Gold

Bond Market Says It All – And More

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Yes, the complete title is technically incorrect. However, I want to emphasize a point. Whatever we think the bond market is telling us might be dwarfed by what goes unnoticed by most observers.

Obviously, lower bond prices are synonymous with higher interest rates. Today’s (and this week’s) drop in Treasury bond prices and the correlative increase in interest rates are stark reminders of how quickly the tide can turn in the credit markets. What makes that a real eye-opener is that seven weeks ago, the long bond (TLT) was perched at the relatively lofty peak of 91. At the close on Friday, TLT stood at 83.7, a decline of more than 8%.

Even so, it doesn’t seem that severe unless we look closer.  Bond prices are now near their lowest point since the shift in Fed policy four years ago to push interest rates upward from near-zero to levels described as “higher for longer.” At current prices, long-term Treasury bonds are down more than 50% from their peak prices less than five years ago.

We have seen bond prices reach this point three times in the past two years. On the two previous occasions, bond prices have rebounded. They could do so again, but I doubt that will happen.

Current long-term bond prices appear close to breaking down and sending interest rates much higher. It has been twenty years since bond prices traded below current levels, and, conversely, interest rates exceeded current levels. A drop in bond prices now will bring consequences that younger investors are unfamiliar with and won’t be prepared for.

OTHER SIGNS OF TROUBLE 

The potential enormity of negative fallout from lower bond prices and higher interest rates was confirmed by big down days in all markets, including stocks, gold, and silver. Only oil was higher. What did you expect?

Also, the U.S. dollar index was up sharply. I expect a strong break above 100 in the US dollar index (DXY), which will be reflected in lower prices across the board for most assets (stocks, bonds, and commodities).

The severity and duration of declines depend on the extent to which the credit markets are affected. Something similar to 2008 is not only a strong possibility, but conditions will likely be worse.

WHAT TO DO

It all depends. If you think the markets will survive and recover, then you could wait things out.

As I said in a previous article, though…

“Thirty percent of investable assets in cash is not harshly negative. For most investors, however, it may be an uncomfortable stretch to have that much lying around, doing nothing. Although when the winds blow, and the rains come, it probably won’t be enough.” (see Buffett’s Cash Cache – $350B Isn’t Chump Change)

Buffett’s (Berkshire’s) Cash Cache

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$350 BILLION ISN’T CHUMP CHANGE 

All kidding aside, the amount is startling, if not staggering. Berkshire Hathaway now holds $350 billion in cash and Treasury bills. The amount represents 30% of total assets.

What is the thinking that led to this accumulation of cash, and what does it mean for investors?

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New Closing Lows For Gold And Silver

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Spot gold closed Friday in New York at $4490, and spot silver closed at $67.69. Both prices were new closing lows for the two metals. See the charts below, courtesy of Kitco…

Live gold chart

Live silver chart

Both gold and silver peaked earlier this year and within 24 hours of those peaks, both metals experienced serious price implosions. The respective lows of close to $4600 for gold and $72 for silver occurred on February 2nd, 2026. At their worst points, the damage amounted to a 15% loss for gold and a 40% loss for silver – in one day! (see Silver Price Implosion – What About The Fundamentals?)

Both prices held up until Friday (March 20, 2026). After two months of consolidation, any technical support appears to have given way. That cannot be a good sign if you are expecting a quick turnaround to the upside and much higher prices. Gold actually did run back up to its old high on the back of concerns about the war with Iran; however, it has lost a considerable amount of air in the past week.

ANALYSIS AND COMMENTARY 

There is a great deal of posturing about the “fundamentals” for both gold and silver. This is meant to assuage and comfort those who have seen a large portion of their metals values disappear – 19% for gold and 44% for silver in short period of time. It is also intended to justify previous predictions of much higher prices for both gold and silver.

There have been various attempts to downplay the significance of the declines. After all, silver had quadrupled in price (up 300%) after just nine months. Is it really so bad that it declined  “only 44 percent” after such a stellar run? The depressing reality of the math should startle anyone awake who might be sleeping – if you owned silver on January 29th when it peaked at $120 oz., you have lost nearly half of your money in less than two months.

In other words, $100,000 in silver at its January peak is now worth $56,000. That might not matter to you if you are in at $25 oz., but another halving of the silver price would erase most of your profits. Will you be able to hold on for the “long term” if silver drops to $25 or lower?

FINAL THOUGHTS

As far as gold and silver prices are concerned, I think we are seeing something quite similar to 1980.

Irrespective of all the 1) fundamentals, 2) proclamations about what is different now, and 3) justifiable arguments and expectations for much higher prices, etc., the price action in gold and silver coupled with the attitudes and behavior of investors leads me to the conclusion that $5500 for gold and $120 for silver are major price peaks and are not likely to be exceeded for several years. (also see Gold vs Silver – Gold Still Wins)

AI Is Bullish On Gold – What About You?

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Occasionally, I have asked ChatGPT for its thoughts on certain topics with the intention that it might provide additional perspective to the subject at hand. I did so again. This time I asked about the gold price and what might be expected over the course of 2026…Kelsey’s Gold Facts:  “Where are gold prices headed over the course of 2026? Please include some specific target prices and reasonable explanations.” 

ChatGPT: Probabilistic Outlook for 2026…

If we combine macro conditions, historical gold cycles, and current forecasts:

Scenario Probability Price Range
Base case ~50% $4,300 – $5,000
Bull case ~35% $5,000 – $6,000
Bear correction ~15% $3,700 – $4,200

Gold will respond most strongly to these signals:

1. US real interest rates (10-year TIPS)
Gold rallies when real yields fall.

2. Central-bank purchases
If annual purchases stay above ~800–1,000 tonnes, it strongly supports prices.

3. Dollar index (DXY)
Weak dollar = stronger gold.

4. Fiscal stress / debt markets
Treasury market volatility tends to push gold higher.

Bottom line…

A reasonable expectation for 2026 is:

  • Average price: roughly $4,500–$5,000

  • Likely trading range: $4,000 – $5,500

  • Extreme upside scenario: $6,000+

The structural drivers (central-bank buying, monetary instability, and declining real yields) remain strongly supportive of the gold bull market.

BEARISH SCENARIO?

Kelsey’s Gold Facts: Thanks for your input. Your assessments indicate that higher prices are likely for both gold and silver over the remainder of 2026. Is that correct? 

ChatGPT: Yes—that is the general conclusion, with an important qualification.

Based on current macroeconomic conditions, most analytical frameworks suggest that both gold and silver are more likely than not to trend higher over the remainder of 2026, though volatility and interim corrections should be expected.

The probability-weighted outlook for gold indicates:

  • Base trend: upward

  • Likely trading range: roughly $4,000–$5,500

  • Average expectation: about $4,500–$5,000

The main factors supporting higher prices are:

  1. Central-bank gold accumulation
    Central banks have been large net buyers for several years. This creates persistent structural demand that tends to support prices during pullbacks.

  2. Potential decline in real interest rates
    If monetary policy eases or inflation remains elevated relative to interest rates, real yields may fall—historically a favorable environment for gold.

  3. Fiscal and geopolitical uncertainty
    Elevated global debt levels and geopolitical tensions often increase safe-haven demand.

CONCLUSION 

How “realistic” are AI (ChatGPT and others) projections for gold prices? Some subtle provocation is intended. After all, we are looking to “artificial” intelligence for answers. See here for more information about AI price projections for gold and other precious metals.

(also see Silver Price Implosion – What About The Fundamentals?)

Gold vs Silver – Gold STILL Wins

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GOLD VS SILVER 

The past year has been wild and crazy for both gold and silver. After peaking at about $120 oz. scarcely one week ago, silver gave up almost 40% of that in one day, with an intraday low at $73. A strong reversal to the upside brought the price back to $84 at the close (January 30, 2026). Silver closed today (February 6, 2026) at $77, down 8% since last Friday’s collapse.

Gold, after peaking at $5500, dropped below $5000 with a loss of about 11% (January 30th) and closed today (February 6th) at $4966, a few dollars below last Friday’s close.

Rather than try to predict what might or might not happen next, let’s take a look at where we’ve been. More specifically, we will compare gold and silver performance since 2016, 2011, 1999, and 1980. As good as silver’s price performance has been, gold STILL wins.

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Crypto Collapse Shatters The Fantasy

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(The original version of this article was published at Talkmarkets.com as New Lows For Bitcoin and Ripple )

Cryptocurrencies are collapsing. Just a few hours ago today (Thursday), the price of Bitcoin (BTC-USD) touched $60k, down 23% from its $78k price in my original article on TalkMarkets two days ago. The selloff in Ripple (XRP) was worse. Its price at about the same time as Bitcoin reached its latest nadir, was $1.14 – down down almost 30% from its $1.60 print on Tuesday.

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More Downside For Gold And Silver?

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You can bet that most vocal proponents for spectacularly higher gold and silver prices will see Tuesday’s huge intra-day reversals as just another dip in price before the next jump to warp speed.

The longer and more severe the “correction”, the more frequent use of the phrase “temporary setback” can be expected. After all, the fundamentals demand higher prices, right? A day of reckoning is at hand.

The euphoria surrounding higher gold and silver prices seems to know no bounds. I remember how it was in 1980, as those of us in the trade at that time experienced a similar situation.

Notwithstanding the grim circumstances of double-digit interest rates (fed funds at 17.6% in April 1980), consumer prices averaging increases of almost 12% annually for three consecutive years, and enthusiastic calls for the “death of the dollar”, there was a pronounced peak to the price action in hard metals in January 1980.

In 2011, a government shutdown began on July 1st and lasted for twenty days. The gold and silver price peaks in 2011 came amidst similar sentiments regarding government debt, inflation, and the dollar.

Now, here in 2025, we can only wonder whether a similar situation is unfolding. If it is, it might be worth considering what happened after the peaks in 1980 and 2011.

GOLD AND SILVER AFTER PEAKS IN 1980, 2011

The price peak for gold in 1980 came on January 20th at $843 oz. Within a few days, gold was priced in the mid-$600s – a drop of almost $200. That might not sound like much, but it was a decline of more than 20%. A similar decline now would take the gold price below $3,500.

After a few more weeks, the gold price had broken the $500 level. In less than two months, gold had declined by more than 40%. Measuring from its recent intraday peak of $4,355, a similar drop at this time would take gold down to $2,600.

Silver fared worse. After peaking at close to $50 oz. on January 20th, 1980, silver’s price dropped by more than 30% in two short weeks. By February 3rd, silver was priced at $34.75. A similar decline at this time would take silver down to $37.80 by the end of next week.

Gold found temporary stability around $500, but silver continued to plummet, losing 76% in less than four months. Measuring from its recent peak of $54 oz, a similar drop now would take silver down to $13 oz.

Prices for gold and silver declined in nominal and real terms over the next two decades, reaching respective lows of $260 for gold and $4 for silver. The cumulative declines totaled 70% for gold and 92% for silver.

The gold price decline after its 2011 peak amounted to 45 % and the silver price decline was approximately 80%. Similar declines at this time could take gold as low as $2400 and silver as low as $11.

MORE DOWNSIDE FOR GOLD AND SILVER?

Quite possibly, yes, especially when considering what has happened in the past. The specific conditions are not necessarily the same, but they are similar. Also, there are other factors that are more important as to whether gold and silver continue to decline, how quickly, and by how much.

Liquidity concerns and deflation are the bigger forces at work that could stop in a heartbeat the relentless march of inflation-fueled higher asset prices (see No Winners When The Inflation Balloon Pops). As far as gold and silver are concerned, their price increases have outrun the fundamentals for now.

That does not mean they cannot go higher at this point. They could. You might not want to bet against that possibility, but you would be foolish not to be prepared for some sizeable declines. (also see The Case For Gold Has Nothing To Do With Its Price)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED

The Case For Gold Has Nothing To Do With Its Price

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THE CASE FOR GOLD

The case for gold is straightforward…

Gold is a proven long-term store of value that retains its purchasing power over extended time periods. When used as money (medium of exchange and measure of value), gold acts as a restraint on a government’s propensity to overspend. Also, using gold as money – without government intervention – guarantees price stability.

Gold is practical and convenient, and was money before fiat currencies. Goods and services were priced in ounces and fractional units of gold (grams, grains, etc.). Because the supply of gold is relatively stable and reasonably scarce, the threat of inflation is greatly reduced, although not eliminated. (see Even Gold Is Subject To Inflation)

Gold is not issued by a government or central bank, so it carries no default risk and is immune to political manipulation.

As if that were not enough, gold has additional (secondary) value because it is desired and used for ornamentation and jewelry.

Lots of things have been used as money. Only gold has stood the test of time. Gold’s universal acceptance is independent of government policy or intervention.

Notice that, so far, we have not said anything at all about the price of gold. When gold was the circulating medium of exchange, there was no price for gold. Gold, itself, was the measure of value for everything else.  How much gold you held – not its price – was indicative of your purchasing power, or wealth.

In other words, the gold price has nothing to do with gold’s fundamental value, i.e., its use as money.

HISTORY OF GOLD AS MONEY 

Gold emerged as the money of choice through competition.  Many other things (beads, grains, various industrial metals, etc) were tried throughout history.  For one reason or another, they didn’t work consistently over longer periods of time.

The first gold coins appeared around 560 B.C.  Over time, it became a practice to store larger amounts of gold in warehouses.  Paper receipts were issued certifying that the gold was on deposit.  These receipts were negotiable instruments of trade and commerce, which could be signed over to others.  They were not actual currency but were a presumed forerunner to our modern checking system.

The warehouse proprietors (‘bankers’) decided they needed to find a way to increase their profits.  Earning fees from their depository and safekeeping services wasn’t enough.  Since most of the gold remained in storage and most transactions involved exchange or transfer of paper receipts for the gold on deposit, they decided to issue ‘loans’ of the gold/money to others and charge interest.  The cumulative amounts of gold loaned out could not exceed the amount of gold held in storage.  Hopefully, not too many depositors would ask to redeem their physical gold at the same time.

By this time, there were reasonable indications of just how much gold needed to be kept available to meet the ongoing, day-to-day withdrawal demand.  The warehouses (banks) began issuing loans in the form of receipts backed by the gold held on deposit. That shouldn’t be a problem as long as people continue to trade with their paper receipts. Occasional redemptions of receipts (withdrawals of gold from storage) were met with smiling faces – business as usual.

It seemed to be a workable system.  But apparently, the ‘bankers’ were not content.  They soon started issuing more loans/receipts for gold that did not exist.  Of course, they saw no need to inform anyone of their actions, and the receipts still stated that they were redeemable in fixed amounts of gold.  And when some wanted to take possession of their gold on a physical basis, they could still do so – up to a point.

Questions arose, however, as to the value of the receipts. More and more individuals, companies, and countries opted for real money – gold.  There simply wasn’t enough gold to meet the redemption demands.

As late as the early twentieth century, U.S. paper currency was issued with a clear statement specifying that it was redeemable for specific amounts of gold (and silver) at fixed rates.  In addition, gold (and silver) circulated concurrently with U.S. paper currency and were interchangeable.  One was as good as the other. Supposedly.

In 1933, President Roosevelt issued an executive order “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States”.  Then, in 1971, President Nixon suspended convertibility of the U.S. dollar into gold by foreign nations.

For more than half a century, there has been no fixed convertibility of U.S. dollars (i.e., fiat currency) into gold (i.e., real money).

THE PRICE OF GOLD

The price of gold in dollars is an inverse reflection of the purchasing power of the U.S. dollar. Under the watchful eye of the Federal Reserve, the U.S. dollar has lost more than 99% of its purchasing power.

The dollar’s loss of purchasing power results in higher prices for goods and services. The gold price reflects the dollar’s loss of purchasing power by continually rising over time, albeit irregularly and in a volatile fashion.

Of particular note is that increases in the gold price come after the effects of inflation have worked their way into economic activity and are readily apparent.   The huge increase in the gold price from $35 oz. to $843 oz. happened over nearly a decade (1971-80) and was reflective of the loss of dollar purchasing power that had occurred over the previous several decades.

The phenomenally huge increase, however, was followed by huge declines. Eventually, more than thirty years later (2011), the gold price peaked again, this time at $1895 oz.

The gold price had more than doubled from its peak in 1980, but the huge price increase did not mean that gold was more valuable. In fact, the value, or buying power of gold at $1895  oz. in 2011 was consistent with its value in 1980 at $843 oz.

Similarly, what one can buy with an ounce of gold today at $3700 is comparable to what one could buy with an ounce of gold in 1980 at $843.

Since 1980, prices have risen more than fourfold. An upscale, new car at $16-18k in 1980 was the equivalent of approximately 20 ounces of gold ($843 times 20 = $16,860). A comparable vehicle today costs closer to $70-75k, and can still be purchased with 20 ounces of gold ($3700 times 20 = $74,000).

CONCLUSION 

The case for gold is the same today as it was centuries ago. Gold is real money; honest money. The price of gold tells us nothing about gold. The gold price tells us the extent to which the dollar has lost purchasing power.

Similarly, it does not matter whether gold is priced in dollars, yen, euros, yuan, etc. The price of gold in any fiat currency is nothing more than a reflection of  changes in the value of that particular currency.

Higher prices notwithstanding, the value of gold remains constant and unchanging. (also see Gold’s Singular Role)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED

The USD Is Worthless – Gold Is At $100k!

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If the U.S. dollar were to become worthless, what difference would it make if the gold price hits $100,000?

The ten ounces of gold you bought for $30,000 ($3000 x 10) would be worth $1,000,000. Should you sell?

A worthless U.S. dollar means that it has no purchasing power and is unacceptable for trading purposes. What would you do with a million dollars that nobody wants?

Likely, though, there would not be a gold price quoted in U.S. dollars. In fact, by that time, anything that would have been quoted in U.S. dollars would need to be repriced in something else, i.e., another fiat currency, crytocurrency, gold itself, etc.

Only then will you have a reasonable idea of how much your gold is worth. In all cases, though, it is about the purchasing power of the gold, not its price – in any currency.

COLLATERAL DAMAGE – CHAOS 

Total collapse of the U.S. dollar would break the entire financial system and wreak economic devastation on the world. A global depression would result. There would be disruptions in communication and public services.

Financial markets would be closed indefinitely (I hope you own physical gold) and social chaos would be rampant. That’s okay. You’re a millionaire, right?

WEALTH PRESERVATION 

Owning gold during a currency collapse does not make you rich. It preserves your purchasing power. (see Gold’s Singular Role)

Since 1980, the U.S. dollar has lost 75% of its purchasing power. It costs four times as much today for comparable goods and services as it did in 1980.

A salary of $50,000 in 1980 would need to be $200,000 today just to maintain the same standard of living.

The gold price peaked at $843 in January 1980. At more than $3400 oz. recently, gold has quadrupled in price since 1980, which compensates for the loss of purchasing power in the U.S. dollar.

CONCLUSION 

Fantastic price predictions for gold are meaningless when couched in terms related to destruction of the U.S. dollar. The financial, economic, and social conditions attendant to a complete collapse of the dollar are so horrific as to nullify any potential positives associated with a “phenomenally higher gold price”.

The value of gold is in its use as money. As a long-term store of value, gold protects and preserves purchasing power.  (also see “Will Gold Hit $3460?” – Followup)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED

“Will Gold Hit $3460?” – Followup

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In mid-March, I wrote the following:

“The U.S. dollar has lost approximately 75% of its purchasing power since 1980. What this means is that it costs about four times as much today for comparable goods and services as it did in 1980. 

In order for the gold price to fully reflect the loss in USD purchasing power, it would need to be $3460 oz. today. As it is, gold is priced at $3045 oz.,  more than $400 oz. cheaper than its inflation-adjusted high in 1980.” 

The intraday high for gold in January 1980 was $843 oz. The current inflation-adjusted equivalent of $843 oz. is $3463 oz. In my original article, I rounded the number to $3460 for simplification.

In conclusion, I asked:

“Will gold reach $3460? It’s possible. A 14% surge from here would do it.”

The answer came quickly as gold surged in price by more than $400 oz. in April. The price action is shown on the chart (source) below…

Live gold chart

The gold price did not reach $3460, but has peaked now, on three occasions, just above the $3430 mark.

Practically speaking, though, it is reasonable to say that gold has now matched its intraday price peak of $843 oz. in 1980.

Where Do We Go From Here? 

After its recent peak at $3435 in April, the gold price declined to $3171, a drop of more than 7%. After last week’s action, gold appears to be headed back to the same level.

Beyond that, the gold price could easily fall back to $3000 oz. or lower.

The upside barrier for the gold price could be more important that any downside price targets. In other words, the gold price is not likely to push through $3500 very soon, regardless of how well it is supported at current prices or lower.

Gold’s higher price over time is a reflection of the U.S. dollar’s loss of purchasing power. It is not a question of “how high can gold go?” but rather “how much purchasing power has the dollar lost?”

Once the gold price reaches a point that reflects the dollar’s loss of purchasing power up to that point, it has gone about as far as it can go, for the time being.

Afterwards, the price can decline or go nowhere for years. This can be seen on the chart (source) below…

 

The increase in the gold price from $35 oz. in 1970 to $843 oz. in January 1980 reflected the effects of inflation on the dollar’s purchasing power over the previous four decades. After finding its inflation-adjusted price, gold declined.

The gold price peak of $1895 oz. in 2011 accounted for the effects of inflation after 1980 and up until 2011. Thereafter, the price declined for nearly five years.

The recent gold price peak at $3435 oz. reflects the dollar’s loss of purchasing power since its 2011 peak at $1895.

All three periods of increasing gold prices were approximately ten years in length (1970-80; 2001-2011, 2015-25). The first two periods (1970-80; 2001-2011) were followed by multi-year declines.

Time will tell us if something similar happens this time.

CONCLUSION 

Gold’s recent price peak at $3435 oz. likely represents the culmination of its latest inflation-adjusted advance. With the dollar’s loss of purchasing power fully accounted for, history suggests that gold could enter a prolonged period of stagnation or decline, much like what happened after the 1980 and 2011 peaks.

A drop below $3000 oz. wouldn’t be surprising. For now, gold appears to have exhausted its momentum. (also see Gold, Silver, & Gold Stocks Since 2011 – Gold Kills It!)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED