It dawned on me this morning that many new Rude subscribers may not know why I’ve been hanging onto miner positions that have already increased by 400-500%. Surely I should’ve sold those by now!

But when you’re a trend follower, the moves in mining stocks are the ones we wait a lifetime for, and selling them early would be tantamount to financial suicide.

With this in mind, in this edition of the Rude, I’m going to reiterate the macro reasons why metals are such a great trade. Those reasons form the bedrock of the trade's rationale. Many of them you already know, but it’s worth reminding ourselves of them.

Then, I’m going to introduce you to Alex Krainer, who’s a former hedge fund manager who specializes in trend following.

I interviewed Alex two years ago this month for the Paradigm Press YouTube channel. I encourage you to watch it if you haven’t already. (Though, do watch it on 1.5x speed, where you’ll get all the information without any of the delays.)

The Macro Reasons I Still Love Gold

1. Wealth Preservation: Gold has been a long-standing store of value that retains its purchasing power over time. It can be a safety net against inflation and currency devaluation.

2. Hedge Against Crisis: Gold performs well during inflationary periods but not perfectly. It’s more of a “crisis hedge” than an inflation hedge. When investors anticipate a rapid decline in the value of money, gold rises. Both Jay Powell’s monetary policy and Congress’s ludicrous fiscal policy have loosened considerably. How much more money is going to Ukraine, Israel, and Taiwan? When will war games turn into war?

3. Diversification: You don’t have to back up the truck and put everything into gold, even though I like to put my eggs into a carefully watched basket. Adding gold to a portfolio provides diversification to a normal stock portfolio, thereby reducing risk. It often has a negative correlation to stocks and other financial instruments.

4. Safe Haven: During periods of geopolitical tension or economic uncertainty, investors flock to gold as a safe-haven asset. Ukraine was already a messy situation, and Israel and Hamas have taken that messiness to a whole new level. If Europe gets its way, it’ll all get much worse.

5. Liquidity: Everyone loves gold and is a buyer. It’s a highly liquid asset that holders can sell quickly and easily if needed, which is beneficial in an emergency.

6. Capital Appreciation: While investors view gold as a wealth preservation tool, it can also appreciate, especially during periods of high inflation and geopolitical unrest.

7. Tangible Asset: Unlike stocks and bonds, gold is a tangible asset that investors find appealing. Dig a hole in your backyard and throw your gold in it. Just don’t tell anyone you’ve done that.

8. Central Bank Buying: Central banks worldwide hold gold as part of their reserves, which can enhance confidence in gold's value. And they’ve been buying a lot over the past few years.

9. Historical Performance: Gold has a long history of holding value and has been a sought-after asset for millennia.

10. Low Volatility: Unlike many other assets, gold often has lower volatility, providing a steadier investment over the long term.

Trend Following With Alex Krainer

Two years ago, I had the pleasure of speaking with Alex Krainer, known on X as @NakedHedgie.

Alex is a former hedge fund manager who splits his time between his native Croatia and Monaco. His story is a fascinating one worth listening to.

He’s also the author of Alex Krainer’s Trend Following Bible, Grand Deception, and Mastering Uncertainty in Commodities Trading.

Grand Deception is about Bill Browder, the Magnitsky Act, and anti-Russia sanctions. Amazon banned it permanently from its offerings. Now that’s a book you want to read.

Click the pic to watch the interview.

Trend Following

📈 Trend following is a popular strategy among traders, especially during market booms and busts.

📈 The NASDAQ tripled from 1996 to 2000, with stock prices more than doubling in the last five months of the dot-com bubble, showing the unpredictability of market trends.

📈 Trend following and commodities futures trading are the best ways to hedge against inflation, benefiting ordinary people the most.

📈 Trend following is a legitimate approach to trading markets, as large-scale price events are the most powerful driver of investment performance.

📅 Gold went up from $35 an ounce in 1971 to $850 an ounce in 1980, showing the potential for significant market fluctuations.

📈 Trend following with sound risk management can outperform stock markets and bond portfolios, even for 30-40 years in continuation.

On Russia-Ukraine

🌐 The international banking cartel is behind the war in Ukraine and attempts to destabilize and institute regime change in Russia.

On the Commodity Super Cycle

🌍 We're looking at a commodity supercycle expected to last between 10 and 25 years, causing the price of energy, metals, and agricultural products to rise.

Wrap Up

I hope you enjoy the interview. If you’d like a little background reading on Alex, his I-System Trend Compass Substack page is here. His bestselling books, Alex Krainer’s Trend Following Bible and Mastering Uncertainty in Commodities Trading, are free to download here.

After watching this interview and reading some of his pieces, it won't be a mystery why I continue to ride the metals and miners wave, and why I encourage you to do the same.