Wells Fargo Investment Institute’s Sameer Samana, head of Global Equities and Real Assets, predicts a booming market for risk assets as the Fed resumes its cutting cycle.
He anticipates gold and silver will particularly shine, outperforming even a strong equity market in a lower-interest-rate environment.
Samana stated in an interview with Kitco News that most assets, with one significant exception, are expected to perform exceptionally well over the next year.
“I think what’s really interesting is just how good the environment is for all risk assets, across the board,” Samana said.
Rarely have you had a Fed start to actively consider cutting rates when inflation has been this far above their target of 2% – running at 3% and bottoming out – and they’re talking about cutting rates.
Fed’s pivot
Samana noted that this renewed investor interest is evident in both the equity markets and gold prices.
He added:
It’s becoming harder and harder to make a bear case for really anything other than bonds, given this pivot by the Fed.
Despite Wells Fargo’s projection of a weakening labor market and slowing economic growth into early 2026, he is of the opinion that the market has already factored in the poor performance.
At worst, equities are expected to experience only a minor secondary pullback.
Equities
Samana said that the market tends to run ahead of the economy, and the fact that they had a pretty big drawdown in Q1, almost a bear market, already accounts for some of the negative impacts of trade and tariffs, which is why they would see the soft patch in Q4 and into the first part of ’26.
He further argued that it would be five to seven percent, maybe 10%, but nothing like they saw in the first half.
Equities are expected to stabilise during the seasonally strong fourth quarter. However, the economy may not recover until the first or even second quarter of 2026, according to Samana.
Wells Fargo predicts that both precious and industrial metals will outperform stocks through 2025 and next year, according to the investment bank’s “chart of the week.”
While equities are also expected to perform well during this period, these two commodity sectors are anticipated to yield superior returns.
Bonds and gold purchases
Samana said that if the Fed was going to start cutting interest rates and focus on the labor market with inflation at 3%, they were basically throwing bondholders under the bus.
He added that bonds were going to be under pressure and were not going to be the typical diversifiers because they struggled to be good diversifiers in a high-inflation environment.
He also stated that people needed to look elsewhere for diversification, and gold seemed to be the easiest alternative because it did well in uncertain times.
Samana added the central bank and institutional diversification away from the dollar, noting that the new administration’s approach significantly differs from the previous one.
However, he acknowledged that gold purchases likely increased around 2022, coinciding with the sanctions against Russia concerning Ukraine.
So it’s just a continuation of that, where central bankers around the world are rethinking how much money they want tied up in U.S. dollar assets.
Meanwhile, silver is poised to benefit significantly from the current low-interest rate, risk-on market conditions.
The metal has been trading consistently above $40 an ounce, potentially contributing to gold reaching new record highs.
Silver outlook
However, silver is also largely an industrial metal, and with the economic recovery not anticipated until the second half of 2026, investors who are counting on silver’s historical tendency to surpass gold during a post-slowdown rebound should consider this timeline.
Samana believes that silver may experience a near-term weakening due to faltering economic activity. However, he remains confident in its long-term potential as industrial activity is expected to rebound subsequently.
“If I look at the gold:silver ratio, they’re both pretty close to the three-year average right now,” he said.
Samana said he thought it would not be surprising if silver underperformed again on a three-month basis, given the soft patch he sees that markets will have to contend with.
But over the next 12 months, I could see silver outperforming by a little bit. If gold, let’s say, is up mid-single-digits, it wouldn’t surprise me if silver’s coming in close to high-single-digits.
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