Rare bearish gold report: $5000 gold price too high, comparable to highs of 1980 and 2011.

Bloomberg strategist issues warning, saying that the surge in gold prices is transitioning from a store of value to speculative betting, with multiple technical indicators showing that this bull market may be coming to an end. On March 17, Bloomberg commodity strategist Mike McGlone pointed out that by the end of February, the premium of gold prices relative to the 60-month moving average had reached its highest level since 1980, with a 180-day volatility reaching 2.4 times that of the S&P 500 index, hitting a 20-year high. McGlone believes that this price level is the "best state that a bull market can reach," and he draws parallels with the historical tops of 1980 and 2011. McGlone further emphasized that if gold prices cannot sustain the inflation environment of the 1970s or extreme geopolitical events, the risk of falling to $4000 per ounce is on the rise. This week, the US dollar index has fallen for the second consecutive time, but the spot gold price has remained almost unchanged, hovering around $5000 per ounce. Overvaluation, parallels with the 1980 and 2011 highs Mike McGlone compares the current situation with the gold boom from 2001 to 2011. When gold prices hit a high of $1921 in 2011, that level wasn't surpassed until 2020. The current rise in gold prices has been faster than that previous trend, increasing the pressure of mean reversion. It is worth noting that the "gold rush" from 1979 to 1980 occurred against a backdrop of high inflation in the United States, with CPI nearing 15%, while the current US CPI is only 2.4%. McGlone believes that in an environment of relatively mild inflation, such an extreme increase in gold prices is evidence of overheated valuations. The ratio of gold prices to the five-year moving average reached 1.6 times the historical high in 2026, with the only precedent for such a level being the peak period in 1979 to 1980. In addition, the ratio of the S&P 500 index to gold prices dropped to 1.32 on March 13, showing a trend towards convergence. McGlone pointed out that the continued decline of this indicator implies that the strength of gold relative to stocks may have reached its limit. More concerning is the rare divergence between high gold volatility and low stock market volatility. The 180-day gold volatility reached a new high since 2006 at 2.4 times that of the S&P 500 index, while stock market volatility remains at an extremely low level. McGlone believes that once stock market volatility increases, the momentum of gold prices weakens, and the prior strength of gold may become a hindrance, meaning that the rise in gold prices itself may indicate greater pressure on all assets, especially stocks. Gold-oil ratio reaches historic extremes, pressure of mean reversion cannot be ignored At the end of February, the ratio of gold to WTI crude oil prices rose to 79, historically exceeding this level only in the extreme case of crude oil prices dropping to negative values in April 2020. As of March 13, this ratio remained as high as 51, with its historical average and mode close to 20. McGlone pointed out that the ratio between gold, a traditional store of value, and the most important industrial commodities is close to a historic high, which may signal the peak of gold prices, and the next major trend in the commodities market may be a regression to the mean for gold prices. Regarding oil, McGlone believes that while the situation in Iran and related geopolitical impacts may temporarily drive up oil prices, such supply shocks are difficult to sustain, as high oil prices will stimulate increased supply, especially from the United States. If the situation eases, the support for oil weakens, further increasing the pressure for gold to fall to $4000. McGlone's conclusion is that 2026 may mark the peak of gold prices for years, following the historical highs of 1980 and 2011. This article is reproduced from "Wall Street See News", edited by GMTEight: Lifo.