A trend investor with known roots in commodity trading said he’s looking to gold and silver to continue the upward trend and bring large returns
During a recent interview, trend investor Alex Krainer, portfolio manager for Altana Inflation Trends Fund, said that despite commodities being in a bear market, there are several winners to be chosen — and gold and silver topped the list.
“I would say silver is going to go higher,” he said. “We have short positions in things like corn, soybeans and cotton. … Gold might go to $3,000, or $10,000 or $20,000. It’s anybody’s guess.”
Hockey stick dynamics
Krainer said he has noticed a rise in “hockey stick” moves among commodities and even equities, which he attributes to the enormous size of the shadow banking system.
“Gold for example, its whole market at current prices is worth about $10 trillion in its current market at current prices. Shadow banking is about $220 trillion. So when the price of something starts to inch higher and the market takes note, it’s enough for a small fraction of money managers to say, “Maybe we need a bigger allocation in gold,” and then you get a stampede and the asset takes off like a rocket.”
Krainer noted these types of moves not just in commodities like cocoa and cobalt, but in equities such as Nvidia, Alphabet and Tesla.
Just follow the trend
Krainer said markets tend to follow trends about one-third of the time, while the other two-thirds of movements will typically be reversals or consolidations.
“You will make money one-third of the time, but you don’t know where the trend is going to start or end,” he said. “Trend following is like commercial fishing — when you hit a big school of fish, you get a big catch — but the only way to find it is to go out there every day.”
Krainer said he is following gold and silver trends and expecting higher moves. He said he is also long platinum, though he noted the metal has been range-bound for about eight years.