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AG Thorson
gold bars

The paradigm shift I spoke about last year is unfolding before our very eyes. Precious metals will emerge from this crisis as the premier asset class for investors.

Investment Themes

If you look closely, you’ll notice each decade has a distinct investment theme. As the decade unfolds, one asset class rises to the top and outperforms everything else. Below are some examples.

  • During the 1990s, the stock market was the place to be. An explosion in Internet stocks headed the dot.com bubble. The Nasdaq rallied from 330 in 1990 to 5100 by 2000.
  • During the 2000s, precious metals and commodities were the best performing assets. Gold rallied from a low of $255 in 2001 to $1923 by 2011.
  • During the 2010s (until now), money flows switched to the stock market. Low and negative interest rates fueled record buybacks and rising earnings multiples. The DOW bottomed at 6469 in 2009, and prices likely peaked in March 2020 at 29,600.

Of course, it’s impossible to get in and then out at the exact bottom. The transition period from one asset class to another takes several months, sometimes longer – the key is recognizing it. Here’s a clue… it’s happening NOW.

After an 11-year bull market in stocks, the next asset shift has begun. The 2019 breakout in gold combined with loose monetary policy and negative bound interest rates suggests 2020 – 2030 will be a decade that heavily favors precious metals. Gold first, then silver and platinum will follow – palladium likely peaked.

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Massive Demand Spike

The crashing stock market and global pandemic have triggered sudden and irreversible demand for precious metals. In the US, coin dealers sold out of ALL American Eagle coins (gold, silver, platinum) last weekend. Premiums have skyrocketed. There’s no putting the genie back in the bottle – an unprecedented shift to precious metals has begun.

Monthly Gold Target 

If gold comes back to test the $1350 – $1400 breakout area, that could be the last great buying opportunity of this decade. By the end of this decade, we expect gold to reach $7,500 – $10,000.

A $7,500 – $10,000 price target for gold sounds absurd, I know. Before you dismiss it, let’s think about the potential triggers that could yield such lofty prices.

  • Loss in Confidence – A total collapse in confidence in Governments and their ability to manage. —> Very possible
  • Widespread Money Printing – Governments may resort to debt monetization and currency depreciation to inflate away record debt levels. —> Already occurring.
  • Speculation- A surging uptrend and new all-time highs in precious metals leads to the fear of missing out and sparks a speculative bubble. —> Likely, but probably years down the road.

Currently, our Gold Cycle Indicator is at 42 and entered maximum bottoming – suggesting gold may be approaching a bottom. I think it could drop further and perhaps reach a perfect score of zero in April or May.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit https://goldpredict.com/

 

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