EMs likely to outperform the US; gold, silver in long-term uptrend: Arvind Sachdeva

Emerging markets are poised to see a long-term uptrend after their underperformance relative to the US, said Arvind Sachdeva, chief market strategist at 13D Research & Strategy, an independent institutional global research firm. In an interview with Nishanth Vasudevan, Colorado-based Sachdeva, during his recent visit to Mumbai, said India may underperform for now, while China, Brazil, energy, gold and silver are among his big bets. Edited excerpts:

2026 so far has been rough for the AI trade. Is the recent turmoil an unravelling of the trade or a temporary reversal?

We fear that it’s more of an unravelling. We think there has been a lot of malinvestment, some extreme capital spending by hyperscalers. We don’t think it’s sustainable. So we’re on the side of caution. We worry that because AI spending has generated such a significant proportion of US GDP growth, if we do see more signs of trouble in the AI space, then it could have some short-term negative implications for the economy and for the general stock market.

The lack of AI has been a reason why India has underperformed. For India, is the current AI concern a boon?
India did better in periods when emerging markets and non-US markets underperformed the US. It still underperformed the US but outperformed those markets. Now, I think the relative performance of India is going to be disappointing relative to non-US markets. I don’t have a view on the length of that potential underperformance, but for now, there are better opportunities elsewhere. On a relative basis, I’m not seeing any real encouraging signs.

Since you track price action very closely, is the adverse market reaction in the AI space right now just the tip of the iceberg?

I think it’s the tremors you get sometimes before the actual earthquake.So what I call them is ‘air pockets’- not in the large companies, but in some of the secondary type companies, you’re seeing these swift declines. That’s often a characteristic of a market that is transitioning-a sector that has led and has been strong may be transitioning into a different stage, maybe a decline. So yes, there are some tremors. So, are you seeing a longer downtrend or even a bear market?
From these US market valuations, future returns are going to be subpar based on history. When we’ve been at these kinds of valuations in the past, expectations for returns are subpar relative to long-term averages.But it’s too early to say bear-market. We may see more rotation in different sectors. So, you could see bear-market-like conditions in some sectors-technology and areas related to mega-cap tech. What’s interesting is we’re seeing rotation to cyclicals, which is counterintuitive. Smaller companies within the S&P are starting to outperform. That’s what we saw in 2000.We would strongly advocate that investors evaluate non-US markets and reallocate capital away from the US. So, which are your top bets outside the US?
Based on almost 15 years of underperformance in emerging markets, we think it’s in a long-term uptrend-possibly a decade. When you’re reversing a 15-year trend of underperformance, it’s unlikely to be a one- or two-year phenomenon.

Do you like emerging markets as a basket, or are there specific markets you like?
As a basket, yes. But within that, Brazil and China look particularly interesting.Brazil fits our thesis because of its resources and commodities. China has been depressed for so long and, technically, looks ready to break out. Brazil has already broken out from a long-term downtrend line.China has been very suppressed and has a very attractive technical profile for a breakout, along with policy support. So, our conviction for the next three to five years would be China. Once global capital recognises a new trend, especially after being heavily concentrated in the US, you could see outsized and sustained returns.

What about gold and silver? Is there more upside?
We think there is more upside for long-term investors. Near-term volatility may persist, but looking beyond that, we are quite bullish. Gold could return to recent highs around $5,600 and potentially into the $6,000s. In the longer term, we have much larger targets. This is a multi-year, decadal story. The foundations are strong because of US debt, concerns about fiat currencies, central bank buying, and an inflationary environment.Gold has also broken out on a relative basis against every major stock index globally. That signals a sustained period of outperformance.Silver has a similar outlook-more volatile, but very attractive. It is both a monetary and strategic metal, with supply deficits and strong demand in technology and solar.

Any long-term targets for silver?
In the intermediate term-one to three years-$250 to $300 would not surprise me. Over the decade, projections are significantly higher.

Within commodities, any other big trades?
Copper is a big one and is a core holding for us. We are also very bullish on critical minerals.

Bitcoin is seeing a slide. Any thoughts there?
On a technical basis, Bitcoin looks very weak. We see Bitcoin trading with the Nasdaq and tech stocks. If one is concerned about tech and software, it doesn’t make sense to be bullish on Bitcoin. It wouldn’t surprise me to see Bitcoin fall 30% from here.

So, which are your top trades for 2026 or the next three years?
Our strongest conviction remains gold and silver. To that, we add critical minerals and energy, particularly energy stocks, which are a contrarian trade right now. Energy stocks are breaking out to all-time highs and starting to outperform the Nasdaq and mega-cap tech. That suggests a new trend and possibly higher oil prices ahead.

The US Dollar seems to be critically poised. What is your outlook?
We think it’s in a long-term decline. It has broken below a 2011 uptrend line. If the DXY (dollar index) breaks below 95, we will have more confidence that the decline is accelerating.A weaker dollar supports emerging markets and commodities. In fact, we think emerging markets and commodities may be leading the dollar lower.