To The Moon

Gold has swung wildly over the past year. It climbed to over $5,500 per ounce earlier this year, then dropped after February, and now trades around $4,500.

Gold has rebounded over the past month. It rose from roughly $4,000 per ounce to a peak above $4,600. Gold has regained market attention. The prospect of a US-Iran deal pushed gold sharply higher. Later, the US Treasury’s bond buyback plan and hawkish comments from the Fed Chair weighed on prices. Mixed US jobs data also kept gold swinging up and down.

The big question now: Is this only a temporary bounce within a downtrend, or a new bullish reversal? This is the biggest debate in the market.

Two groups hold opposite views on this rally. Some investors argue US-Iran tensions are not fully resolved. US bond yields stay high, and rate hikes are still possible this year. They believe gold is only seeing a technical bounce, not a full trend reversal.

Others think multiple positive factors support a lasting reversal. First, global central banks keep buying gold. China’s August data showed heavy monthly purchases, with consistent buying for many months. Second, the US government cannot afford high interest rates, as high rates raise its debt repayment burden. Third, the US dollar is weakening. Many investors believe the pullback since the start of this year will not break gold’s long-term uptrend.

To judge whether gold is bouncing or reversing, let’s review what drove gold’s major rally in recent years.

1. The Fed started rate hikes in 2022. Inflation peaked in mid-2023, then hikes stopped. The Fed cut rates in 2024, bringing policy rates down from 5.3% to 3.63%. Gold pays no interest. Lower rates make gold more attractive.

   

2. Gold is priced in US dollars. The dollar has weakened overall since 2022. This currency effect lifts gold prices.

   

3. Global geopolitical tensions remain high. Central banks keep buying gold. After Russia’s foreign reserve assets were frozen following the Russia-Ukraine war, nations diversified reserves away from USD. Central bank gold purchases accelerated sharply from late 2022.

   

4. Gold ETFs lowered barriers for retail investors. In 2025, GLD drew over $20 billion in inflows, hitting a 20-year high. Retail investors buy ETFs, and ETFs purchase physical gold, creating a positive feedback loop.

   

Why did gold crash in 2026? I believe the main trigger was excessive gains, with the US-Iran conflict acting as the catalyst.

1. Gold had risen for years, climbing from about $2,000 to above $5,000 without meaningful pullbacks. Huge profit positions were ready to take profits.

   

2. The trigger came from US-Iran tensions. Disrupted oil shipping through the Strait of Hormuz pushed oil prices up and raised inflation expectations. Markets priced in one Fed rate hike in December. Non-yielding gold faced heavy pressure.

   

3. Global central bank gold buying slowed temporarily between February and March this year. But after gold fell sharply in April, central bank purchases picked up again and stayed steady.

   

Looking ahead, whether gold can beat its all-time high depends on three long-term drivers. First, the reshaping of the global order. Tariffs and trade disputes with traditional allies keep shaking the post-WWII system, and this will not reverse after political leadership changes. Uncertainty benefits gold. Second, US national debt keeps expanding, which puts long-term pressure on the US Dollar Index. Gold priced in USD benefits from this trend. Third, gold delivers solid long-term returns. GLD has delivered an annualized return above 12% over the past decade. Over 20 or 30 years, it beats inflation. I believe gold can break its early-year high eventually, though the timing is uncertain.

Top institutions and investors have shared their views on gold. Citi set a target price of $5,000 per ounce for the next 6–12 months. It expects the Strait of Hormuz issue to ease and real interest rates to trend down. Europe’s largest asset manager has added gold positions recently and forecasts gold will return to $5,000 per ounce by year-end. Ray Dalio, founder of Bridgewater, is bullish on gold. He recommends allocating roughly 15% of capital to gold as a hedge against US debt risks.

If you also like gold, here are several ways to get exposure.

• Option 1: Physical Gold It is easy to understand and you can hold it directly, with no recurring holding fees. But it is not suitable as a core position. Risks are obvious: storage safety issues and poor liquidity. Gold jewelry will lose significant value when resold. For regular retail investors, physical gold is not the best pick.

• Option 2: Gold Mining Stocks This option offers the highest upside, but also the most risks. Mining companies have relatively fixed production costs. When gold rises, profit growth outpaces revenue growth, so miner shares can outperform gold itself. The downside is stacked risks. Beyond gold price moves, you also face broad stock market swings, geopolitics, liquidity, and operational risks like mine accidents. Only consider mining stocks when you are confident gold has entered a solid bull cycle.

• Option3: Gold ETFs This is the best choice for ordinary retail investors. Gold ETFs closely track gold spot prices with small tracking errors. You can trade them like stocks during market hours, with high liquidity. Trading costs are even lower than regular stocks. The only ongoing cost is the annual management fee, charged regardless of price moves. Major funds charge between 0.09% and 0.40% per year, which barely impacts long-term holdings. You can compare popular gold ETFs by 10-year annual return, asset size and expense ratio.

  Name	Asset Focus	ETF Underlying Index	Total Assets	Leverage	Expense Ratio (%)	%TR YTD
  $SPDR Gold ETF(GLD)$	Commodity	GOLDLNPM	151250.23	#N/A	0.40	3.5
  $Gold Trust Ishares(IAU)$	Commodity	GOLDLNPM	64865.74	#N/A	0.25	3.6
  $Spdr Gold Minishares Trust(GLDM)$	Commodity	GOLDLNPM	32443.18	#N/A	0.10	3.7
  $VanEck Gold Miners ETF(GDX)$	Equity	MVGDXTR	30800.36	#N/A	0.51	18.3
  $VanEck Junior Gold Miners ETF(GDXJ)$	Equity	MVGDXJTR	9792.33	#N/A	0.52	16.3
  $ISHARES GOLD TRUST MICRO(IAUM)$	Commodity	GOLDLNPM	7870.22	#N/A	0.09	3.7
  $Abrdn Gold ETF Trust(SGOL)$	Commodity	GOLDLNPM	7603.32	#N/A	0.17	3.7
  $VanEck Merk Gold ETF(OUNZ)$	Commodity	SOLAGOLD	2876.61	#N/A	0.25	3.7
  $Goldman Sachs Physical Gold ETF(AAAU)$	Commodity	GOLDLNPM	2871.37	#N/A	0.18	3.6
  $abrdn Physical Precious Metals Basket Shares ETF(GLTR)$	Commodity	GLTRI	2790.84	#N/A	0.60	-1.0
  $iShares MSCI Global Metals & Mining Producers ETF(PICK)$	Equity	M1WDS1PI	2583.35	#N/A	0.39	28.0
  $iShares MSCI Global Gold Miners ETF(RING)$	Equity	M1WDS1MI	2466.19	#N/A	0.39	21.8
  $MicroSectors Gold Miners 3x Leveraged ETN(GDXU)$	Equity	MINERS	1566.83	300.0000%	0.95	-28.7
  $Graniteshares Gold Trust(BAR)$	Commodity	GOLDLNPM	1433.33	#N/A	0.1749	3.6
  $Direxion Daily Gold Miners Index Bull 2X Shares(NUGT)$	Equity	MVGDXTR	1365.02	200.0000%	1.13	9.5
  $ProShares Ultra Gold(UGL)$	Commodity	BCOMGCTR	895.31	200.0000%	0.95	-3.9

Gold delivers mid-to-high returns among asset classes. Its biggest value is portfolio diversification. Gold ETFs tracking bullion delivered ~12.7% annualized return over the past decade. It beats bond ETFs, healthcare ETFs (10.77%), Japan ETFs (9.2%) and emerging market VWO (8%). It underperforms S&P500 (15%), QQQ (over 20%) and semiconductor ETFs (33%). The key point: broad market and semiconductor assets are highly correlated. They fall together during US bear markets. Gold can lower your portfolio concentration and overall risk.

Lastly, my allocation suggestion: use a 5%-10% portfolio weight and build the position via dollar-cost averaging. Gold does not generate business earnings, cash flow or dividends. Its price is driven by global market consensus and events. Historically, gold can stay in downtrends for 3 to 5 years. Many investors cannot hold through multi-year flat or negative returns. A 5%-10% allocation balances risk diversification and upside capture. It also removes the psychological stress of holding a large position in a non-income asset. Do not deploy all capital in one lump sum. Buy fixed amounts monthly or quarterly. You don’t need to guess if the Fed will hike or cut rates. Dollar-cost averaging works especially well when gold prices drop, improving your long-term success and returns.