Folks,
Gold is getting obliterated!
The SPDR Gold Trust is down roughly 16% since the US launched its massive strikes on Iran, and leveraged gold holders are looking at drawdowns of 30% to 50% depending on the product. On paper, the case for gold has never been stronger — and yet the price is doing the exact opposite of what most investors expected.
Understanding why is the difference between panicking out of a long-term position and using the volatility to one's advantage... | | | Why Gold Is Crashing When It "Shouldn't" Be
The bull case for gold reads like a checklist that should be sending prices to the moon. A full-blown military conflict is disrupting roughly 20% of global oil supply. Central banks bought over 1,000 tons of gold last year — a generational level of accumulation. The US national debt is at levels that barely register emotionally anymore. Inflation is elevated and worsening. Gas prices are surging. The dollar has been in a long-term weakening trend. Every single one of those factors points to higher gold prices.
And yet, gold has been destroyed...
The answer comes down to the Federal Reserve. The Iran conflict is causing oil and commodity prices to spike, which is sending inflation expectations surging. When inflation expectations surge, the Fed loses the ability to cut rates — and starts considering hikes. The rate cuts that markets had priced in just months ago are now completely off the table. The Fed is going from unleashing cheap money onto markets to potentially plotting rate increases, and that shift changes everything.
✔️ The three-step chain reaction — Step one, the government prints money to fund the Iran conflict. Step two, printing and supply disruption cause a price spiral. Step three, the Federal Reserve raises yields to tighten the money supply and prevent that spiral from running away. Markets are forward-looking, and they are already pricing in step three. ✔️ Paper market dynamics — There is a pricing dislocation between the effectively infinite supply of paper gold contracts and the limited supply of physical gold. This dislocation is particularly pronounced in US markets and adds downward pressure on the spot price. ✔️ Forced liquidation by sovereigns — Several OPEC partners and central banks that had been aggressive gold buyers are now having to sell reserves to free up liquidity to manage through the crisis. The very buyers that drove gold higher are temporarily reversing course. | | | The Historical Playbook Says This Has Happened Before
Gold crashing during a crisis sounds counterintuitive, but it follows a pattern that has repeated for decades. The move tends to play out in four stages, and history suggests the current sell-off fits neatly into the early chapters of a much longer story.
1979 — Iranian Revolution — Gold ran from roughly $220 at the start of 1979 to a peak near $850 by early 1980, a roughly 290% move in about 12 months after the revolution collapsed oil supply and geopolitics spiraled. 2008 — Financial Crisis — Gold dropped from roughly $1,000 to around $700 as institutions liquidated their most profitable positions to raise cash. Once the Fed launched quantitative easing, gold ran more than 170% to its 2011 peak above $1,900. 2020 — COVID — Gold initially pulled back, then surged from around $1,520 in January to over $2,070 by August — more than 36% in eight months — after the Fed cut rates to zero and launched unlimited QE. 2022–2026 — Post-Ukraine bull run — Gold pulled back to roughly $1,600 in late 2022 during the Fed's aggressive rate hiking cycle, then launched one of its strongest runs in history, crossing $3,000 in early 2025, surpassing $4,000 in October 2025, and hitting an all-time high above $5,500 in January 2026 before the current pullback.
The recurring pattern is clear — acute crisis triggers a sell-off, the Fed responds with liquidity, and gold's structural drivers reassert themselves. | | | Three Mistakes Investors Are Making Right Now
The biggest risk in this environment is not the drawdown itself — it is how investors respond to it. Three common mistakes are playing out in real time and have historically punished those who make them.
1. Dumping physical gold or unleveraged ETF positions because the chart looks bad — Selling a hard asset with limited supply into weakness is handing discounted inventory to institutional buyers who are accumulating. The long-term supply dynamics have not changed. 2. Holding leveraged ETFs or using excessive leverage — Leverage compresses timelines and makes it nearly impossible to withstand the kind of volatility playing out right now. Bear markets in any asset class destroy leveraged holders first. 3. Going entirely to cash to buy the "perfect" bottom — Research on historical gold cycles shows that the move off the bottom is often fast and sharp, and it arrives before most investors are psychologically ready to re-enter. Having some cash for firepower is smart — going all cash while the long-term trend for the dollar remains down is a different calculation entirely.
The short-term trend and the long-term trend have almost nothing to do with one another. Anyone making long-term decisions based on short-term fluctuations is making a mistake that history has punished over and over again. The crisis will not last forever, and the structural forces behind gold — sovereign debt levels, central bank accumulation, and long-term dollar debasement — have only gotten stronger, not weaker.
These fear cycles come and go, and they tend to create the best opportunities for those focused on years rather than weeks.
Anyways...
That's all for now!
Until Next Time, -ZT Team | P.S. Want our text alerts? Text "ZIPTRADER" to 1-(855)-228-1598 to sign up!
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