The Real Case for Gold, Part II

In October 2025, with gold at $4,300 and the headlines celebrating a historic breakout, I published “The Real Case for Gold” and called the rally a warm-up act - a false dawn that would end in a massive correction, with the true bull market beginning only after the Fed’s next intervention. In January, in Forbes, I warned that the snap-back was imminent. The top arrived two days later. This is the update: where we are on the gold journey, why the current bounce can run for weeks, why the decline is probably not finished - and why what follows will make the last decade of gold look like a rounding error.

I publish forecasts before the fact so that the record can speak for itself afterwards. So let the record speak.

On October 23, 2025, with gold just above $4,300, I wrote that the “breakout” was an illusion - a mini-bubble built on an inflation narrative that was already obsolete. I wrote that gold would first suffer a swift, massive correction as the deflationary bust arrived, that the dollar would surge as liquidity vanished, and that the true bull market would begin only “when policymakers panic and unleash liquidity to counter the deflationary bust. Everything up to that point is prelude.” I also admitted that the extremity of the final rise had surprised me. That is what blow-offs do: they run further and faster than any confirming indicator justifies - right before they end.

On January 27, 2026, in Forbes, I sharpened the warning. The gold and silver mania, I argued, was not 1979. It was 2008 - oil’s great inflation-narrative blow-off, staged months before deflation took hold. The final words of that column: when the cycle turns, narratives don’t die gently. They snap. That day is coming - but this may not be it.

Two days later, on January 29, gold printed $5,608 per ounce. Silver touched $121. And then it snapped. What followed was the largest single-day decline in precious metals since 1980: silver collapsed more than 30 percent in roughly a day, gold fell more than 10 percent from its high within 48 hours, and the CME raised margin requirements four times in the weeks that followed just to restore order. By the end of July, gold had fallen to just above $4,000 - a drawdown of nearly 30 percent. Silver had been cut in half.

This is not a victory lap. It is a checkpoint. The sequence I published in October had three phases: correction, capitulation, take-off. Phase one is well advanced. It is not, in my view, complete.

The advance from the 2022 low near $1,615 to the January high at $5,608 was, in my count, a completed five-wave structure - the first primary wave of a much larger bull market. Call it Wave 1. What has followed since January is Wave 2: the correction that separates the first advance from the third - which is, historically, the longest and most powerful.

Wave 2 corrections unfold in three parts: A down, B up, C down. Wave A bottomed in July just above $4,000. The bounce underway now is Wave B. Wave C - the final decline - still lies ahead in my analysis, and it arrives with the bust.

If that count is right, then everything currently being written about gold - “the bull market is over,” “the bubble has burst,” “gold has failed” - is commentary on a Wave 2. It is the same commentary that was written about gold at $100 in 1976 and at $700 in late 2008. In both cases, the correction was not the end of the story. It was the precondition for the main event.