Gold was up 76% from the end of 2024 into early 2026…
U.S. stocks were up 18% over the same period. Even Nvidia (NVDA), the artificial intelligence (“AI”) darling, couldn’t keep up… rallying just 39%.
Precious metals were the place to be. And when that happens, folks go from whispering about life-changing gains in gold to preaching into a megaphone about it. Word gets around. And confidence turns into an unshakeable belief that higher prices are inevitable.
This is what we saw in the gold market in January. Well, pockets of this type of behavior were coming out of China.
Quotes like this one from a recent Reuters article start to become common…
If this keeps up, gold is still likely to go higher. I can still mentally accept the current price level, so I decided to come buy some.
That’s from 68-year-old Wang Quiqin in January. She was ready to buy gold after the rally higher.
You also get folks saying things like this…
It will definitely go higher. Society is so chaotic and unstable now.
Or this…
Trump, being like this now, gold will keep going up. It won’t fall. He’s a madman, don’t you think so?
This was the sentiment in China’s gold market in January. And as a contrarian, this is not what I want to see. Prices tend to drop once the crowd turns euphoric.
It didn’t take long for gold to correct, either. The metal fell 14% from January 28 to February 2. That’s a double-digit loss in just three trading days.
I’m sharing this with you now because this is just a taste of what the ultimate gold peak will feel like.
It won’t just be Chinese buyers that are riding the golden rocket to the moon… It will be everyone around you.
Your neighbor, cousin, or friends who’ve never talked about gold with you will be clamoring to buy more.
Plus, as gold recovers from its rapid 14% drop, it will only strengthen the belief that gold’s boom is unstoppable.
In a minute, I’m going to dive into several reasons why gold will keep climbing higher. And I don’t mean for a few more months – but years… with an ultimate peak as high as $10,000 an ounce before the boom ends. But before we get into that, let’s look at one indicator that can help you spot the top for this current gold boom…
How to Avoid Buying the Top in Gold Alongside the Crowd
Your grocery bagger giving you a gold-stock tip will be a good sign… but this isn’t 1928 anymore.
We don’t want to rely just on a few anecdotes to make a major portfolio decision. And we don’t have to.
Along with your grocery bagger, hairstylist, and second cousin hyping up gold, there will be a signal from the larger crowd.
I’m talking about the speculators who chase quick gains in the markets. They tend to take the opposite bets of the pros.
When these speculators get extremely bullish on one asset, it’s usually a sign that the boom is coming to an end. And once the trend reverses, a bear market kicks off.
Importantly, we can see what these speculators are doing through the Commitment of Trader reports for all sorts of assets… including gold.
In the chart below, you can see that the crowd was extremely bullish on gold from 2010 to 2011, in 2016, and in 2020. It also shows how we are nowhere near that herd mentality today…
Buying at those peaks in sentiment was a terrible idea.
Gold fell 45% from its 2011 peak until its December 2015 low. That’s four years of falling gold prices. And it would’ve wiped out nearly half of the money you put into the trade.
In 2016, gold sentiment reached a high in July. Gold hit a peak on July 8 and fell 17% by December 15.
Worse, gold didn’t hit a new high until June 2019. So if you bought with the crowd in 2016, you were sitting on losses for three years.
The most recent case was in 2020. Gold speculators were the most bullish ever in February 2020. And in this case, they would be right for a few more months.
But by August, gold’s rocket higher was over. Gold fell 20% from August 2020 to September 2022. And it wasn’t until March 2024 that the next leg higher in gold took off.
Put simply, when these speculators go “all in” on gold, I’ll be more worried. But we aren’t there yet. It could be years before we see that kind of euphoria throughout the whole gold market.
The Gold Boom Isn’t as Old as You Think
Gold has been rallying since September 2022. But it has only started to outperform stocks in the past two years.
You see, gold and U.S. stocks tend to take turns being the best performers. I’m not talking about over days or weeks, but over years.
In fact, U.S. stocks beat out gold for more than a decade in the 2010s and early 2020s.
The decade before that was the opposite. Gold outperformed U.S. stocks from 2001 until 2011.
In the 1990s, stocks were the big winners.
Now, we are in the early innings of a gold decade. That’s because the outperformance in gold versus stocks just started in late 2024.
The gold-to-S&P-500 ratio shows this. When this ratio rises, it means gold is the better performer. And when it crashes, you want to own stocks instead of gold.
The ratio is finally rising after years of falling. Check it out…
What’s interesting is that this cycle is starting out a lot like the 2000s gold boom. Gold outperformed stocks in a big way in 2001 into 2003.
Then, the metal cooled off a bit before taking off again. In fact, it did this a handful of times in the 2000s.
The metal would rip higher, cool down, and then rip higher again before its eventual peak.
Importantly, with the ratio at 0.76 today, it would have to double to reach its 2011 peak.
Gold is already near $5,200 an ounce. If this bull market lasts a few more years, it could easily break $10,000 an ounce by 2030. The market is already buying the idea that the gold boom will continue…
January’s Drop Isn’t ‘the Big One’
Gold has been steadily climbing higher after the quick drop in late January. And it’s forming a bullish wedge pattern.
If you’re not familiar with a wedge, it consists of a “support” line and a “resistance” line.
The top line of the pattern is resistance, and the bottom line is support. Typically, these lines act as barriers to stop prices from rising or falling past certain thresholds.
The asset bounces between the two lines as the wedge forms. Then, when the gap between these lines narrows, the asset breaks out in one of those directions.
Once that happens, it’s common that a big move follows in the direction of the breakout.
Put simply, a jump above the resistance line indicates a rally is on the way. And a drop below the support line tells us more losses are coming.
The SPDR Gold Shares (GLD) is forming a wedge right now. And it looks very similar to the wedge we saw in late 2025. Check it out…
The late 2025 case is just the most recent example of this bullish pattern taking shape. We saw setups like this in late 2024 and early 2025. Both led to breakouts, with gold quickly climbing higher. Check it out…
So far, this isn’t what happens after a gold peak. This is a textbook cooldown before the next leg higher kicks off. And we are getting close to that next breakout today.
In short, there was excitement in the gold market in January. Pockets of euphoria were starting to show up. Then shortly after, gold sold off.
What we saw in January was not peak sentiment. The crowd has a lot more speculating to do before we reach that ultimate top.
If gold is in a new cycle of beating U.S. stocks, it will be years before the top shows up.
This is likely one of the last great buying opportunities of this gold boom. If you haven’t bought already, consider doing so today.
– Chris Igou
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