We have been accumulating gold through funds and ETFs during quiet times when nobody wanted it and the crowd was looking elsewhere. That patience has paid off, with our positions doing very well over the last two years or so.
The rise in gold has added real upside to our range of models, including multi-strategy portfolio so far this year. To keep things interesting, silver has also joined the mix because sometimes even gold likes a sparring partner.
I get more nervous when gold suddenly becomes the market’s favorite theme. Right now, it feels like there is a competition to see who can be the loudest bull. That usually means money is being made and money is also being made selling the gold story to newcomers eager not to miss out.
Gold’s breakout to new highs in March 2024 was the real turning point, and since then it has marched higher without a meaningful pullback. That is impressive but it also means the “this is only getting started” crowd may be conveniently ignoring how far we have already come.
The fundamentals remain supportive. Well, lower rates make gold cheaper to hold, inflation does not seem in a hurry to fall back to the Fed’s 2% target, and central banks keep buying bullion by the ton as insurance against debt, dollar dominance, and policy risks.
Geopolitics also plays a role. With Donald Trump once again working to reshape America’s place in the world and testing its ties with major trading partners, investors are left with plenty of uncertainty and markets tend to reward the yellow metal whenever the global order looks unsettled.
Looking further out, I still see plenty of room for gold to appreciate in the long term. Nothing moves up forever. With CTAs already heavily long, it will not take much, some volatility, a geopolitical flare-up for gold to take a real breather.
Of course, the question everyone is now asking is where could gold go from here? During this rally, I have heard people wonder, “how much higher can we go?” Can we push much further? Well, some of my clients already know my long-term target and let’s just say, the story for gold is not finished yet.