Gold Rally Just Getting Started

Ray Dalio released an excellent article last week concerning longer-term investment themes and paradigm shifts. He breaks down each decade, starting with the 1920s and the various economic factors that shaped capital flows. In a nutshell, each decade has its own investment theme. For example, from 2010 until now, the stock market has been the place to be. He believes the next decade (2020 -2030) will favor gold as governments will likely resort to debt monetization and currency devaluation to keep the system afloat. It’s a long read but enlightening. Click here to check it out.

I agree with him 100%, and I think the rally in gold is just getting started. So how should an investor approach the next decade? I prefer a long-term perspective. Have and keep a core position, preferably in physical bullion. Add to your core holdings when prices pull back or when something is undervalued – like platinum and silver are today. When the time is right, and the gold bull market is nearing its end, it will be time to look for undervalued asset classes (stocks, bonds, real estate, etc.) and the next paradigm shift.

Investors that have a high tolerance for risk and volatility can use a portion of their portfolio for trading the shorter-term cycles. But that can be difficult, even in the bull market.

If the next decade is going to be suitable for gold and other hard assets, it might not be a bad idea to allocate a little capital to speculative mining stocks. One company I’m considering is Northern Dynasty Minerals (NAK). They have vast, undeveloped copper and gold reserves in Alaska. The company has struggled with permitting, and there’s no guarantee it will ever become a mine. But the potential is there, and if everything works out, I think the stock could be a 50 or even 100-bagger.

GOLD’S 2019 BREAKOUT

Gold broke out of the 6-year basing pattern that began in June 2013. Any retest of support surrounding $1360 should be considered a strong buy. There is significant resistance near $1550 and then again at $1800. It will take time, and there will be plenty of backing and filling as prices work their way towards the $1900 level. Depending on political events and monetary policy, I’m not expecting a breakout above $2000 until 2021 or 2022. The moral of the story is I believe gold prices are beginning a rally that should strengthen throughout the majority of the next decade. There are too many unknowable factors, but if we see a 1970’s style inflationary period, I think gold could reach $8500+.

1 2 3
View single page >> |

Disclosure: None.

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Roger L. Morris 4 weeks ago Member's comment

50-100 bagger is exactly what I'm here for!

Katy Lin 4 weeks ago Member's comment

He said, potential 50 to 100 bagger!