silver, (like gold) is riding on a massive monetary wave driving force. But it also has a unique fundamental driver as an “industrial” metal. Demand for silver for solar photovoltaic cells (for solar panels, an essential in many parts of the world and one that is rapidly growing year by year), and for silver’s essential use in micro and multiple imbedded factors in high tech and AI projects. Over the past five years, the silver market has suffered from ongoing demand outstripping supply. And it’s not getting better. So, silver’s rise is surfing upon two major waves—monetary and industrial.
We expect the silver price to once again catch up to some prior- and much higher valuation levels against gold. A shift in its relative value such that silver’s net price gains against gold, will reflect not only silver’s bull trend, but its massive catch-up to prior relationship to gold.
So, it’s best not to just look at gold or silver charts as your reality, but also be fully cognizant of trend factors in U.S. T-Bonds (and other major government bonds now under stress, to put it politely). Or the U.S. dollar’s demise vs. other fiat currencies. Also be aware that the commodity asset category upturn- so far virtually unnoticed by most analysts, will soon also be a fellow traveler with the monetary metals.
Yes, there will be much noise along the way, not only in short-term confusing price swings- but in ever-changing day-to-day “headlines” regarding silver and gold. Examples being the much higher pricing of silver in China vs. U.S., or changes in futures open interest reports or commitment of traders reports — all of which are best ignored. Yes, some are true and real, but are not primary factors- and others are just noise.
Big changes. Big waves. For reasons outlined. Expect the monetary metals to be the leaders. And that much of what we are to see will occur this year. EG
