Oracle Investment Team 2026 Predictions for the year ahead

We begin the new year by continuing a long-standing tradition: the Oracle Investment Management team shares its forward-looking predictions for 2026.

Drawing on their individual expertise and industry insights, each team member has contributed predictions that reflect diverse viewpoints across finance and investing. We are pleased to share these ideas with you and hope they offer meaningful insight into the opportunities and challenges that may lie ahead.

Prediction 1

Three-Way Bifurcation in Asia Pacific

Comments by Japanese Prime Minister Sanae Takaichi in November 2025 that Japan would be in a “survival-threatening situation” if Taiwan were to be attacked by China have already resulted in a radar incident between China and Japan.

In Taiwan itself, the governing DPP party is viewed by Beijing as pursuing a path away from eventual unification – no one asks if Taiwan wants unification, which we find strange.

We have two predictions for 2026 in the Asia Pacific:

1. The “Grey Zone” strategy of Beijing is likely to intensify in 2026.
2. The “Red Line” becomes a permanent, high-friction pressure point, leading to targeted economic punishment from China against Japan.

Throughout history, bullying tactics have been followed by giants to hurt and terrorise the less-so-giants; the biblical story of David and Goliath and British imperialism in South Africa are two examples coming to mind. In the Asia Pacific, we have two “small” democracies in Japan and Taiwan being attacked by a communist-led regime just because of their “big brother” status. The sustained actions from Beijing against Taiwan, just short of war – known as “Grey Zone” tactics are being implemented to pressure the DPP-led government in Taiwan. 2026 is squarely within the "Davidson Window" (the period identified by former U.S. Admiral Philip Davidson where the Chinese military would achieve sufficient capability to execute an invasion, often cited as 2024–2027). China will use this readiness to escalate the threat.

In the case of Japan, China has already demonstrated its tool of choice for retaliation: non-trade economic sanctions. Such economic coercion should sound familiar to Australians - Trade restrictions on Australian products between May and November 2020, in the form of higher tariffs, resulted in Australia’s exports of certain goods to China falling to nearly zero.

Why does it all matter? The Silicon Island, as Taiwan is referred to by Trade institutions, has emerged as one of the leaders in the global semiconductor industry. In 2021, Taiwan captured an estimated 10% of the total value created in the global semiconductor industry. It accounted for roughly 21% of global semiconductor manufacturing capacity, including 92% of manufacturing capacity for the most advanced chips. Taiwan has achieved this prominent role primarily through its foundries—providing contract manufacturing services to other companies. Taiwan is home to four of the world’s top ten foundries, including Taiwan Semiconductor Manufacturing Company (TSMC), the largest foundry in the world.

Prediction 2

Predictive Market Evolution

We are witnessing the emergence of a new asset class that is taking shape beneath the surface of global finance. It does not trade equities or currencies. It trades outcomes.

Predictive markets, once dismissed as novelty platforms or digital gambling, have evolved into real-time engines that compress vast streams of data into forward-looking probabilities.

With a new pillar of finance under construction, the “early & smart money” has already moved – Sequoia Capital is invested in Kalshi, and Polymarket has secured investments from Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE), Coinbase Ventures, the venture arm of cryptocurrency exchange Coinbase (COIN) and various other venture capital and angel investors.

Prediction is becoming the world’s next trillion-dollar market, as volumes spike and retail interest continues to grow. Kalshi has already achieved U$50bn in annualised volume in 2025, up from just U$300m in 2024 – it is capturing 60% of the global market share and setting new weekly records above U$1bn.

Prediction 3

Silver hits US$100

We have been bullish on gold and silver for over a year now, based on our view that the US dollar is being devalued through the extraordinary fiscal expansion and money printing being used to finance this and to refinance existing debt at higher interest rates. This has played out throughout 2025 for gold and silver, and while we remain positive on gold in 2026, we think silver’s run still has legs for a few reasons.

Firstly, it is a classic supply/demand play: silver is a key input into industrial manufacturing such as mobile phones, electric vehicles, and electronics, all of which are experiencing strong demand. But the miners can’t dig it up quickly enough because it is getting harder to find. In fact, the industry is mining less silver in relation to gold than it has historically. Despite this fact, the gold-to-silver ratio (gold price divided by the silver price) is still historically high. If this is correct, we think it will likely be due to silver rising more than gold (rather than gold falling). A lot has to go right for this prediction to come to fruition, but there is a world where the stars align and the continued demand for silver in manufacturing, in tandem with the tight supply and gold/silver dynamics, could lead to a $100 silver price.

Prediction 4

Australian markets outperform the US

We are big proponents of investing overseas because Australia makes up such a small component of global markets; it makes sense to diversify our assets and gain exposure to the opportunities outside our borders. As the largest market with some of the best companies in the world, the US is a natural hunting ground. While the Australian market does tend to follow the moves of the American one day to day, over time, differences emerge due to the vastly different construction of each: the US is overly concentrated in big tech, while the Australian market is overly concentrated on resources and financials.

It is for this reason that we think Australia could outperform. Inflation has proven to be sticky, and rate rises are likely for 2026 (so much so, we didn’t think it fair to even bother predicting that in this article). In an inflationary environment, commodities tend to perform better because they are backed by hard assets. Similarly, if rates rise, banks should better as this takes the pressure off the net interest margin (the difference in the rate charged to borrowers and the rate the bank is charged from borrowing from other banks, the RBA, or the bond market). While bank valuations remain elevated in Australia, strong financial performance should help buoy their share price.

Conversely, and even though rate rises are not (yet) predicted for the United States, the same inflationary pressures exist in America, not least of which is the constant expansion in the money supply that is devaluing the currency. If rates rise, we will likely see a repricing downwards of leading technology stocks (you know the ones). That’s not to say they are priced ridiculously today, but their valuations are certainly elevated, requiring perfect execution. A lot has to go right for the continued performance in US markets, while the setup in Australia looks a lot more straightforward.

Prediction 5

Gold Breaches US$4,500/oz and Copper US$6/lb – The Australian Mining Sector Enters Another Boom

In 2026, gold will grind higher to over US$4,500/oz for the first time. Copper will also follow this trend, breaking record prices over US$6/lb. The drivers are straightforward and continue in 2026.

For gold, another 800–1,000 tonnes of central-bank gold buying (led by China, India, and Turkey) will push demand, while a structurally weaker US dollar, as the Fed refuses to hike in the face of sticky inflation, will push people into the real asset.

A poor copper supply response — Panama’s Cobre Panamá to remain offline, and new mega-projects delayed won’t help the already precarious supply/demand situation for copper. Demand will continue to be elevated as the transition to clean energy continues and AI data centre builds ramp up.

Prediction 6

Australian Small Caps Continue Their Strong Run From 2025

As of the end of November, Australian Small Caps had returned 22% for 2025. We believe they can continue with their strong run in 2026. As the index has 15% gold exposure, if our prediction of the gold price moving above US$4,500 plays out, the gold miners in the index will have another strong year. Overall, materials companies make up 26% of the Small Ords, and the current macroeconomic environment is supportive of higher commodity prices.

Over the next two years, companies in the Small Ords Index are forecast to increase earnings per share by 23.3% p.a. With the index trading on a 19x PE, the same as the large cap index, which is only forecast to grow earnings at 7.6% p.a., we believe Small Caps will continue with the stellar run from 2025 and reach double-digit returns.

Prediction 7

Interest Rates to Remain Elevated in 2026 — and Why Credit Matters

Despite widespread expectations that policy rates will normalise meaningfully over the next 12 – 24 months, there is a credible case that interest rates remain structurally higher in 2026. While inflation may continue to moderate (not our base case), the forces that suppressed yields for much of the post-GFC period appear to have weakened or reversed.

One key driver is the persistence of structural inflation pressures. Labour markets in Australia and other developed economies remain tight by historical standards, supported by demographic ageing, lower participation elasticity and ongoing skills shortages. At the same time, large-scale investment in energy transition, infrastructure and defence is capital-intensive and inflationary at the margin. Even if headline inflation returns to target ranges, central banks may be reluctant to ease aggressively in an environment where underlying price pressures remain sticky.

Equally important is the scale of sovereign bond issuance. Governments are increasing borrowing to the point that elevated deficits have become structural and normal. The recently released mid-year budget update shows net government debt is now forecasted to climb to 21.4% next year vs 20.1% this year. As bond supply increases, markets will likely demand higher compensation to absorb duration risk, particularly at the long end of the curve. This suggests that even in a slower growth environment, yields may remain elevated relative to history, limiting the defensive effectiveness of traditional long-duration bonds.

In such an environment, credit is well positioned to assume a more central defensive role within portfolios. Australian credit markets, in particular, benefit from conservative corporate balance sheets, strong regulatory oversight of the banking system and ample supply of floating-rate issuance. Higher base rates translate directly into higher income, allowing investors to be compensated for risk without relying on falling yields or capital gains.

Importantly, well-constructed credit portfolios can deliver resilience through income carry rather than duration exposure. Short-dated and floating-rate securities, senior in the capital structure and supported by strong covenants, provide a buffer against both rate volatility and moderate economic slowdown. Provided defaults remain contained, as current balance-sheet health suggests, credit income can absorb a meaningful amount of mark-to-market volatility.

By 2026, portfolios that rely solely on duration for defence may prove vulnerable in a higher-rate world. In contrast, high-quality credit, carefully structured and actively managed, may emerge as the more reliable source of stability, income and capital preservation in an environment where rates stay higher for longer.

We’re excited to see how things shape up this year and whether our predictions for 2026 come true! It's always exciting to see the future unfold before our eyes, and we hope to gain a better insight into what's in store for us.

Written by the Oracle Investment Management team

Important information – Oracle Advisory Group makes no representation or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. The information in this document is general information only and is not based on the objectives, financial situation or needs of any particular investor. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek their own professional advice. Past performance is not a reliable indicator of future performance. The information provided in the document is current as the time of publication.