"The Big Long"

Incrementum's 19th Annual "In Gold We Trust" Report - Article #115

In this 12-minute article, The X Project will answer these questions:

I. Why this article now?

II. What is "The Big Long," and why does it advocate significant investment in gold?

III. How are geopolitical dynamics, particularly Trump's policies, influencing the gold market?

IV. Why is the sovereign debt crisis a critical issue supporting the bullish outlook for gold?

V. How do persistent inflation and the risk of inflation volatility support the investment case for gold?

VI. What role are central banks playing in the current gold bull market?

VII. How does the weakening U.S. dollar contribute to the gold investment thesis?

VIII. Why are silver, mining stocks, and other commodities also compelling parts of "The Big Long" strategy?

IX. What does The X Project Guy have to say?

X. Why should you care?

Reminder for readers and listeners: nothing The X Project writes or says should be considered investment advice or recommendations to buy or sell securities or investment products. Everything written and said is for informational purposes only, and you should do your own research and due diligence. It would be best to discuss with an investment advisor before making any investments or changes to your investments based on any information provided by The X Project.

I. Why this article now?

This is The X Project’s 115th article since November 2023. In the first 66 articles, I wrote six articles on gold:

• Article #13 (Dec. 7, 2023): Gold Prices are at New All Time Highs - Why now? And what does it possibly mean?

• Article #31 (Feb. 4, 2024): Navigating the Golden Tide - A summary of the World Gold Council's Report: "Gold Demand Trends: Full Year and Q4 2023"

• Article #41 (Mar. 10, 2024): Gold Prices Decisively Break Out to New All-Time Highs Surging 4.5% This Past Week - What do you need to know about what's happening and why?

• Article #43 (Mar. 17, 2024): Priced in Gold – Looking at Inflation, the Dollar, and the World from a Different Perspective

• Article #59 (May 19, 2024): What’s Up with Gold? The Latest News, Analysis, and Thoughts on Gold

• Article #66 (June 23, 2024): "The New Gold Playbook" - Reviewing Incrementum's 18th Annual "In Gold We Trust" Report

Since then, I’ve only written one article on gold in the past year:

• Article #102 (February 9, 2025): Gold Prices Made New All-Time Highs - Again! What's Moving Gold, and How High Might Gold Prices Go According to Luke Gromen

And yet, Gold prices made new all-time highs a few times again since my last article, most recently on April 21, 2025:

Is it too late to invest in gold? Is the gold bull market over?

NO! In my opinion, we are still in the very early stages of this bull market.

Incrementum’s latest 443-page annual In Gold We Trust report comprehensively covers all the reasons why. (See Section I of article #66 above for an overview of Incrementum and this report’s authors.) While I enjoyed reading this report, I understand not everyone has the time or the interest that I do, which is why The X Project curates, summarizes, distills, and synthesizes knowledge & learning at the interseXion of economics, geopolitics, money, interest rates, debts, deficits, energy, commodities, demographics, & markets - helping you know what you need to know.

II. What is "The Big Long," and why does it advocate significant investment in gold?

"The Big Long" is a concept introduced by Ronald-Peter Stöferle and Mark J. Valek, highlighting the formation of a new secular bull market in gold. This perspective stems from the belief that the golden decade announced in their 2020 report is well underway, driven by persistent geopolitical and economic uncertainties. The authors argue that traditional asset allocations significantly undervalue gold, suggesting investors increase their allocations substantially. They emphasize gold’s dual role as a safe-haven asset and a performance asset capable of providing substantial returns during volatile periods.

The report highlights how current market conditions resemble those of previous gold bull markets, notably the 1970s and 2000s. This environment is characterized by significant sovereign debt challenges in leading industrialized countries, persistent inflation volatility, and geopolitical uncertainties such as those brought about by Donald Trump's return to power in the U.S. With historical precedence demonstrating gold’s resilience and growth potential during similar conditions, the authors argue that prudent investors should view corrections as buying opportunities rather than threats.

Institutional allocation remains astonishingly low despite compelling performance data. Family offices, for instance, allocate a mere 1% to precious metals, compared to significantly higher percentages in real estate or private equity. The report suggests that investors who recognize this misallocation early and adjust their portfolios accordingly can significantly benefit from anticipated price increases. The report concludes that the strategic and tactical incorporation of gold into portfolios is essential for both hedging and capital appreciation in this decade.

III. How are geopolitical dynamics, particularly Trump's policies, influencing the gold market?

Donald Trump’s second presidency represents a seismic shift in global economic and monetary policies, triggering instability that significantly enhances the investment case for gold. Trump’s aggressive tariff strategy, encapsulated by the so-called Liberation Day tariffs, and his confrontational stance towards de-dollarization have increased geopolitical tensions. Such instability typically boosts demand for gold as investors seek safe-haven assets to protect their wealth from volatility and potential currency devaluations.

The Trump administration aims to resolve persistent U.S. trade deficits and industrial decline by imposing tariffs averaging nearly 30%, far exceeding historical levels, such as those from the Smoot-Hawley Tariff Act. Although intended to stimulate domestic manufacturing, these protectionist policies risk disrupting global supply chains, potentially reducing U.S. economic growth in the medium term. These consequences fuel investor anxiety, reinforcing gold’s attractiveness as a hedge against economic uncertainty.

Additionally, Trump's rejection of central bank digital currencies (CBDCs) and promotion of stablecoins further indicates an unconventional approach to monetary policy that generates both risks and opportunities. With stablecoin issuers becoming significant holders of U.S. government debt, the intertwining of digital assets and traditional finance creates complex new dynamics in currency and bond markets. Such complexity and uncertainty provide a fertile ground for gold, which thrives in environments marked by distrust and unconventional monetary practices.

IV. Why is the sovereign debt crisis a critical issue supporting the bullish outlook for gold?

The escalating sovereign debt crisis in major economies, including the U.S., Germany, France, and Italy, constitutes a fundamental driver supporting the bullish outlook for gold. Historically, gold prices rise significantly during periods of unsustainable government indebtedness, as investors seek a stable store of value that protects against currency debasement and fiscal irresponsibility. With national debts rising rapidly and interest payments becoming substantial fiscal burdens, particularly in the United States, confidence in traditional safe-haven assets, such as government bonds, is declining, driving investors toward gold.

Germany’s recent shift away from fiscal conservatism under Chancellor Friedrich Merz exemplifies a broader international trend toward increased government spending and higher debt levels. Germany, traditionally regarded as a benchmark of fiscal responsibility in Europe, is now poised to significantly increase its national debt to fund infrastructure and defense, potentially triggering broader concerns about debt sustainability across the continent. Such shifts undermine confidence in government bonds, strengthening the investment thesis for gold and reinforcing its role as a secure alternative.

Furthermore, rising interest payments relative to GDP highlight structural weaknesses within government finances, especially when debt servicing costs surpass critical spending categories, such as national defense. This scenario, starkly evident in the U.S., underscores the looming fiscal challenges and heightens the risk of monetary inflationary policies as governments struggle to service their debts. The historical resilience of gold during inflationary and debt-driven economic downturns provides a strong rationale for increased allocation to gold.

V. How do persistent inflation and the risk of inflation volatility support the investment case for gold?

Persistent inflation and high volatility in inflation rates significantly enhance gold's appeal. Gold is traditionally seen as a strong hedge against inflation, maintaining purchasing power during periods of rising prices. Despite central banks’ aggressive monetary tightening policies, inflation—particularly core inflation—has remained stubbornly high, reinforcing concerns that structural, rather than transient, forces are at play. This environment compels investors to maintain or increase gold holdings to preserve their purchasing power.

The report highlights that inflation volatility remains high and suggests the possibility of a second wave of inflation. Such volatility creates significant uncertainty, making traditional financial assets less reliable as stores of value. Historical evidence presented in the report consistently demonstrates gold’s performance as an effective inflation hedge, especially when inflation expectations become unanchored or erratic. Thus, investors seeking to protect their portfolios against unpredictable inflationary shocks are increasingly viewing gold as indispensable.

Moreover, the report suggests central banks are facing severe credibility challenges due to their struggles in managing inflation effectively. Confidence in central banks’ ability to control inflation without significant economic disruption is waning, causing investors to diversify away from conventional financial assets. Gold’s historical role as a stable monetary asset and its independence from government and central bank policies position it ideally to benefit from prolonged periods of inflationary uncertainty.

VI. What role are central banks playing in the current gold bull market?

Central banks globally have played a crucial and consistent role as net buyers of gold, providing strong support for gold prices. Their sustained buying trend, notably reaching over 1,000 tonnes annually for three consecutive years, highlights gold’s strategic value amidst geopolitical tensions, de-dollarization efforts, and reserve diversification strategies. This pattern of central bank activity underscores gold's status as a critical asset for national financial stability, significantly influencing broader market perceptions and demand.

The report highlights a geopolitical motivation behind the increased central bank gold holdings, particularly in Asian countries and Poland, reflecting efforts to diversify reserves away from dependence on the U.S. dollar and Western financial institutions. This geopolitical dimension highlights a broader systemic shift, where countries are strategically enhancing resilience by reducing exposure to potential financial weaponization by other powers. Consequently, this diversification further consolidates gold’s standing in global monetary arrangements.

Additionally, central banks' gold repatriation activities underscore the importance of gold in enhancing national economic security. Increased repatriation efforts suggest that nations are prioritizing direct control over their gold reserves, indicating a decline in trust in international custodial arrangements. Such actions, driven by geopolitical and economic risk assessments, reflect an ongoing global reordering that positions gold as a pivotal asset for sovereign financial independence.

VII. How does the weakening U.S. dollar contribute to the gold investment thesis?

The deliberate weakening of the U.S. dollar under Trump’s policies significantly enhances the attractiveness of gold. Trump's administration explicitly seeks to devalue the dollar to stimulate reindustrialization, reduce trade deficits, and counteract de-dollarization pressures. Historically, gold prices exhibit inverse relationships with the dollar's strength, rising significantly during periods of dollar depreciation. Thus, the intentional weakening of the dollar by the U.S. administration acts as a substantial tailwind for gold investment.

The unresolved Triffin dilemma exacerbates concerns surrounding the structural integrity of the U.S. dollar, highlighting inherent conflicts between domestic economic policy and international currency stability. The report argues that the persistent trade and current account deficits, which undermine the dollar’s reserve currency status, intensify demand for alternative stores of value. Gold, as a neutral reserve asset, emerges as a logical hedge against the potential destabilization of the global monetary system.

Finally, the report emphasizes that artificial currency devaluations do not address underlying economic structural issues; instead, they create inflationary pressures and erode investor confidence. This macroeconomic instability, caused by intentional currency weakening, reinforces investor appetite for gold, which is seen as a dependable hedge against monetary instability and economic mismanagement.

VIII. Why are silver, mining stocks, and other commodities also compelling parts of "The Big Long" strategy?

The report explicitly identifies not only gold but also silver, mining stocks, and broader commodities as essential components of "The Big Long" investment strategy. These assets, categorized as "performance gold," represent higher-risk but potentially high-reward investments that offer leverage to gold price movements. Historically, silver and mining equities significantly outperform gold during bullish cycles due to their higher beta, making them attractive additions to portfolios designed to maximize returns during sustained gold bull markets.

Silver, in particular, is highlighted due to its dual characteristics as both a monetary and industrial metal, especially within the context of the ongoing green energy transition. With silver already experiencing its fourth consecutive year of supply deficit, the report underscores how structural demand drivers—including solar power, electric vehicles, and broader technological advancements—are creating a powerful catalyst for silver’s price appreciation. Therefore, silver plays a crucial role within "The Big Long," appealing to investors seeking an asset with both inflation-hedging capabilities and substantial industrial growth potential.

Mining stocks, while historically more volatile, offer compelling valuation opportunities after years of underperformance relative to the underlying commodity. The report suggests that mining companies have strengthened their financial positions and improved operational efficiencies, positioning themselves strategically to benefit from higher gold and silver prices. This enhanced resilience, coupled with improving market fundamentals, is expected to lead to substantial re-ratings of mining equities as investors seek leveraged exposure to precious metals. Thus, mining stocks present a unique opportunity for portfolio diversification and enhanced performance within "The Big Long" thesis.

IX. What does The X Project Guy have to say?

Mining stocks are a more speculative investment. They only perform well in precious metals bull markets; otherwise, they have historically performed very poorly. However, when a bull market in precious metals occurs, their prices can explode to the upside. Based on my research, there could be 10x, 20x, and even 50x plays with junior mining stocks.

I started investing in ~40 individual gold and silver mining stocks, with only 6 or 7 of them considered large-cap or major miners, about two years ago. I am up 500% on one of them, up between 200-300% on five of them, up between 100-200% on seven, up between 50-100% on five, up between 20-50% on six, up between 10-20% on three, and up less than 10% on one. However, I am down 50-90% on ten of them, and the remaining few are even less. This is based on gold breaking out above $2,000 per ounce ($3,310 currently) and silver breaking out above $25 per ounce ($36 currently) in early 2024.

The 2025 In Gold We Trust Report suggests gold prices could reach $4,800 per ounce by the end of the decade under their base scenario. In a more bullish inflationary scenario, the report suggests gold prices could reach as high as $8,900 per ounce. The miners are highly leveraged plays on the price of the underlying metal, and they can easily move 10x the price of the metal.

X. Why Should You Care?

Aside from the chance to increase your wealth substantially from this generational opportunity, gold bull markets like this are often indicative of other things going on that can threaten most of your other investments. The guys at Northstarbadcharts.com, to which I subscribe, have called these Capital Rotation Events and we are just in the beginning of the latest one. Please check out this visual article of charts that will show you what happens when we have one:

• CAPITAL ROTATION – A visual article of X posts and charts from the guys at Northstarbadcharts.com

Remember, this is not investment advice or a recommendation to buy or sell securities or investment products. Everything written and said is for informational purposes only, and you should do your own research and due diligence. It is recommended to consult with an investment advisor before making any investments or changes to your investments based on information provided by The X Project.

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