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Transcript:

CAROLINE WOODS: OK, joining me now is Carley Garner, senior strategist and broker at DeCarley Trading. Carley, great to have you back.

CARLEY GARNER: Thank you. It’s good to be here.

CAROLINE WOODS: So Carley, you’ve been a gold skeptic for quite some time, yet it just touched a new record high yesterday. It’s a bit lower today, back around $3,600 an ounce, but still close to those highs. You say this is the last hurrah. Tell us why.

CARLEY GARNER: Yes, I’m aware of the fact that I’ve been bearish for a little while, and gold has refused to sell off. In fact, we’ve made just recently, in the last couple of days, new all-time highs. But I don’t think that my premise is wrong. I think it’s just that, since the pandemic, we’ve had so much stimulus come into the marketplace that all assets are going up. It’s not just gold — it’s stocks, real estate, you name it. A lot of assets are benefiting simply from the fact that there’s a lot of liquidity in the system chasing a handful of assets. I think that’s probably part of what’s going on in gold.

It’s also being exacerbated by some really odd things that we haven’t seen before. For example, I just read an article this morning about AI bots that are basically programmed to trigger buys in gold when the headlines start churning. And it’s ironic because it’s kind of a nasty cycle: the AI bots are creating articles that are bullish for gold, and then those bullish articles are triggering buys in the market. This has existed for years — this isn’t something new — but now in today’s environment, almost anybody can write an algo or a system that reacts to headlines. And I think that’s a lot of what’s going on.

So I would argue that yes, gold’s going up, but I think it’s going up in spite of fundamentals, not because of fundamentals. So maybe we see $3,700, maybe we get some sort of additional parabolic run higher. But I stand by my idea that this is probably gold’s last roar. At some point, probably in the next couple of years, as popular as gold is now, it will be just as unpopular as it was in 2022–2023, when nobody wanted to touch gold. It was considered kryptonite in a portfolio — it didn’t pay dividends or interest, it was a price dog, and it hadn’t gone anywhere in a decade. We will see that again. We have to give it a little more time, and I think we’ll start to see some surprising price action on the chart.

CAROLINE WOODS: OK, so you said $3,700 is a possibility, which would mean the peak isn’t in just yet. Yesterday wasn’t necessarily the last hurrah. But I guess what signs should traders look for that it is coming to an end, other than an all-out reversal?

CARLEY GARNER: Well, that’s the thing — when markets reverse, it happens all at once. There’s no memo. I believe there’s a lot of complacency out there. And so if and when it turns, as I do believe it will — and let’s keep in mind, I’m an analyst, I don’t have a crystal ball. I’m just going off what I’ve seen gold do historically, in the ’79 rally and then again in the 2011 rally. We had exactly this type of parabolic price action, and then when the party ended, it ended very sharply.

I will say this: gold is often talked about as a safe haven. Gold is a safe haven at times, but at other times, it’s not. Right now, it’s not. If you look at the charts of gold, Bitcoin, and the stock market from basically 2020, right before all the COVID stimulus, those three assets have basically moved as if they’re one asset. Gold is behaving like a risk asset, not a risk-off asset. So if there’s any trouble in risk assets, we could easily see gold follow suit. Be very aware of that. If you’re buying gold thinking it’s a safe haven play, think again — it’s behaving like a risk asset.

CAROLINE WOODS: So how much does it have to fall to be at a price that makes sense to you?

CARLEY GARNER: I’m going to throw some kind of shocking numbers out there. But gold is not the kind of market that corrects 5% or 10%. When gold goes into correction, it’s 40–50%. In the ’80s, we saw 70% plus correction. Gold is a very boom-or-bust commodity. If you look at gold from 2011 through today, it has gone up on average 6% a year. But almost all of those gains have occurred in about three years out of the last 15. If you take away the really big dramatic gains like we’ve seen in the last couple of years, gold actually hasn’t performed all that well. It’s a market that has to be timed well, unless your holding period is multiple decades, not years or months.

CAROLINE WOODS: OK, so we could see a really huge downturn — 40–50% possibly. What about this huge move higher that we’ve seen in silver? Is there still money to make in silver, or is it too late to that party as well?

CARLEY GARNER: Thank you for asking that. Let me mention one more thing: I should have mentioned this previously. If gold behaves the way it has in the past, we could easily see $2,000 again. I know that sounds almost impossible to most people, but that’s how gold behaves. That would basically take back this entire rally and start from scratch where it broke out. Believe it or not, I think that is not just possible, but probable.

Going into silver: silver has been leading gold here in this last week or so on the last leg of the rally. Had silver not broken out, I think gold may have struggled a little more than what we’ve seen. That said, silver has the capacity to go into the $44–45 area. The all-time high in silver is $50. I can’t rule out maybe seeing $50. I’ve actually mentioned in previous years that I don’t think silver is going to see $50 again in my lifetime — and maybe I’ll be proven wrong here in the next few months, but I’m not sure I will be. Silver is an industrial metal, so it does have a lot of production use, unlike gold, which is mostly precious metal and jewelry.

Some of that capacity to be useful is taken away at these prices. This has been my experience. I know people are going to think I’m crazy, but silver has been a complete dog since 2011. If you bought at the highs in 2011, you’re just now maybe getting your money back, and you may not even be up to par. So again, it’s getting a lot of attention now, but if we’re talking about an asset that most people should have in their portfolio, I don’t believe it’s that.

CAROLINE WOODS: So if you had to buy one — gold or silver — right now?

CARLEY GARNER: Oh, that’s hard. It could very well go up, but if I had to buy, I’d probably pick silver. I think silver might have a little further to go on the upside because it’s just now getting into the spotlight, whereas gold is maybe a little saturated in the spotlight — everybody’s already long and gold may just run out of buyers. Silver might have a little ammo left.

CAROLINE WOODS: OK, and finally, Carley, you make a good point — we’ve seen gold move up along with the overall stock market and Bitcoin. What if we see a reversal in the stock market, and the second half of the year doesn’t look as good as some of the first half did? Do you think there’s potential for that money to actually go into gold as a safe haven in that case — or silver?

CARLEY GARNER: That’s an amazing question. Thank you — I’m glad you brought that up. I’ve actually been thinking about this. I’ve noticed that Bitcoin generally tops before the stock market does. Bitcoin topped around February–March, about a month before the stock market. Late February, early March, Bitcoin topped, and the stock market came in early April.

We’re seeing something similar now. Bitcoin seems to have started to decline here in the last handful of weeks, and I think the stock market has a pretty good chance of following suit. These have been bombtastic bull markets — it’s hard to pick a top, obviously — but the risk is probably to the downside in both of those assets.

If we get some sort of market surprise or seasonal sell-off, like a lot of people are looking for, I do believe it pulls gold lower. I don’t think people will hit the buy button on gold because, as I mentioned, they are actually trading as if they’re one asset. The stock market, Bitcoin, and gold over the last handful of months have been correlated positively about 50% of the time. That’s not extreme, but it’s enough to let me know that if something goes south in the stock market and/or Bitcoin, people will probably hit the sell button. Gold is likely to follow.

CAROLINE WOODS: OK, we’ll leave it there. Carley Garner, senior strategist and broker at DeCarley Trading. Always appreciate your insights.

CARLEY GARNER: Thank you. Thank you.