Gold Breaks $4200!

Gold has broken through $4,200, continuing a long-term bull market, but while a correction is anticipated, it is unlikely to signal a permanent top before gold eventually reaches new highs by the end of the decade.

• Gold is in a strong, long-term bull market expected to continue through the 2020s.

• Technical indicators like RSI are unreliable for timing major market tops or bottoms.

• A 20-30% gold correction is likely, but will lead to higher prices by 2026 and beyond.

Gold has reached new highs, extending a bull market that began around 2015, and is expected to continue outperforming the S&P 500 throughout the 2020s. While a significant correction of 20-30% is likely in the near term, with a potential low in 2026, this is viewed as a higher macro low before gold resumes its upward trajectory, making it advisable to maintain gold exposure for continued upside and downside risk minimization against other asset classes.

Gold's Bull Market Trajectory

• 00:00:29 Gold is in a sustained bull market, having recently surpassed $4,200, following a pattern of initial moves up, retreats to a logarithmic regression band, and subsequent rallies. This current bull run has already exceeded 513 weeks since its 2015 low, suggesting a similar prolonged ascent seen in past cycles like the 1970s. The long-term forecast anticipates gold reaching $6,000 over the next six to nine years, with the current phase possibly extending into early 2026 before any major shifts.

RSI as a Top Indicator

• 00:04:31 Using indicators like the Relative Strength Index (RSI) to identify market tops or lows is often problematic because assets can remain overbought or oversold for extended periods. For example, in 1973, gold's monthly RSI hit 94, and while selling then would have avoided a 30% drop, gold later rallied another 600% from that level, demonstrating that short-term accuracy does not guarantee long-term success with such indicators, which can lead to significant missed gains.

Gold vs. S&P 500

• 00:09:37 Analyzing the S&P 500 divided by gold reveals a critical level that has held since 2014, with bounces off this level historically continuing the stock bull market. However, if this level breaks down, it signals a significant devaluation of the S&P against gold, as seen in the 1970s, where gold ultimately rallied to all-time highs during a recession while stocks corrected. Gold has already outperformed the S&P 500 since 2022, and its inclusion in a portfolio helps mitigate downside risk if risk assets experience a sharper decline.

Anticipated Gold Correction

• 00:15:16 A 20-30% drawdown from gold's high is likely to occur within the next two to four months, with the low for this correction anticipated in 2026. This correction is expected to form a macro higher low, after which gold will resume its upward trend, potentially continuing to rally throughout the 2020s as part of a broader commodities bull market. Investors are advised against attempting to perfectly time the market top, but profit-taking is an option, provided funds are not reallocated to highly risky assets.