Oguz Erkan
Investor, Founder of Capitalist Letters
Gold is a secular long-term long, and its weakness should reverse once oil falls and pulls yields down. Oil now drives yields, with their correlation at a 35-year high, as high oil prices keep inflation expectations elevated. Gulf exports are normalizing, so oil should come down soon once the war ends, with yields following and gold recovering. x.com x.com
Gold is just getting started as eroding trust in the dollar pushes gold ETF holdings to records. Per @KobeissiLetter, global gold ETFs took in $17.9B in August, the second-largest month on record, lifting holdings 121 tonnes to a record 4,189. Ray Dalio says gold becomes attractive when currencies are unreliable. JPMorgan sees gold at $8,000 if private investors raise their average gold allocation from 3% to 4.5% as trust in fiat erodes. x.com
Gold and silver may benefit if yields ease a little further from their local high for a while longer. The FOMC meeting and minutes could be good for both. x.com
Gold is set to take off as energy-driven stagflation traps the Fed and negative real rates favor it. Today's dovish hold was likely its last chance to hike: once the AI bubble bursts, the Fed loses that option, while current debt-to-GDP rules out Volcker-style hikes without fiscal insolvency. Per Macrotrends' chart, gold rose eightfold from its 1976 low to its 1980 high, equivalent to $32,000 gold over five years in today's terms. x.com x.com x.com
Rising Treasury yields make non-yielding gold less attractive, setting up one major selloff before the next big rally. Oil above $100 adds inflation and rate pressure; higher yields could lift the dollar, while gold ETF outflows and forced selling in a liquidity crisis add risk. The Benner Cycle flags 2026 as a potential selling period. The long-term bull market is not necessarily over: central banks are still buying and long-term demand remains strong. Gold is not worth chasing at these levels. … Show more
Crude oil's long historical correlation with gold and its lag behind gold make an oil catch-up to $200-$500 almost a lock. Oil-to-gold stands at 0.03 against a 75-plus-year upper range of 0.15; even a move to around 0.08 would mean oil rising 2-3 times against gold, gold falling 50%-66%, or both moving. Demand would probably hold up to around $300, though it could break closer to $500. Such a surge is not an outcome to cheer for. x.com x.com x.com x.com x.com x.com x.com
Gold's long-term bull case holds because rising defense spending and higher US rates increase the risk from US fiscal deficits, reinforcing gold as a store of value. Per VanEck's Jan van Eck, the pullback reflects short-term forces: stretched positioning, Middle East energy producers likely selling Treasuries and gold for cash as the Iran war disrupts revenue, and an unwind of speculative ETF positions. Global wealth growth should return and lift private and central bank demand. x.com
Rising oil worsens inflation and puts Fed rate hikes back in focus, making non-yielding gold and silver less attractive. Investors are also selling metals to meet margin calls. An estimated $1.83 trillion in combined value was wiped out over recent sessions; both metals remain under pressure as long as oil keeps rising and rate-hike expectations stay high. x.com
Gold and bitcoin should benefit because the Fed is not going to hike rates, so priced-in hikes must be priced out. Treasury Secretary Bessent is fighting for his life in the 30-year market, and a Warsh hike flattening the curve would hurt him, so the two are unlikely to be at odds. The US also looks headed to war with Iran, when the government most wants cheap funding. If they do hike, Bessent stepping further into the 30-year market would be bearish for the dollar. x.com x.com
Gold remains bullish because its correction and investor washout fit the expected cycle reset before the next major move. After two strong years, the projected cycle low is approaching, making the shakeout a setup within gold's multi-year cycle rather than a break in the long-term trend. x.com x.com
Gold is dumping because the Iran conflict pushed up oil and inflation, leaving less room for rate cuts and lifting yields, and more downside lies ahead. It was overheated at peak attention, and retail is now skipping it for cash and short-duration Treasuries. The setup mirrors 1979, when an Iran war doubled oil prices and led to crisis and a gold dump; higher real yields also raise the cost of capital and pressure the concentrated AI leaders. x.com
Gold is now pricing stagflation, and a Fed caught in a policy bind is the most favorable setup for it. After the war began on February 28, a liquidity shock hit gold with everything else, then haven buying returned as the conflict looked prolonged. Near 4,550, inflation expectations are at 3.8% while growth slows. The risk is that central-bank buying, the bull market's key driver, fades: Turkey used about 60 tonnes in two weeks to defend the lira, and war costs could force others to sell. x.com … Show more
