Inflation Just Spiked ~ Here Are 3 Reasons Why a Gold Investment Makes Sense Right Now.
“Gold, Mr. Bond.”
Americans were already feeling squeezed by rising prices, and now they have fresh data to confirm it. After months of relative stability, consumer prices are climbing at their quickest annual pace in nearly two years, surprising both economists and households already stretched by elevated borrowing costs. According to the latest inflation data, the Consumer Price Index rose at a 3.3% annual rate in March, up sharply from a rate of 2.4% the month prior.
That jump was even more pronounced in terms of energy costs, which surged in the wake of the Middle East conflict that has choked off crude oil supply through the Strait of Hormuz. That resulted in gasoline prices alone jumping nearly 11% from the month prior. That, in turn, pushed inflation significantly higher overall, creating ripple effects across transportation, food and everyday goods.
For consumers, that means a renewed squeeze on purchasing power. For investors, though, it raises a different question: how to respond when inflation proves more stubborn than forecasts suggest. And for many, that conversation inevitably turns to gold, and for good reason.
3 reasons why a gold investment makes sense right now!
Rising inflation doesn’t automatically make any single investment the right move, but it does change the environment — and historically, that’s where gold has played a distinct role. Here are three reasons it could make sense to invest now:
Gold has historically held value during inflation spikes
When inflation accelerates, the value of cash declines in real terms. Essential expenses rise, but the paper currency used to pay for them loses purchasing power. That dynamic is precisely why gold has long been viewed as an inflation hedge.
Unlike paper currency, gold isn’t tied to central bank policy or interest rate decisions. Its supply is finite, and its value is driven largely by global demand and investor sentiment. During periods when inflation rises quickly, especially when it rises unexpectedly, investors often turn to gold to help preserve value.
That doesn’t mean gold prices move in perfect lockstep with inflation, but the broader pattern tends to hold. When inflation surprises to the upside, interest in gold typically follows. And, with inflation now back above 3% and energy costs driving uncertainty, that historical relationship is once again in focus.
Market volatility is increasing — and gold can act as a stabilizer
The recent inflation spike isn’t happening in isolation. It’s tied to geopolitical developments that are also affecting oil markets, global trade routes and broader investor confidence. That combination can introduce volatility across stocks, bonds and currencies.
Gold has traditionally served as a safe-haven asset in such environments. When markets become more unpredictable, whether due to inflation, geopolitical risk or both, investors often allocate a portion of their portfolios to assets perceived as more stable.
This doesn’t mean gold won’t experience price swings in these landscapes. It can and it will. But compared to equities or more growth-oriented assets, it often behaves differently during periods of stress.
That diversification benefit is a key reason it’s frequently used as a portfolio hedge. And, in today’s climate, where inflation is rising and external risks are driving market uncertainty, that stabilizing role becomes more relevant.
Real returns on traditional assets may be under pressure
Inflation doesn’t just affect prices. It also impacts investment returns. When inflation rises, the “real” return on many traditional assets declines unless those returns outpace inflation. For example, savings accounts, bonds and even some dividend-paying stocks can struggle to keep up when inflation accelerates quickly. If inflation is running at 3.3%, any investment yielding less than that is effectively losing purchasing power in real terms.
Gold doesn’t produce income like dividends or interest, but its appeal lies in its ability to potentially maintain or increase value when real returns elsewhere are under pressure. In periods where inflation rises faster than expected and interest rates don’t immediately adjust to compensate, gold can become more attractive by comparison.
That dynamic is especially relevant now. While rate cuts late last year helped ease borrowing costs, inflation’s recent jump complicates the outlook. If rates remain relatively stable while inflation rises, real yields could tighten — a scenario that has historically supported gold demand.
The Bottom Line
A sudden inflation spike can shift both financial planning and investment strategy. While no asset is a guaranteed hedge, gold’s historical role during periods of rising prices, market uncertainty and declining real returns helps explain why it’s gaining attention again. That doesn’t mean it should dominate a portfolio or replace other investments. But as inflation proves more persistent, and potentially more volatile, than expected, gold may serve as a useful complement for investors looking to balance risk and preserve purchasing power.
Gold’s Healthy Correction: Why the Bull Market May Still Be in Its Early Stages
After the second greatest breakout in its history in March 2024, Gold has entered its first meaningful correction.
For many investors, pullbacks can feel uncomfortable, especially after strong gains. But in long-term bull markets, corrections are not only normal – they are essential.
History suggests that the current correction in gold may simply be the market catching its breath before the next major advance.
By examining historical breakouts, market cycles, and macroeconomic conditions, we can gain insight into where gold – and silver – may be headed over the next several years.
Gold’s Big Picture: A Historic Breakout and Its First Correction
Gold is currently experiencing its first intermediate-term correction since its major breakout roughly two years ago. Similar breakout periods in the past have led to some of the strongest multi-year advances in the metal.
Two historical parallels stand out: the 1973 breakout and the 2024 breakout. Both periods triggered powerful two-year runs in gold prices.
In the 1973 cycle, gold surged dramatically before peaking – on the scale of the current breakout near $6,000, followed by a 28% correction.
The recent corrections have been remarkably similar, with gold declining roughly 27% so far. The magnitude of the drop is consistent with historical precedent, but the timing suggests the correction may not yet be complete.
When examining long-term historical analogs – including the 2005 breakout – gold’s trajectory still points toward a potential $7,000 price target by 2027.
Understanding Post-Breakout Corrections
Major breakouts in gold tend to follow a consistent pattern:
1. Breakout
2. Rapid surge
3. Intermediate correction
4. Bottom near the 200-day moving average
Looking back at two relevant historical examples:
* 1973: Gold corrected 28% over roughly five months
* 2006: Gold corrected 25% over roughly five months
The current correction closely mirrors those earlier cycles. The first leg down has likely already occurred. Notably, the bottom of that first phase arrived almost exactly when the 1973 correction bottomed and just days after the historical average timing.
If the pattern continues to hold, gold may now enter a sideways-to-lower drift lasting roughly another two to three months before completing the correction phase.
The Importance of the 200-Day Moving Average
Following major breakouts, Gold often retraces toward this level before the next leg higher begins. This test acts as a reset point where momentum cools and new buyers enter.
Gold futures briefly touched the 200-DMA intraday while spot Gold came very close to that level. Daily closing charts can sometimes obscure these tests because intraday moves are not captured fully.
With the 200-DMA rising steadily and gold likely drifting sideways to lower through the spring, the metal appears poised to complete its correction with a clean test of that support level.
It is important to note that Gold actually fell below the 200-DMA for a few weeks before making its final bottom in 1973 and 2006.
What Happens After the Correction?
Historically, once Gold tests its 200-day moving average following a breakout, the next phase of the bull market begins.
When charting rebounds following these corrections, two historical averages are particularly useful:
* The 1973 and 2006 corrections
* A broader average including corrections in 1978, 2003, 2010, and 2020
The first comparison – the 1973 and 2006 pattern – may provide the most realistic roadmap for the current cycle. These historical models suggest that once the correction completes, Gold can resume its longer-term advance with significant upside potential.
The chart assumes a Gold bottom at $4200 in mid-June. The average of the 1973 and 2006 post-correction rebounds would put Gold at $6000/oz in October 2026.
The Macro Environment: Inflation vs. Recession
While charts and technical patterns are useful, the macro-market environment also plays an important role in Gold’s trajectory.
Currently the macro chain reaction looks something like this:
Rising oil prices → higher bond yields → rising inflation expectations → tighter Federal Reserve policy (for now).
This environment can temporarily pressure Gold.
However, the dynamic changes when the narrative shifts from inflation fears to recession fears.
Historically, that transition is when Gold and the broader precious metals sector tend to launch their next major move higher.
Silver’s Role in the Cycle
Silver at times behaves differently from Gold during major precious‑metal cycles.
After what appears to be a blow‑off top, most similar to 1974 and 2006, Silver is lagging Gold again.
Several observations stand out:
* The Gold/Silver ratio is consolidating in a bullish pattern
* The ratio’s measured upside target sits near 77
* Silver appears to have a strong price floor around $55
* The 200‑day moving average near $58 continues to rise
Silver may continue lagging Gold in the near term. A likely turning point would occur once gold breaks above $5,200 – $5,400.
The Chronic Under‑Allocation to Gold
One of the most striking features of the current bull market is the lack of institutional allocation to gold.
Comparisons to 2011, 1980, or 1979 don’t hold up as money flows and allocations in recent years tell a completely different story.
The implied ETF allocation to Gold remains near 2%. This is below the 2019 peak and well below peaks in 2008 and 2011 around 8%.
Corrections like the one currently unfolding often deepen that under‑allocation—creating conditions that can fuel the next advance when sentiment shifts.
~ Conclusion ~
The current gold correction appears to be normal, healthy, and historically consistent.
Historical patterns suggest a few more months of consolidation before the correction completes, likely accompanied by a test and break of the rising 200‑day moving average.
Long‑term analogs still point toward a potential $7,000 gold price in 2027. Silver may lag in the near term but appears to have strong support between $55 and $60.
For investors, periods like this are often when the most important groundwork is laid. When sentiment cools and markets pause, disciplined research and careful portfolio positioning can prepare investors for the next major phase of the precious‑metals bull market.
Now is the time to rotate out of yesterday’s winners and into the potential big winners of the next few years.
Start adding gold and other precious metals to your portfolio.
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While there’s no guarantee on any investment, it is clear we have entered a period of great economic uncertainty. In recent economic news, several banks and major financial institutions have filed for bankruptcy leading our country into what is likely a recession period. The US dollar is losing significant value caused in part by monetary inflation, overspending, and fading market confidence. Some economists speculate that the US will consider a centrally controlled, government issued, cryptocurrency as a means to promote Modern Monetary Theory.
Throughout history, as fiat currencies have come gone, gold has stood the test of time again and again, and there’s reason why… Give Gold a Look in These Uncertain Times
Always and again the magic of money presents us with problems. These problems change constantly. Time after time experience teaches us that there is no universally-valid system by means of which monetary problems may be solved. Every new situation demands new deliberations, new measures, new insights, new ideas. Each of these ideas must be informed by and subservient to the sole and single purpose of maintaining the soundness of the currency. ~ Hjalmar Schacht
Seeking out the most efficient and most secure route to owning gold, and converting it into widely-accepted currency, is the next best thing to enjoying gold-backed currency.
In a world of central bankers hell-bent on devaluing your savings you need your own private gold standard.
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Kettle Moraine, Ltd.
P.O. Box 579
Litchfield Park, AZ 85340
602 – 799 – 8214
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