Commodities expert Carley Garner explains why gold’s record breaking rally may be near its end.
Transcript:
CAROLINE WOODS: OK, joining me now is Carley Garner, senior strategist and broker at DeCarley Trading. Carley, great to have you back.
CARLEY GARNER: Thank you. It’s good to be here.
CAROLINE WOODS: So Carley, you’ve been a gold skeptic for quite some time, yet it just touched a new record high yesterday. It’s a bit lower today, back around $3,600 an ounce, but still close to those highs. You say this is the last hurrah. Tell us why.
CARLEY GARNER: Yes, I’m aware of the fact that I’ve been bearish for a little while, and gold has refused to sell off. In fact, we’ve made just recently, in the last couple of days, new all-time highs. But I don’t think that my premise is wrong. I think it’s just that, since the pandemic, we’ve had so much stimulus come into the marketplace that all assets are going up. It’s not just gold — it’s stocks, real estate, you name it. A lot of assets are benefiting simply from the fact that there’s a lot of liquidity in the system chasing a handful of assets. I think that’s probably part of what’s going on in gold.
It’s also being exacerbated by some really odd things that we haven’t seen before. For example, I just read an article this morning about AI bots that are basically programmed to trigger buys in gold when the headlines start churning. And it’s ironic because it’s kind of a nasty cycle: the AI bots are creating articles that are bullish for gold, and then those bullish articles are triggering buys in the market. This has existed for years — this isn’t something new — but now in today’s environment, almost anybody can write an algo or a system that reacts to headlines. And I think that’s a lot of what’s going on.
So I would argue that yes, gold’s going up, but I think it’s going up in spite of fundamentals, not because of fundamentals. So maybe we see $3,700, maybe we get some sort of additional parabolic run higher. But I stand by my idea that this is probably gold’s last roar. At some point, probably in the next couple of years, as popular as gold is now, it will be just as unpopular as it was in 2022–2023, when nobody wanted to touch gold. It was considered kryptonite in a portfolio — it didn’t pay dividends or interest, it was a price dog, and it hadn’t gone anywhere in a decade. We will see that again. We have to give it a little more time, and I think we’ll start to see some surprising price action on the chart.
CAROLINE WOODS: OK, so you said $3,700 is a possibility, which would mean the peak isn’t in just yet. Yesterday wasn’t necessarily the last hurrah. But I guess what signs should traders look for that it is coming to an end, other than an all-out reversal?
CARLEY GARNER: Well, that’s the thing — when markets reverse, it happens all at once. There’s no memo. I believe there’s a lot of complacency out there. And so if and when it turns, as I do believe it will — and let’s keep in mind, I’m an analyst, I don’t have a crystal ball. I’m just going off what I’ve seen gold do historically, in the ’79 rally and then again in the 2011 rally. We had exactly this type of parabolic price action, and then when the party ended, it ended very sharply.
I will say this: gold is often talked about as a safe haven. Gold is a safe haven at times, but at other times, it’s not. Right now, it’s not. If you look at the charts of gold, Bitcoin, and the stock market from basically 2020, right before all the COVID stimulus, those three assets have basically moved as if they’re one asset. Gold is behaving like a risk asset, not a risk-off asset. So if there’s any trouble in risk assets, we could easily see gold follow suit. Be very aware of that. If you’re buying gold thinking it’s a safe haven play, think again — it’s behaving like a risk asset.
CAROLINE WOODS: So how much does it have to fall to be at a price that makes sense to you?
CARLEY GARNER: I’m going to throw some kind of shocking numbers out there. But gold is not the kind of market that corrects 5% or 10%. When gold goes into correction, it’s 40–50%. In the ’80s, we saw 70% plus correction. Gold is a very boom-or-bust commodity. If you look at gold from 2011 through today, it has gone up on average 6% a year. But almost all of those gains have occurred in about three years out of the last 15. If you take away the really big dramatic gains like we’ve seen in the last couple of years, gold actually hasn’t performed all that well. It’s a market that has to be timed well, unless your holding period is multiple decades, not years or months.
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