What $4,000 Gold Just Did to the Market

$4,000 gold is no longer a what if, no longer a how soon. We're on the other side of it now, so $4,000, it's no longer cool. You know what is cool, $5,000. Gold opened today above $4,000 an ounce, and I guess it's time to start talking about bigger numbers. Now that we're here, we can say we all knew $4,000 gold was coming, but it did sneak up faster than expected. Six weeks ago, I posted a video explaining why $4,000 gold is justified, why it isn't crazy. And at the time, that still needed to be said because it still was a stretch and it still was a little bit crazy. But now here we are. And just prior to us hitting $4,000 an ounce, Goldman Sachs released a new forecast calling for gold to hit $4,900 an ounce by December, 2026. That's a big jump up from their last target of $4,300, and it didn't take long to go from talking about $4,000 an ounce to talking about almost 5,000. And maybe more interesting than that is that their sentiment once again says they might be undershooting. What they're getting at here is the possibility of private sector diversification could really punch up ETF holdings even further, making $4,900 still not high enough. And this is important because we've mostly gotten here without that private sector involvement. And before we take that further, a quick shout out to channel sponsor Summit Metals. If you're looking to buy gold or silver, they have you covered. And hey, if you're looking to sell, they have you covered there too. They'll take care of you on both sides of the sale. Summitmetals.com. So look, gold being in the news is not new, but we're seeing more and more of it. At one point yesterday, the top four articles on CNBC were focused on gold. Now we've talked about this coming. As price goes up, so does the attention. Investors get more and more excited. Well, some of us might be slowing down on our physical gold purchases, but that is not how the general population operates. Nobody wants to be left out. Everyone wants to catch up. And sure, that happens a little bit with physical gold purchases too, but it's going to be a lot more apparent with typical investor activity. We're talking about private sector diversification here. So new money pouring into ETFs, chasing the wave. That's what Goldman is talking about when they say risks remain skewed to the upside and why they point out they might still be undershooting. We get how that works. Price feeds attention. Attention feeds demand. Demand pushes prices higher. It's an upward spiral. And we're going to see that when the ETFs start chasing. Now the topic of typical investor activity, Ray Dalio is saying investors should allocate as much as 15% of their portfolios to gold. That sentiment feeds the idea that the rally isn't done. And for some, it's really just getting started, or at least it has been grossly underestimated. Now this article is interesting because Dalio is comparing today to the early 1970s. I covered the 1970 to 1980 price rally a few videos back showing that 2025 is currently performing on par with 1979. Now it was the last few months, 1979, and the first few of 1980 when gold really took off, but that was the biggest rally of all time. That's not to say it's about to happen again, but if you want a historical example of a time investors were hedging against falling confidence in the dollar, well, the 1970s rally is a good one. One important difference though, gold ETFs didn't exist back then. The first one launched in 2003. So today's private sector access is way broader and that changes how fast capital can move in. Now Dalio is getting into the big question here. Where do you store your wealth when there's so much debt? There's so many debt instruments. Well, it's gold. He's saying that you should have more of it. And Goldman Sachs is saying they think more investors will be doing the same. They're also saying central bank demand is going to stay strong. And after two years of net outflows from Western demand, well, private investors, institutions, and funds are now expected to join those central banks. It's going to add a new wave of demand. So this isn't a speculative spike that we're looking at. It's more of a broad repricing. And we should probably point out, this is more than just safe haven appeal at this point. It's definitely not some kind of artificial demand for gold because behind all of this, we have real rates and yields falling. When the return on cash and bonds drops, the opportunity cost of holding gold drops with it. We haven't even really talked about that. The price has been running so fast that we haven't looked at what might make it go up further. You have that idea that less incentive to chase yield is going to lead to more incentive to protect wealth. So in the late 70s, real rates had just turned negative and that was a big driver in gold's strongest rally in history. And we're not there yet, but that's where Dalio is going with this comparison. Okay, so back to $4,900 gold. Apparently $4,000 isn't exciting enough. I remember this exact coin feeling really expensive when gold hit $2,000. This is a 2020 gold Buffalo. And I would say now we need to increase our expectations. You have Goldman Sachs saying they're more likely undershooting at $4,900. You have Dalio saying just get more. And we should point out that both of those messages are primarily aimed at investors. And why do we care about that? Well, they're saying price is going up, but buying more doesn't necessarily mean buying more physical ounces at higher spot price. It might actually make good sense to reduce the amount of gold you're buying since the price has increased so rapidly. The point in covering opinions from Goldman Sachs, Ray Dalio, is that the price looks like it has a lot further to go up. It's not that we should all go out, take out second mortgages so we can buy more. If you're thinking about your own buying strategy and you're using some amount of ounces as a goal or as a consistent purchase, it's okay to reconsider how much you need. It's actually more than okay because it might actually be necessary to keep you accumulating. And it's the consistency that's important. It's not the amount. I've been showing lately that the increase in gold price has exceeded inflation by a significant clip, 43% more. So any target amount that you had in mind has now changed pretty dramatically. If your goal is based on some kind of number of ounces, it probably makes more sense to reassess that goal than it does to just chase the same number of ounces at double the price. And to get you some context on that, a goal that used to require 24 ounces of gold now takes less than 17. If you're wondering how that happens, well, I showed the math in my last video. If your goal was 50 ounces, it might now be 35. If it was 100, maybe it's now 70. This is a really important shift in target numbers because your portfolio allocation is probably still going up considering gold is already up 52% year to date. Now, I just wanna take a quick breather here. Going forward, this would be a great time for a price correction. Nobody seems to be talking about that. And really, it doesn't matter because the analyst calls for $4,900 and above, they still make more sense than any call for some kind of reversal. Even if they're out there. Really just saying, don't be surprised if one hits. The possibility of a pullback is driven mostly by the fact that we just haven't seen one. There hasn't been a significant correction since this run kicked off in 2024. Now, typically, you would expect to see something. Now, that wouldn't affect the longer-term direction of the Goldman Sachs $4,900 scenario. It's just more to say that a short-term pullback shouldn't be completely unexpected. Okay, had to get that out of the way. It wouldn't change the story if we did see a correction. Though, if anything, it would strengthen it. Gold is being repriced, but we aren't seeing much price discovery. It's kind of strange. Gold price just doubled. And maybe that's the reality with all the new conditions. And now that we passed $4,000, it looks like it's probably time to start talking about $5,000. $5,000 is now less than 25% higher than where we are today. So if we took everything together, the news, the market conditions, ETFs starting to chase the general sentiment, it's pretty clear we've gone from deciding if gold is overpriced to deciding how much higher it can go. Let's call it good there, $4,050, and gold still doesn't seem like it got ahead of itself. Kind of a wild run. Let us know what you think, though. Does gold price keep running? Does it pull back? Does it pull back and then keep running? Let us know in the comments. And then while you're there, be sure to hit the like button if you found any of this interesting. Be sure you're subscribed with notifications turned on if you want to hear more on the topic. And if you're still here, thanks again for watching. I always appreciate your time. Take care.