You Haven't Missed the Gold Bull Market... Yet.
If history is any guide, gold could double or triple from here.
If you’ve read me for any time at all, you know I’m a believer in keeping at least a little bit of your net worth in gold and ideally in physical form.
If owning coins or bars of gold is impractical (or if you invest primarily via an IRA), then a low-cost gold ETF like the SPDR Gold MiniShares (GLDM) is a solid option.
This is not ideological or political.
It’s basic math.
Gold and regular U.S. common stocks (i.e. the S&P 500) both tend to rise over time.
But they don’t always rise at the same time. The number will change depending on the precise time period you cover, but the correlation between gold and stock price movements ranges from slightly negative to slightly positive, hovering close to zero.
In pain English, this means that they move independently of each other. They each march to the beat of their own respective drummers. So, owning both gives you real diversification. And actively rebalancing between the two after major price moves allows you to constantly buy low and sell high. (Sizemore Capital does this in our Adaptive Asset Allocation, by the way. Please reach out if you’d like for me to walk you though it one on one.)
For what it is worth, gold has absolutely beaten the pants off of stocks over the past two decades. Since November 2024, when the launch of the SPDR Gold Shares (GLD) really made gold accessible to rank and file investors for the first time, the price of GLD is up 876%.
The State Street SPDR S&P 500 ETF?
“Only” 494%.
Great!
All of this explains why it’s a good idea to always have a little gold in your portfolio. But now let’s talk about why you should specifically own some today.
The price of gold cratered after the onset of the war in Iran, making some investors question its value as a true crisis hedge. But as Daniel Doge explains, it’s very normal for gold to fall at the beginning of a crisis when investors are in panic mode and hoarding cash.
You know the disclaimer… past performance is no guarantee of future results. But past performance does show a pronounced pattern here. After an initial setback, gold tends to perform well coming out of crises.
Or at least it has over the past 50 years!
You can view Doge’s full piece here. I’ve included an excerpt below, edited for brevity.
Enjoy!
Charles
The Last Time Gold Did This, It Tripled
By Daniel Doge
In the fall of 1978, gold was getting destroyed.
The Shah of Iran had just imposed martial law, strikes were spreading, and the streets of Tehran were on fire. Gold, the one asset that was supposed to protect you when the world fell apart, dropped 22% in a matter of weeks.
Investors panicked, sold, and swore it was over.
Twelve months later, gold ripped more than 300% to its all-time high.
I think about that moment a lot right now. Because what just happened in the gold market is almost identical, and I don’t think anyone is reading it correctly.
The Setup Nobody Wants to Talk About
Gold hit roughly $5,600 in late February. The Iran war started on February 28th. And instead of rallying, like most people expected, gold cratered.
It fell to an intraday low around $4,100 on March 23rd. A 25% drawdown from the highs.
The Daily Sentiment Index, one of the most reliable contrarian indicators in commodity markets, hit 15 for gold and 19 for silver. Weeks earlier, both sat in the high 80s.
Sentiment went from euphoria to despair in less than a month…
If you’ve been reading me for any length of time, you know what I think about moments like this. This is where fortunes are made. Not when everything feels safe. Not when the charts are clean and the talking heads are bullish. Right here. In the wreckage.
The question isn’t whether gold is going higher. The question is whether you have the structure to hold it when it does.
The Pattern That Keeps Repeating
Here’s what the financial media won’t show you. Gold has sold off violently during every major oil shock and financial crisis of the last 50 years, and every single time, it came back stronger.
Not a little stronger. Dramatically stronger.
1973—OPEC Oil Embargo
Gold dropped 29% during the Yom Kippur War. By December 1974, it had risen 117%.1978—Iranian Revolution
Gold fell 22% as the Shah’s regime collapsed. It surged over 300% by January 1980.2000—Internet Crash
Gold fell 18%, bottoming in the low $260s. It eventually ran past $1,000.2008—Global Financial Crisis
Gold dropped 34% after Bear Stearns. It bottomed in the autumn, right before QE1. Then it ran 180% to over $1,900.
The average drawdown across those four episodes is just over 25%.
Gold’s drawdown from its February high to the March 23rd intraday low: almost exactly 25%.
And if history rhymes even loosely, what comes next could be one of the most explosive moves in gold’s history.
Franco-Nevada co-founder Pierre Lassonde, a man who has spent his entire career in precious metals, has said gold could break $17,000 an ounce if it follows a path similar to the late 1970s.
Before you dismiss that number, look at the chart comparing U.S. inflation today to the 1970s cycle. The trajectories are eerily similar. And Iran connects both.
The Fed’s Impossible Choice
The Federal Reserve is trapped.
Fourth-quarter GDP growth was just revised down to 2.0% year-over-year—a three-year low. Real per capita disposable income is falling. Consumption is weakening. The economy is slowing.
At the same time, core PCE and core PPI are both above 3% and rising, and that was before oil spiked 40%.
With Brent well above $90, the inflationary impulse from energy hasn’t even fully hit the data yet. It takes weeks for those costs to filter through supply chains, agriculture, transportation, and consumer prices.
So the Fed faces a choice with no good answer.
If they hike rates to fight inflation, they risk breaking an already fragile economy. Private credit markets are already under stress. A rate hike could trigger a deflationary crisis similar to what followed Lehman.
If they cut rates to support growth, they pour gasoline on an inflation fire that’s already burning.
If they do nothing, they watch stagflation eat the economy alive while Treasury yields climb higher on their own.
The last time the Fed faced a setup like this was August 2008. Dallas Fed President Richard Fisher argued for a 25 basis point rate hike, even while acknowledging the economy was weak and the financial system was “brittle.”
One month later, Lehman Brothers collapsed. The Fed was forced to backstop global banks with over $8 trillion in liquidity and launch the first of several QE programs.
Gold bottomed during that crisis. And from October 2008 to March 2009, while the S&P 500 fell another 22%, gold rallied 32%, and the gold miners roughly doubled.
That’s the kind of asymmetry I’m looking for right now.
The One Thing You Should Do Right Now
I’m not going to tell you to go all-in on gold miners tomorrow morning. That’s not how I operate. What I am going to tell you is this:
Audit your portfolio for hard-asset exposure.
If you own zero gold, zero silver, and zero mining stocks, you are making a bet.
You are betting that the Fed will thread the needle perfectly. That inflation will cool on its own. That the Iran war will resolve quickly. That Treasury yields will behave. That the dollar will hold.
That’s a lot of bets to get right simultaneously.
Gold doesn’t need everything to go wrong. It just needs one of those assumptions to break. And right now, most of them are already breaking.
Start with a core position in physical gold or a gold-backed trust. Then look at the miners. The gold miner ETFs are testing critical trendlines right now.
A successful hold of those levels would be a powerful signal that the correction has run its course.
If you already own gold and miners, this drawdown is not a reason to sell. It’s a reason to hold and potentially add. Sentiment is at extremes, the pattern is clear, and the macro setup is as bullish for gold as anything I’ve seen in my career.
The Bottom Line
Gold’s 25% drawdown mirrors the four most important bottoms of the last half-century, each of which preceded explosive rallies of 100% to 300% or more.
The Fed is trapped between inflation and recession with no clean exit. And sentiment has reached the kind of bearish extreme that historically marks the end of corrections, not the beginning of something worse.
Once this bearishness runs its course, and the evidence suggests it already has, gold could eventually double or triple from here. North of $10,000 an ounce.
I like that risk-reward.
The world is telling you something right now. The question is whether you’re listening, or whether you’re doing what most people do in moments like this: selling the bottom because it feels safer than holding through the fear.
Prepare and act. That’s what separates the people who build wealth from the people who watch it happen to someone else.
Daniel Doge