Where Mainstream Analysts Get it Wrong on Gold

Prices and Charts

Yet More All Time Highs IN NZD and USD Gold

Gold surged higher again this week. Setting yet more all time highs in both NZD and USD.

But as you can see in the charts below, in both currencies gold is getting overbought and also right on resistance lines. So it is overdue for a correction. One will inevitably come but as our NZD chart shows gold can stay overbought for long periods.

Silver: Still No Breakout

NZD Silver got up close to its all time highs during the week. But it is down a little today. It will probably take a break above the key US$35 mark in order to get silver surging in either currency.

Kiwi Dollar Uptrend Starting?

The New Zealand dollar looks like it has bottomed out. Still watching for a move back towards the overhead resistance line just above 0.5800.

Need Help Understanding the Charts?

Check out this post if any of the terms we use when discussing the gold, silver, and NZ Dollar charts are unknown to you:

Gold and Silver Technical Analysis: The Ultimate Beginner’s Guide

Continues below

Gold’s Quiet 25-Year Outperformance

While most investors focused on stocks, bonds, and property, one asset quietly outshined them all—with less risk and more resilience.

In this week’s feature article we dig into the data at the London Bullion Market (LBMA), COMEX futures and silver ETFs. Trying to answer the question: Is a squeeze around the corner?

Gold vs Stocks, Bonds, Cash & More: A 25-Year Showdown

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More Mainstream Headlines But Still No Correction

A couple weeks back we highlighted some mainstream headlines about gold. We thought they were signs that gold could be getting a bit “toppy” in the short term. Since then gold has surged even higher.

But this week we have seen another one pop up in the NZ news. Maybe not a glowing endorsement for gold, but good to see Mark Lister, Investment director at Craigs Investment Partners, actually say “gold can be a useful tool”.

“As the price of gold continues to hit new highs, investors are being warned to carefully consider how much they invest in the precious metal. Trade tariffs, war, economic uncertainty and volatile US markets have created a potent cocktail”

Read more

Lister says 10% is the max and going as high as 20-25% in gold is way too much.

However we’ve shared studies and reports previously which show more than 10% to be very beneficial.
See:What Percentage of Gold and Silver Should Be in My Portfolio

While this Incrementum study shows the optimal gold allocation purely based upon performance for the last 50 odd years is 40%:

See:Ideal Allocation to Gold is 40%?

While the best sharpe ratio (Return vs Risk) says around 14-20% in gold.

So while we wouldn’t agree with Lister, it’s still great to see gold getting some airtime and positive sentiment from a stock broker.

Also great to hear our friend Louis Boulanger on there too!

Where Mainstream Analysts Get it Wrong on Gold

On the definitely not so positive was a Business Insider article featuring a Morningstar analyst:

Why an analyst sees the record-setting gold rally headed for a 38% crash in coming years

1. Supply in the market will grow

But it takes a long time to bring a mine to production. We don’t see gold supply rising much more than the 1-2% it has done for a long time.

2. Demand for gold will ebb
He thinks central bank and investor demand is peaking. Yes central banks have been adding to their reserves but the public has barely even entered the market. This while probably only about 1% of people even own any gold. Also historically, U.S. gold reserves accounted for 53% of global gold holdings; today, that figure has declined to just 20%.

We came across this insightful comment from Karl Kruger. Interestingly it was in response to a post from Dean Chastina about how gold had outperformed the stock market over the last 25 years. A main point in this week’s feature article.

Karl said:

“I listened to a Gold market analyst from a major brokerage firm this morning on Bloomberg and I must say in my humble opinion that they don’t actually have any idea why Gold has gone up 11 times in 25 years vs less than 4 times for the S&P 500. Analysts are generally only looking at supply and demand for things like Gold and/or earnings and other metrics for stocks. They miss the forest for the trees due to academic blinders. In my opinion, the reason Gold has so outperformed stocks is so simple that it is almost offensive to common sense and stock, bond, and commodity analysts often can’t see the bigger picture. Basically, the dilution of the currency via deficit spending and monetary policy that is excessively accomodative floats stocks and other assets only a fraction of the level of the currency dilution whereas the price of Gold is a purer inverse reflection of the purchasing power of the currency going down in real terms versus goods and services. Everyone should be asking themselves why the mainstream financial media won’t report this correctly.”

Source

Indeed we think this morningstar analyst also misses the forest for the trees too! Simply citing supply and demand factors as the rationale for why gold will fall.

Currency dilution is why gold will continue to rise until it balances out the currency and debt created for the last 40-50 years. So it’s more likely gold is only just getting started.

Silver Short Squeeze 2.0: So Far No Dice

31 March 2025: Silver Squeeze day. There was a concerted effort to “rally the retail troops” in a bid to break the silver shorts.

The theory being that if enough retail investors shift to physical silver instead of ETFs or futures contracts, this could strain delivery systems and expose the gap between paper claims and real supply.

What happened?

So far not too much.

However we can see signs of a definite increase in silver buying in the USA. Some previous issue products that were available via USA suppliers are now sold out. And premiums have gone up a little on other products.

While here in NZ we are down to the last 200 or so kgs of our special on 1kg silver bars @ spot + 8%.

It doesn’t mean the squeeze won’t happen. Just maybe we need a little more time for demand to build and excess supplies to be used up.

For more on silver shorts see our very popular recent article: Silver Short Squeeze Ahead? 2025 Signals from LBMA, COMEX, SLV & PSLV

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