Recent headlines warned of gold’s “largest sell-off in a decade.” In reality, gold prices barely moved – and major banks like JPMorgan now see $6,000 by 2028. This week, Peter Reagan explains why today’s dips may mark a “new normal” for gold…
By Peter Reagan
Your News to Know rounds up the most important stories about precious metals and the overall economy. This week, we’ll cover:
- Gold price finally pulls back…
- …but is anyone actually concerned?
- The gauges used to measure gold for the last 40 years are no longer valid
- JPMorgan says $5,000 gold in 2026, $6,000 in 2028
Gold’s “worst selloff in a decade” still leaves it above $4,000
CNN tells us that gold posted its steepest one-week drop in ten years, falling as much as 6.3% to $4,082 an ounce. At first glance, that sounds alarming. Until you remember that gold traded at $1,650 just two years ago.
In other words, the “worst sell-off” of the decade still left gold above $4,000. For long-term holders, that isn’t crisis – it’s consolidation.
Gold’s pullbacks increasingly resemble plateaus, not plunges. Each “low” stands higher than the last. Think about it for a moment and you’ll understand why – it’s because every currency gold is priced in keeps losing purchasing power.
When U.S. government debt breaks $38 trillion – surging by $1 trillion in just 79 days – while inflation proves sticky, the smart question becomes: How low can gold go? Waning purchasing power means higher ceilings and higher floors, too.
Mainstream attempts to impose a narrative on reality – “trade optimism,” “dollar rebound” or even reduced seasonal demand in India – all miss the point. The dollar’s structural weakness (shared by every major currency today) matters far more than a single season’s jewelry sales.
Remember: Over the long run, gold’s direction is set by currency debasement, while its day-to-day volatility is shaped by supply and investor demand.
But don’t take my word for it – take a look at the paper The price of gold and the exchange rate.1 Or Baur and Lucey’s Is Gold a Hedge or a Safe Haven?2
Spoiler alert: They all come to the same conclusion. Gold’s long-term trend reflects monetary destruction (from factors like inflation, real interest rates and currency strength) while gold’s short-term moves are influenced by supply fluctuations and investor sentiment.
So what does that mean for investors today? Don’t chase price – instead of buying dips; focus instead on how much “financial insurance” you need.
Why “gold bubble” talk misses the point
An analysis by Gary Tanashian pushed back on claims that gold is in a “bubble.” I want to discuss it because it’s quite good.
Tanashian’s logic is simple:
- Gold is money, but it can’t inflate like a currency
- Supply isn’t exploding; global production has flattened
- Demand is surging among both central banks and investors
Between 1980 and 2022, analysts gauged gold against inflation-adjusted interest rates and GDP growth. Today, those yardsticks have broken down. Debt now grows faster than GDP across developed economies – something those old models simply didn’t anticipate. This analysis goes so far as to call out academics3 for “valuing theory over reality.”
There’s an important lesson here! The map is not the territory. If your theory fails to account for reality, it’s time to reconsider your theory. Maybe go shopping for a new one. When I hear the words
Here’s my take: Each new record-setting gold price teaches the market that scarcity – not speculation – drives price discovery. When gold hit $1,900 in 2011, bargain hunters waited for $1,100. Now, after seeing $4,300, even $3,000 looks irresistible. Today, it looks to me like weak hands have exited. Only disciplined buyers remain.
Let’s take a closer look at JPMorgan’s $6,000 gold forecast
Reuters recently reported that JPMorgan expects gold to reach $5,000 by 2026 and $6,000 by 2028.
Natasha Kaneva, the bank’s Head of Global Commodities Strategy, calls the coming U.S. rate-cutting cycle “historic in size” – a polite way of saying highly inflationary.
That logic holds water: When policy makers choose lower rates to manage an impossible debt burden, currencies weaken – and gold reprices higher. Even brief corrections serve a purpose. They allow investors to accept that gold is being revalued in a new, debt-heavy era where traditional benchmarks no longer apply.
Gold’s recent volatility isn’t a warning sign; it’s confirmation that the metal now trades closer to our new fiscal reality.
The “biggest sell-off in a decade” barely dented its long-term trajectory because the forces pushing it higher – sovereign debt, currency erosion, and central-bank accumulation – are still accelerating.
That’s why, for savers worried about currency debasement rather than day-to-day price moves, physical gold remains a long-term anchor to real-world, uninflatable value.
For more on how physical precious metals can help diversify savings against both inflation and debt-related risks, request your free copy of the updated Birch Gold Information Kit.
