The Last Time Gold Did This, It Tripled

In the fall of 1978, gold was getting destroyed.

The Shah of Iran had just imposed martial law, strikes were spreading, and the streets of Tehran were on fire. Gold, the one asset that was supposed to protect you when the world fell apart, dropped 22% in a matter of weeks.

Investors panicked, sold, and swore it was over.

Twelve months later, gold ripped more than 300% to its all-time high.

I think about that moment a lot right now. Because what just happened in the gold market is almost identical, and I don’t think anyone is reading it correctly.

The Setup Nobody Wants to Talk About

Gold hit roughly $5,600 in late February. The Iran war started on February 28th. And instead of rallying, like most people expected, gold cratered.

It fell to an intraday low around $4,100 on March 23rd. A 25% drawdown from the highs.

The Daily Sentiment Index, one of the most reliable contrarian indicators in commodity markets, hit 15 for gold and 19 for silver. Weeks earlier, both sat in the high 80s.

Sentiment went from euphoria to despair in less than a month.

My parents didn't have Bloomberg terminals or hedge fund connections. They had a kitchen table and a stack of bills.

When things got scary, they didn't have the luxury of "waiting to see what happens." They made decisions with imperfect information and lived with the consequences.

That experience taught me something Wall Street never will… when the people in charge have no good options, you protect yourself. You don't wait for permission.

If you've been reading me for any length of time, you know what I think about moments like this. This is where fortunes are made. Not when everything feels safe. Not when the charts are clean and the talking heads are bullish. Right here. In the wreckage.

The question isn't whether gold is going higher. The question is whether you have the structure to hold it when it does.

The Pattern That Keeps Repeating

Here's what the financial media won't show you. Gold has sold off violently during every major oil shock and financial crisis of the last 50 years, and every single time, it came back stronger.

Not a little stronger. Dramatically stronger.

• 1973—OPEC Oil Embargo
  Gold dropped 29% during the Yom Kippur War. By December 1974, it had risen 117%.

• 1978—Iranian Revolution
  Gold fell 22% as the Shah's regime collapsed. It surged over 300% by January 1980.

• 2000—Internet Crash 
  Gold fell 18%, bottoming in the low $260s. It eventually ran past $1,000.

• 2008—Global Financial Crisis
  Gold dropped 34% after Bear Stearns. It bottomed in the autumn, right before QE1. Then it ran 180% to over $1,900.

The average drawdown across those four episodes is just over 25%.

Gold's drawdown from its February high to the March 23rd intraday low: almost exactly 25%.

And if history rhymes even loosely, what comes next could be one of the most explosive moves in gold's history.

Franco-Nevada co-founder Pierre Lassonde, a man who has spent his entire career in precious metals, has said gold could break $17,000 an ounce if it follows a path similar to the late 1970s.

Before you dismiss that number, look at the chart comparing U.S. inflation today to the 1970s cycle. The trajectories are eerily similar. And Iran connects both.

The Fed's Impossible Choice

The Federal Reserve is trapped.

Fourth-quarter GDP growth was just revised down to 2.0% year-over-year—a three-year low. Real per capita disposable income is falling. Consumption is weakening. The economy is slowing.

At the same time, core PCE and core PPI are both above 3% and rising, and that was before oil spiked 40%.

With Brent well above $90, the inflationary impulse from energy hasn't even fully hit the data yet. It takes weeks for those costs to filter through supply chains, agriculture, transportation, and consumer prices.

So the Fed faces a choice with no good answer.

If they hike rates to fight inflation, they risk breaking an already fragile economy. Private credit markets are already under stress. A rate hike could trigger a deflationary crisis similar to what followed Lehman.

If they cut rates to support growth, they pour gasoline on an inflation fire that's already burning.

If they do nothing, they watch stagflation eat the economy alive while Treasury yields climb higher on their own.

The last time the Fed faced a setup like this was August 2008. Dallas Fed President Richard Fisher argued for a 25 basis point rate hike, even while acknowledging the economy was weak and the financial system was "brittle."

One month later, Lehman Brothers collapsed. The Fed was forced to backstop global banks with over $8 trillion in liquidity and launch the first of several QE programs.

Gold bottomed during that crisis. And from October 2008 to March 2009, while the S&P 500 fell another 22%, gold rallied 32%, and the gold miners roughly doubled.

That's the kind of asymmetry I'm looking for right now.

Why Miners Are the Sharpest Edge of This Trade

I know what some of you are thinking. "If oil is spiking, won't that crush mining costs?"

Fair question. And in the short term, yes, rising energy prices increase input costs for miners.

A BMO analysis showed that a 10% increase in oil prices raises gold mining costs by about 2% and copper mining costs by about 3.5%.

But here's what that analysis misses: in a secular bull market for commodities, the rising tide lifts all boats.

Commodity prices rise together… gold leads, base metals follow, and oil follows base metals. The revenue side of the equation overwhelms the cost side.

I've seen this movie before. When I was first researching copper miners in May 2003 and silver miners in September 2003, crude oil was trading around $30. Oil subsequently rose five-fold to $147 by mid-2008.

Did that stop Freeport-McMoRan and Pan American Silver from appreciating 4x to 6x? It did not.

Broad gold and silver mining indices have fallen 25–27% since the war began.

Despite that, they still outperform the S&P 500 on a year-to-date basis, by double digits for gold miners and roughly flat for silver miners. That tells you something about the underlying strength of this trend.

The correction took a massive amount of risk off the table without breaking the secular thesis.

As Sprott's Managing Director Maria Smirnova told The Northern Miner last month:

“Why are copper, uranium, gold, silver, other metals, even lithium, going up?… The world has weaponized metals and mining. The world has realized that we need all these things to build stuff. We need these things to electrify. Electrification and power generation are big themes and they're not going away."

She's right. And the irony is almost poetic: the same conflict driving gold's short-term selloff is accelerating the long-term case for hard assets.

The One Thing You Should Do Right Now

I'm not going to tell you to go all-in on gold miners tomorrow morning. That's not how I operate. What I am going to tell you is this:

Audit your portfolio for hard-asset exposure.

If you own zero gold, zero silver, and zero mining stocks, you are making a bet.

You are betting that the Fed will thread the needle perfectly. That inflation will cool on its own. That the Iran war will resolve quickly. That Treasury yields will behave. That the dollar will hold.

That's a lot of bets to get right simultaneously.

Gold doesn't need everything to go wrong. It just needs one of those assumptions to break. And right now, most of them are already breaking.

Start with a core position in physical gold or a gold-backed trust. Then look at the miners. The gold miner ETFs are testing critical trendlines right now.

A successful hold of those levels would be a powerful signal that the correction has run its course.

If you already own gold and miners, this drawdown is not a reason to sell. It's a reason to hold and potentially add. Sentiment is at extremes, the pattern is clear, and the macro setup is as bullish for gold as anything I've seen in my career.

What I'm Telling Premium Members Right Now

Everything above is the why. But the what, the specific names, the entry levels, the position sizing, the stop-loss triggers, the exact tickers I'm buying and holding through this drawdown, that's what Moonshot Minute Premium members get.

And below in the Premium section, I'm updating Premium members on exactly how I'm positioning across gold, silver, miners, and the broader commodity complex in light of this correction.

Which positions triggered our Moonshot Ride rules. Which ones I'm adding to. And one name in particular that just became the sharpest risk-reward setup in the entire portfolio.

If you've been on the fence about joining Premium, this is the kind of moment it was built for. When fear is at its highest, and the biggest moves are about to happen.

You don't want to be standing on the sidelines reading the free version and wondering what I'm actually doing.

The Bottom Line

Gold's 25% drawdown mirrors the four most important bottoms of the last half-century, each of which preceded explosive rallies of 100% to 300% or more.

The Fed is trapped between inflation and recession with no clean exit. And sentiment has reached the kind of bearish extreme that historically marks the end of corrections, not the beginning of something worse.

Once this bearishness runs its course, and the evidence suggests it already has, gold could eventually double or triple from here. North of $10,000 an ounce.

I like that risk-reward.

The world is telling you something right now. The question is whether you're listening, or whether you're doing what most people do in moments like this: selling the bottom because it feels safer than holding through the fear.

Prepare and act. That's what separates the people who build wealth from the people who watch it happen to someone else.

— Double D

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