Where the Metals Stand Right Now
Gold peaked in January at 5,600 and then spent roughly five months grinding lower, bottoming last week around 3,959. That is a 29% drop from the top. For a bear-style pullback inside a larger bull market, that magnitude is ordinary rather than alarming. The timing here looks good precisely because the correction has run about five months, which puts it close to the end of the pattern. There was not much worth discussing during those five months of decline, and now the market appears to be coming out of it.
This is the third gold bull market of the modern era. The first ran from 1971 to 1980, the second from 2002 to 2011, and both are best described as nine-year runs. Each contained significant corrections, and the historical average sits between 25% and 30%, lasting five to seven months. So a 29% drawdown does not end the trend. The 200-week moving average currently sits at 2,800, and there is no reason to expect price to travel down anywhere near that level. The gold chart looks unbelievably healthy. Even after that 29% correction, the market is nowhere close to breaking down. This is a bull market correction and nothing worse.
Gold has since bounced. As of Friday, July 3rd, it traded at 4,175, which leaves it down 25% from the high. That is a partial crawl back, though price is still bouncing around near the bottom rather than surging away from it.
Silver told a rougher story on the downside. It hit a high of 121 and fell all the way to 56, a 54% correction. It has recovered to 62, which still leaves it off about 48%. The 4160 zone was the floor being watched, and both metals blew right through it. Those levels corresponded to the 200-day moving averages. Price broke under both averages twice, two weeks ago and again last week, which amounted to a false breakout followed by a retest of the 200-day line. That produced two clean buying opportunities in June.
The mining stocks moved in parallel. The HUI index hit a high of 989 and fell to 624, a 37% correction. That was painful for many holders, some of whom were down 50% and a large number down around 40%, but it was not as brutal as past cycles. The index has since backed off its lows and is down about 32%. It could squeeze higher fairly quickly. A meaningful divergence appeared here: the miners did not sink to their earlier lows, which is a sign of underlying strength on these corrections. When better-quality miners stop making new lows while price is being tested, that behavior can mark the point where weak hands have been exhausted and stronger buyers start accumulating quietly.
The Path Higher Will Not Be a Straight Line
The good news is that a run is likely in July and early August. The bad news is that the move will not go straight up. Gold's all-time high is 5,600 and price is sitting at 4,175, so there is no ripping all the way back to the high in one leg. It will take work.
I have already built my buy list for the next correction. I do not think 4,000 will hold as the low for the year. I expect price to go back below 4,000, which is ugly. I bought this dip, but I am prepared to buy the next one too, so I will wait for the next correction even though I would rather not have it.
Seasonality is the obstacle. Even if gold makes a run in July and August, the window from mid-August to mid-October carries poor seasonality for the S&P 500. Sometime in that stretch, a correction on Wall Street looks very likely. How deep is the open question: 5% is close to certain, but it could run 10% or 20%. When that equity correction arrives, gold and silver get whacked along with it. The metals are not out of the woods yet, even after a six-month correction. The normal rhythm inside a deep bull-market correction is a sequence of higher highs and higher lows.
What I am hoping for is a run up to somewhere between 4,500 and 5,000 before the next correction hits, and then for that pullback to hold at 4,200 without retesting 4,100 or 4,000. I do not think that clean outcome will happen. I definitely do not expect 4,500 to hold once price gets above it, so more waiting is probable. The goal is to be above 5,000 by November 1st, and I might be begging for that. Once we are above 5,000 on November 1st, the S&P seasonality headwind is gone, and at that point gold and silver should start ripping through November, December, and January. My conviction turns strongly bullish once November 1st arrives.
The reason timing matters this much is that the next leg is where the real gains sit. The first leg started in August of last year, when silver went from 35 to 120 and gold was ripping alongside it. Gold ran from below 4,000 in August up to 5,600. When the second leg comes, you want to already be on the train, not off it. I expect that next leg to begin in November. Very bullish for the end of the year, less so for the coming quarter. The costliest mistake here is not buying too early, it is running out of cash before the opportunity actually arrives.
Downside Targets and the Round-Number Trap
On the question of how much lower silver could go, the logic follows gold. If gold heads back below 4,000, silver goes lower with it. The 55 area is in play, and 54 to 55 is very much in play. I do not expect 50 to get touched. It is possible price could sink that low, but 54 is the more realistic target. A lot of people fixate on the previous high near 54 from last year and treat 50 as a clean psychological floor, yet markets tend to reverse before that kind of round number becomes comfortable to everyone.
For gold, many analysts are calling for 3,500. I do not think price goes there. My expectation is somewhere in the 3,700 to 3,900 zone. The recent test of 4,000 gold was a beautiful entry point, because I do not think price travels much below those levels. Anyone who did not buy near there will probably regret it over time. Those are the floors as I see them.
The One Chart That Matters
The triggers for a final washout come down to AI, the war in Iran ending, and how both feed into the S&P 500. The single chart worth watching, if you own gold and silver miners, is the gold-to-S&P 500 ratio. It currently sits at 0.55, which you get by dividing the gold price of 4,175 by the S&P at 7,483. The number that changes everything is 0.77. Above 0.77, the wind is at your back and the coast is clear.
For historical scale, the average of that ratio in January 1980 was six, meaning gold traded at six times the S&P 500. That figure is genuinely insane by today's standard. We are not going back to six. But two is a reasonable target, and from 0.55 that is roughly a double-and-double-again move.
This ratio is so useful because it captures two things at once. As it climbs from 0.5 through 0.6, 0.7, 0.8 and onward toward two, it shows capital rotating out of the S&P and into gold, massive amounts of money changing allocation. It also shows sentiment turning, because a rising ratio reflects money moving into the miners and into gold itself. Once price clears 0.77, I firmly believe the ratio trends all the way to two, and that is when precious metals investors win the war. Relative strength exposes capital flows that a dollar-price chart alone cannot show, and institutions like pension funds and large asset managers tend to shift gradually, leaving subtle footprints before the dramatic price moves appear. The 0.77 threshold comes from a chart published by Northstar Charts on X.
The Four Battles of This Bull Market
There are essentially four battles gold and silver investors need to win, and three are already won.
The first battle was gold breaking out. That happened back in December 2019. Gold sat at 1,500 heading into the end of January 2020 and was already trending upward, but it did not truly confirm the breakout for years. From 2020 to 2024 it was a slow, sluggish slog from 1,500 to 2,000, about 100 dollars a year, never breaking down but never accelerating either. In February 2024, gold reached 2,050 and then took off. The breakout confirmed in February, and by the end of March it was clearly off to the races, running from 2,000 all the way to 5,600. The current correction does not stand in the face of that breakout.
The second battle was silver confirming. Silver did not join the party in 2024. It took another 18 months of waiting, all the way until August 2025, before silver finally moved. At $35 it effectively said "it's time" and went to 120. Gold was far ahead the whole time while silver stayed sluggish.
The third battle was the miners confirming. The HUI broke out in August, joining silver.
The fourth and final battle is sentiment, and that is the one still unresolved. Sentiment turns only when gold outperforms the stock market. That is exactly what happened from 2002 to 2011 and from 1972 to 1980. From 1972 to 1980 gold went from 35 to 800. From 2002 it went from 250 to 1,900, an 8x move, while outperforming equities. That relative outperformance has not happened in this bull market. The S&P has been roaring, which is why the ratio sits at only 0.55 and gold has not yet outrun stocks. When it finally does, the ratio pushes past 0.77 and toward two. Until then, the strategy is simply to keep stacking shares and wait for gold to outperform the stock market.
Silver can be ignored in this framework, because silver follows gold. The focus belongs on gold's fundamentals and on that ratio chart.
The Macro Case Underneath It All
One of gold's core fundamentals is a weakening economy, which generates a fear trade into gold. That fear trade is the ultimate reason for owning gold and silver miners. The working assumption is that the United States defaulting on its debt is a fait accompli. If a default happens, the fear trade goes off the charts. That is the outcome being waited for. Watching systemic risks, sovereign debt, and investor confidence alongside the metals gives a more complete picture than headlines provide. Whether or not that scenario plays out, preparation beats reaction, and diversification tends to become valuable before the consensus admits it is necessary.
