Table of Contents
Gold currently sits right around $4,600, generally following the trajectory mapped out back in 2020. At that time, when gold was trading below $2,000, the thesis was simple: a move upward, followed by consolidation, and ultimately a breakout leading into 2025 and 2026. Five years later, that long-term outlook is being validated. While the price is approaching $5,000, market sentiment is shifting from skepticism to euphoria, raising questions about whether we are nearing a top or simply entering the most aggressive phase of the bull run. The data suggests that while short-term volatility is possible, the macro move is far from over.
Key Takeaways
- The $6,000 trajectory remains intact: The long-term logarithmic regression suggests gold is on track to hit $6,000 before the end of the decade, potentially peaking in 2026 or 2027.
- RSI is a flawed exit signal: While monthly RSI levels are historically high (comparable to 1973), selling solely on this indicator caused investors in the 70s to miss a subsequent 600% rally.
- Capital rotation is accelerating: Liquidity is moving away from speculative assets like altcoins and towards hard assets; crypto continues to put in new lows when valued against silver and gold.
- Correction dynamics have changed: History suggests that when precious metals eventually correct, risk assets (stocks and crypto) often drop significantly harder, rather than rallying as a counter-balance.
Respecting the Bull Market Structure
Since the breakout began in late 2023, the most prudent strategy has been to simply respect the bull market. A clear pattern has emerged where gold consistently holds the "Bull Market Support Band." We saw successful tests of this level in February 2024, November 2024, and again in August 2025.
Currently, it has been approximately 24 weeks since the last test. While a retest is likely at some point in 2026, the market structure remains incredibly robust. The expectation is a short-term "blow-off top" in metals, likely occurring within the first half of 2026. However, investors should be cautious about labeling this as the cycle top. A distinct possibility exists where gold finds a local top, retraces, and then continues its march upward through the end of the decade.
The RSI Trap: Lessons from 1973
There is a prevailing narrative that gold is currently overbought. Critics point to the monthly RSI, which is hovering around 93 to 94—levels not seen since 1973. While it is true that the asset is heated, using monthly RSI as a definitive sell signal is a strategy fraught with historical risk.
In 1973, during a similar period of inflation and market turmoil, gold hit a monthly RSI of 94. Following that signal, gold did indeed suffer a correction of approximately 30%. If a similar scenario played out today, gold could drop to around $3,200.
"Imagine if you sold all your gold in May of 1973 when the monthly RSI hit 94... You would have avoided a 30% drop, but if you didn't buy back, you would have missed out on another 600% rally from there."
The danger of trying to time the exact top based on momentum indicators is that you risk stepping off a freight train right before its longest journey. In the 1970s, after that initial "overbought" signal and correction, gold rallied another 7x over the next seven years. Extreme momentum often signals the middle of a secular trend, not necessarily the end.
Valuation Against M2 and the S&P 500
To understand the true value of gold, we must look beyond the nominal price and measure it against the supply of money (M2) and the stock market.
Gold vs. M2 Money Supply
Gold has recently broken through its 2011 highs when valued against M2. Assuming this is a genuine breakout and not a liquidity sweep, technical analysis suggests the next major level is approximately 26% higher from current prices. This aligns with the broader thesis of gold moving between $5,000 and $6,000. The denominator—the US dollar—is being printed relentlessly, ensuring that hard asset prices continue to move up and to the right over the long term.
The S&P 500 Ratio
The S&P 500 divided by gold chart is nearly identical to the setup in 1973. We are seeing a major rollover where equities are losing value relative to metals. If the S&P 500 breaks down against gold, it signifies a regime change that fundamentally alters market correlations. In this environment, the "smart" money moves that worked for the last decade (blindly buying tech stocks or crypto) stop working, and hard assets begin to drastically outperform.
The Great Rotation: Crypto and Altcoins
One of the most painful realizations for modern investors has been the performance of the crypto market against precious metals. While stocks are at all-time highs in nominal terms, they are down significantly against metals. The situation is even more dire for the cryptocurrency sector.
The "Falling Knife" of Altcoins
For the last four years, the prudent move was to pivot away from altcoins. Yet, market participants consistently fear missing out on an "Altseason" that social sentiment data suggests isn't coming. Retail interest has been trending lower, not higher.
When looking at Total3 (Altcoins) divided by Silver, the chart shows altcoins putting in fresh lows. This is not a consolidation; it is a bleed. Investors often try to catch the bottom, assuming that because an asset is down 90%, it cannot go lower. However, against hard assets, altcoins have behaved like falling knives.
- Momentum is a powerful force: Just because an asset class feels "exhausted" doesn't mean the trend is over.
- The Bitcoin Mask: For years, Bitcoin's performance masked the weakness of the broader altcoin market. Now that Bitcoin has stalled against inflation hedges, the weakness in the broader crypto market is exposed.
The Correction Fallacy
A common hope among crypto holders is that when metals finally correct, profits will rotate back into risk assets. History suggests the exact opposite. During the 1973 gold peak, when gold finally corrected, the stock market dropped by 50%. We saw a preview of this in April 2025: gold corrected about 10-11%, but stocks dropped nearly 20%.
If gold corrects, it usually signals a liquidity crunch that hits risk assets harder. Until the stock market undergoes a serious correction and finds a true bottom, Bitcoin and altcoins will likely continue to bleed against stocks and metals. We are in a cycle where hard assets are the primary flight to safety, and expecting a rotation back into speculative assets prematurely is a dangerous gamble.
Conclusion
We remain in a distinct market regime where tangible assets are outperforming speculative ones. While gold is undoubtedly heated in the short term, and a local top in the first half of 2026 is probable, the long-term data points to much higher valuations by the end of the decade.
The path to $6,000 is not a straight line, but the macro drivers—monetary debasement and a rotation out of risk assets—remain stronger than ever. Investors should be wary of selling their insurance policy (gold) just because the price has risen, especially when the alternative is holding assets that are breaking down against real money.
