Rare bearish gold report: $5,000 gold price is too high, comparable to the peaks in 1980 and 2011

Bloomberg Strategist Warns: Gold Price Surge Shifting from Store of Value to Speculative Bet, Multiple Technical Indicators Suggest Bull Market May Be Nearing End

On March 17, Bloomberg commodities strategist Mike McGlone noted that as of the end of February, the premium of gold prices over the 60-month moving average reached its highest level since 1980. The 180-day volatility also hit 2.4 times that of the S&P 500, a 20-year high.

McGlone believes this price level is “the best the bull market can reach,” drawing comparisons to the historic peaks in 1980 and 2011.

He further emphasized that unless gold can sustain support from the inflationary environment of the 1970s or extreme geopolitical events, the risk of a decline back to $4,000 per ounce is increasing.

This week, the US dollar index has fallen for two consecutive days, but spot gold prices have remained nearly unchanged, holding around $5,000 per ounce.

Overextended Valuation, Comparing 1980 and 2011 Highs

McGlone compares the current situation to the gold rally from 2001 to 2011.

Back then, gold hit a high of $1,921 in 2011, a level that was not surpassed until 2020. Currently, the pace of gold’s rise exceeds that previous rally, increasing pressure for mean reversion.

It’s noteworthy that the “gold rush” of 1979-1980 occurred amid near 15% inflation in the US CPI, whereas the current CPI is only 2.4%.

McGlone suggests that such extreme gains in gold during a relatively mild inflation environment are evidence of overvaluation.

The ratio of gold to its five-year moving average reached 1.6 in 2026, a historic high, with the only previous instance being during the peak in 1979-1980.

Additionally, the S&P 500 to gold ratio fell to 1.32 on March 13, trending toward 1. McGlone points out that the continued decline of this indicator signals that gold’s relative strength compared to stocks may have reached its limit.

More concerning is the rare divergence between gold’s high volatility and the stock market’s low volatility. Gold’s 180-day volatility hit 2.4 times that of the S&P 500, a new high since 2006, while stock market volatility remains very low.

McGlone believes that once stock volatility rises, gold’s rally may fade. The previous strength in gold could become a limiting factor, as the rise itself might indicate that all assets, especially stocks, will face greater pressure.

Gold-to-Oil Ratio at Historic Extremes, Mean Reversion Imminent

At the end of February, the gold to WTI crude oil price ratio rose to 79, a level only exceeded during the extreme event of oil prices turning negative in April 2020.

As of March 13, the ratio remained high at 51, while its 100-year average and mode are both near 20.

McGlone points out that the ratio of this ancient store of value to the most important industrial commodity approaching a historic high could signal a gold top. The next major move in commodities may be a reversion of gold prices toward the mean.

Regarding oil, McGlone believes that although geopolitical tensions involving Iran and related shocks could temporarily spike oil prices, such supply shocks are usually unsustainable, as high prices will incentivize increased supply from the US and other Western Hemisphere producers.

If tensions ease and support for oil weakens, downward pressure on oil prices could further push gold back toward $4,000. McGlone concludes that 2026 may mark a multi-year peak for gold, echoing the peaks of 1980 and 2011.

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