We fear it is more of an unraveling. We think there is a lot of bad investment, and there is extreme capital spending by hyperscalers. We don’t think it is sustainable. So we are on the cautious side. We worry that because AI spending has generated such a significant portion of U.S. GDP growth, if we see more signs of trouble in the AI space, it could have negative near-term impacts on the economy and the overall stock market.The lack of AI is one reason why India has underperformed. Is the current AI concern a boon for India?
India outperformed during periods when emerging and non-US markets underperformed the US. It still underperformed the US, but outperformed those markets. Now I think India’s relative performance will be disappointing compared to non-US markets. I have no idea how long this potential underperformance will last, but for now there are better opportunities elsewhere. Relatively speaking, I don’t see any really encouraging signs.
Since you are watching the price action very closely, is the adverse market reaction in the AI space just the tip of the iceberg at the moment?
I think it’s the tremors you sometimes get before the actual earthquake. So what I call them are ‘air pockets’. Not in the large companies, but in some secondary type companies you see these rapid declines. This is often a characteristic of a market in transition: a sector that has been at the forefront and strong may be in a different phase, perhaps even in a decline. So yes, there are some vibrations. So do you see a longer downtrend or even a bear market?
Based on these valuations in the US market, future returns will be sub-par based on history. When we have experienced these types of valuations in the past, return expectations have been below par relative to long-term averages. But it is still too early to speak of a bear market. We may see more rotation across sectors. So you could see bear market-like conditions in some sectors, technologies, and areas related to mega-cap tech. What’s interesting is that we’re seeing a rotation into cyclical stocks, which is counterintuitive. Smaller companies within the S&P are starting to perform better. That’s what we saw in 2000. We would strongly advocate that investors evaluate non-US markets and move capital out of the US. So, what are your best bets outside the US?
Based on almost fifteen years of underperformance in emerging markets, we think the upward trend is happening in the longer term – possibly ten years from now. When you reverse a fifteen-year trend of underperformance, it is unlikely to be a one- or two-year phenomenon.
Do you like emerging markets as a basket, or are there specific markets you like?
As a basket, yes. But within that, Brazil and China look particularly interesting. Brazil fits our statement because of its resources and raw materials. China has been depressed for so long and technically seems ready to break out. Brazil has already broken out of the long-term downward trend line. China is highly suppressed and has a very attractive technical profile for an outbreak, along with policy support. So our belief for the next three to five years would be China. Once global capital recognizes a new trend, especially after it becomes highly concentrated in the US, you may see outsized and sustained returns.
What about gold and silver? Is there any more benefit?
We think there is more upside potential for long-term investors. Short-term volatility may persist, but looking further ahead, we are quite optimistic. Gold could return to recent highs around $5,600 and possibly towards $6,000. In the longer term, we have much bigger goals. This is a multi-year, ten-year story. The fundamentals are strong due to US debt, fiat currency concerns, central bank purchases and an inflationary environment. Gold has also broken out on a relative basis against every major stock index globally. This indicates a sustained period of outperformance. Silver has a similar outlook: more volatile, but very attractive. It is both a monetary and strategic metal, with supply shortages and strong demand for technology and solar energy.
Are there long-term goals for silver?
In the medium term (one to three years), $250 to $300 wouldn’t surprise me. Forecasts for the next ten years are considerably higher.
Are there any other major transactions within commodities?
Copper is a major raw material and is a core component for us. We are also very bullish on key minerals.
Bitcoin sees a decline. Any thoughts there?
On a technical basis, Bitcoin looks very weak. We see Bitcoin trading with the Nasdaq and technology stocks. If you’re worried about technology and software, there’s no point in being optimistic about Bitcoin. I wouldn’t be surprised if Bitcoin fell 30% from here.
So, what are your top trades for 2026 or the next three years?
Our strongest belief remains gold and silver. To that we add crucial minerals and energy, especially energy stocks, which are a contrarian trade right now. Energy stocks break to record highs and begin to outperform the Nasdaq and mega-cap tech. This indicates a new trend and possibly higher oil prices.
The US dollar seems to be in a critical phase. What is your vision?
We think it is declining in the longer term. It has broken below the 2011 uptrend line. If the DXY (dollar index) falls below 95, we are more confident that the decline will accelerate. A weaker dollar supports emerging markets and commodities. We even think emerging markets and commodities could send the dollar lower.
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