Ned Davis Research strategist forecasts continued gold growth

John LaForge, Chief Alternative Strategist at Ned Davis Research, suggests that gold is currently in the middle stages of a commodity super cycle rather than approaching a peak. Despite recent price corrections, LaForge notes that long-term momentum indicators do not show the 'overbought' signals typically associated with the end of a cycle.

Several macroeconomic factors are driving structural demand for gold. The increasing burden of global public debt is weakening currency purchasing power, as governments often devalue currencies to manage debt loads. Additionally, the freezing of Russian foreign exchange reserves following the 2022 invasion of Ukraine has prompted central banks to reconsider the safety of their assets. This has led to a shift toward physical assets like gold, which can be held outside of traditional credit systems and are less susceptible to political intervention.

LaForge advises investors to focus on macroeconomic realities rather than specific price targets like $8,000 or $10,000 per ounce. He suggests that the upward trend will only end when governments implement fiscal discipline and restore confidence in the global credit system. For portfolio diversification, he recommends allocating at least 10 percent to alternative assets, specifically suggesting a split of 5 percent in gold, 3 percent in a broad commodity basket, and 2 percent in Bitcoin.