The 1973 pattern and an $8,000 gold target
Today's gold chart out to July 2026 looks almost identical to the gold bottoming pattern of 1973. Both show a double top, then a plunge, a small recovery, up-and-down chop, and finally a double bottom. In the current chart, the double top sits near 5,600 and again near 5,350, with the double bottom hanging around $4,000 in 2026. In 1973, gold peaked near $125 (roughly 125-130), fell to a bottom near $90, and made a double bottom there.
After the 1973 bottom, gold ran about 100% over the next four or five months, moving from roughly $90 at the end of 1973 to about $180 by the start of 1974. If the same thing repeats now, a 100% move from about $4,000 lands gold near $8,000 by roughly December 2026. Nothing is guaranteed. No two patterns are ever exactly the same, and there is always some delay rather than a perfect one-to-one match. But if the pattern completes, there is a decent chance of $8,000 gold by the end of 2026.
Silver should move even faster than gold. Because of that, I hold some silver positions, and I have options plays running now in gold. Most of my holding is physical metal that I leave alone. I play the derivatives game only a little, since I want to stay in the game.
Why gold can fall while inflation rises
Many people assume that any time gold drops while consumer prices climb, it must be manipulation. The 1973 data says otherwise, and this predates gold futures markets, which did not exist until December 1974.
In 1973, month-to-month inflation spiked to about 1.8% in a single month. Annualized, that is 1.8 times 12, more than 20% inflation. That 1.8% reading came during the oil embargo triggered by the Yom Kippur War of October 1973, which pushed the price of everything sharply higher. Even COVID-era inflation never reached that level. Yet during that same spike, gold fell from about $125 down to about $90. Rising consumer prices and a falling gold price happened at the same time, because gold and inflation are never lined up exactly. There is always a lag, and that lag is what is happening now.
Two bubbles popping: Bitcoin and AI
Two large bubbles look like they are popping or have already popped: Bitcoin and semiconductors, which is what we now call AI. Once they deflate, gold should recover strongly.
The MicroStrategy story frames the risk. A New York Times article by Floyd Norris, dated December 15, 2000, reported that Michael Saylor, chairman of MicroStrategy, was accused of fraud by the SEC. The company's share price had soared, then collapsed after it was forced to restate its books and erase all the profit it had reported. Saylor settled the civil charges filed in federal court in Washington without admitting or denying them. He agreed to pay $8.3 million to shareholders plus a $350,000 penalty to the SEC. Two other MicroStrategy officials each agreed to a $350,000 penalty and to pay a combined $1.7 million to shareholders. The SEC said they reported profits while the company was actually losing money. That article ran about seven to eight months after the dot-com bubble collapsed.
This is not Saylor's first bubble. Counting the dot-com crash 26 years ago, the current one is his second or third, and it looks like it has collapsed a third time. The MicroStrategy chart back to 1999 shows the initial Bitcoin bubble when the company started buying Bitcoin, then the crypto winter, then the run to the December 2024 high near $100,000-plus, and now a drop back down. People who get in trouble for taking investors' money tend to do it again if they can. Whether those who bought in this time, especially anyone who lived through the dot-com bubble, deserve to be ripped off again: maybe.
The ratios that matter more than dollar prices
The gold-to-S&P-500 ratio sits at a major pivot point going back to the start of the current bull market at the end of 2015. A higher ratio means gold is expensive relative to stocks, or stocks are cheap relative to gold. That level was hit twice, zigzagged around for about a year and a half, acted as resistance, briefly broke above during the lockdowns, was resistance again in 2022 and 2023, then finally broke through at the beginning of 2025. It has been support since 2025 and looks like it will stay that way, so gold should start recovering relative to stocks.
That does not mean gold rises in dollars right away. It means gold should hold its value against stocks. If a bubble pops and stocks fall hard, gold falls much less in dollar terms, until the whole thing gets reinflated, which ends in a crack-up boom after the next reflation.
Bitcoin priced in silver tells a similar story. It has been stuck at the crypto-winter levels of late 2022 and early 2023 since the start of 2026, currently about 1,000 ounces of silver per Bitcoin. Silver has stayed relatively stable while Bitcoin deflated. I do not think Bitcoin recovers in silver terms this time, maybe slightly in dollar terms depending on how low the dollar goes. Gold and silver should recover in dollars before Bitcoin does.
In dollar terms, Bitcoin is struggling at its 200-week moving average, which now acts as resistance instead of support. Bitcoin broke through that line after the crypto winter in early 2023, broke back below it around March or early April, and has not recovered above it since. That is a very bad technical sign for a bubble that has already popped and is now deflating.
The end game
Trump said today he wants to cut off trade with Spain, apparently over NATO. Whether that is legal or will happen is unclear, but it could be enough to pop the AI bubble through the semiconductor index, which has been falling sharply for three weeks. That drop could already be over.
Once it is, deflation hits, gold recovers, and then comes a reinflation. My thesis is that there is only one more major reinflation left after a financial crisis, and that should be the end game. Gold will recover eventually. That much is certain. Whether it starts now is not.
