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Shades of 2008
A post I saw on X this morning got me thinking, and after some consideration, I decided it was a notion worth exploring in this week's column.
Let's start with the post from Jamie Carrasco that set this in motion - view the X post.
Reading it, I started thinking about the current parallels to 2008, and while no situation is ever identical to the past, there's a reason we've all heard the old adage about "history rhyming".
Let's go back to 2008 or, more precisely, 2007. The Greenspan Put had led to over two decades of increased speculation and eventually brought about the conditions that led to The Great Financial Crisis. This impacted the precious metals, too, as gold rallied from lows below $300/ounce as the 21st century began.
In the 18 months before the GFC hit with full force, the gold price had quite the journey. It began 2007 near $600/ounce, and it rallied nicely through the summer with price near $660 in August. But then it shot higher with price reaching a peak of $1033 in March of 2008. That's a 56% gain in under seven months.
But gold began to sniff out the tightening of financial conditions that came with the subprime collapse, and price fell over the next seven months to a low of $683 in October. That's a drop of 34%. Need a reminder? See the chart below.
Gold - Daily Candlestick Chart
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Gold Price Rally After The Financial Crisis
What happened next? That March-November decline wasn't the start of a "new bear market" and $1033 wasn't a "multi-year high". Instead, Ben Bernanke picked up the Greenspan Put and morphed it into Too Big To Fail and Quantitative Easing. The gold price responded by breaking out and through its downtrend line and then rallying to a high of $1920 by September of 2011. That played out as nearly 3X or about a 280% move off the lows in just under three years. Even if you measured it off of the breakout near $900 in January of 2009, price more than doubled before the next peak.
Gold - Weekly Candlestick Chart
Gold Price Outlook For 2025 And 2026
OK, so where is gold today? The gold price began 2025 at $2600/ounce and, by August of last year, had rallied to about $3400/ounce for a gain of over 20%. It then shot higher and, by late January, peaked just below $5500/ounce. That's a gain of 62% in just over five months. Again, compare that to 2007-2008.
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2007: 10% rally to August. 56% gain into early 2008 followed by a drop of 34% seven months later.
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2025: 20% rally to August. 62% gain into early 2026 followed by a drop of 29% six months later.
This leaves us with a current chart that certainly does resemble the one posted above from 2007-2008, as gold has sniffed out a potential liquidity crisis brought about by The Iran War and the specter of higher nominal interest rates.
Gold - Weekly Candlestick Chart
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Federal Reserve Policy And Gold Prices
So what happens next? Will the Fed begin to ratchet up the fed funds rate in an attempt to counteract the inflationary pressures of higher energy costs? Maybe. But what if the July 30 coordinated forex intervention of the Bank of Japan and the U.S. Department of Treasury is simply the first salvo of a new whatever-it-takes central bank policy of liquidity additions? Could the Greenspan/Bernanke Put be morphing into a new Warsh/Bessent Put? The gold market seems to think so, with price rallying nearly $300 last week.
And with that, I'll leave you to consider again the gold price action and chart from 2008-2011. Once the gold price broke its downtrend in January of 2009, it was clear that the pullback had ended and a new move upwards had begun. The rally that followed over the next two and a half years culminated in a gain of 280% from trough to peak.
Gold Price Forecast And $11,000 Gold Target
If past is prologue, a gain from the 2026 low of $3945 creates a target of $11,000/ounce by late 2028. A break of the 2026 downtrend, currently found near $4500, would set a target north of $9,000/ounce. Either way, not too shabby.
We have no way of knowing, of course, if the future will repeat or even rhyme, but all of this creates an interesting scenario to contemplate. Thanks again to Jamie Carrasco for the inspiration.
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