28.3 C
New York
Saturday, August 16, 2025

Gold prices risk ‘blow-off top’ like 2011


Gold prices risk ‘blow-off top’ like 2011 originally appeared on TheStreet.

Carley Garner is a long-time futures trader who has seen a thing or two over a career that has lasted over 20 years, including gold market rallies and sell-offs.

The massive rally in gold stocks this year to north of $3,357 per ounce has caught her attention, and not in a good way.

Invest in Gold

Powered by Money.com – Yahoo may earn commission from the links above.

Gold prices are up over 28% year-to-date in 2025, and the size and speed of the move (and the reasons behind it) remind her of a similar rally 14 years ago in 2011. Back then, the outcome for gold bugs wasn’t fun.

“The 2011 top was met with a 45% haircut that took nearly a decade to recover,” according to Garner.

Gold has rallied over 28% in 2025, but not everyone is convinced it can continue to climb higher.Image source: Costaseca/Lucas/AFP via Getty Images
Gold has rallied over 28% in 2025, but not everyone is convinced it can continue to climb higher.Image source: Costaseca/Lucas/AFP via Getty Images

Gold has enjoyed a perfect storm this year as macro crosscurrents hamstring the Fed’s monetary policy, GDP slips, and the U.S. debt outlook worsens.

Unemployment has risen to 4.2% from 3.4% in 2023, CPI inflation of 2.7% is stubbornly above the Fed’s 2% inflation target, the World Bank says GDP is expected to fall to 1.4% from 2.8% last year, and debt experts say the One Big, Beautiful Bill Act passed this year will add $3.4 trillion to the U.S. debt by 2034.

Related: Analyst expects gold to fall off the ‘Wall of Worry’

The risks have hammered the US Dollar, causing the Dollar Index to tumble 10% in 2025. Since gold is priced in USD, the Dollar’s struggles have made it more attractive to overseas buyers eager to diversify their holdings away from U.S. Treasuries in protest of President Donald Trump’s tariff policy.

The significant uncertainty has also made antsy investors far more interested in gold than Treasuries as a safe haven.

“Safe haven dollars can purchase gold, an asset that doesn’t produce income, at an all-time high without a risk parachute, or they can buy Treasuries at multi-decade lows with a yield of 4% to 5% to cushion downside price risk,” said Garner in a TheStreet Pro post. “Ironically, the masses select the former and pass on the latter.”

Many are indeed giving up on Treasuries’ relatively juicy yields, fearing the worst. That may not be the best move, though, for newer gold bugs, given that gold has already rocketed to all-time highs this summer.

Troubling times always increase interest in gold, and this isn’t the first time that gold has put on a show.

In 2011, gold similarly rallied sharply to all-time highs amid uncertainty around major banks and the economy, and aftershocks following the Great Recession, which was still fresh on investors’ minds.

Related: Major analyst resets gold price target after shocking economic data

Remember the S&P cut the U.S. debt rating for the first time in history in August 2011 because of the growing deficit, prompting a massive 5.5% drop in the S&P 500 on Aug. 8. The situation was so bad that Warren Buffett famously back-stopped Bank of America on Aug. 25, providing a cash influx in exchange for preferred stocks and warrants that eventually made Buffett’s Berkshire Hathaway a mint when risk assets found their footing and gold lost its luster.

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe

Latest Articles