Gold’s Retreat Could Offer a Buying Opportunity Amid a New Inflation Supercycle.

A 40-year supercycle in commodities, inflation, and interest rates began in 2020 and is likely to extend through 2060.

As legendary commodities strategist Jeff Currie has argued, this cycle is fundamentally driven by a widening imbalance between demand and supply.

While the conflicts in Ukraine and Iran are acting as medium-term catalysts for higher prices, the longer-term trend is being fueled primarily by soaring global government debt and the economic rise of billions of consumers across Asia and Africa.

Some countries are feeling a greater impact than others from the US government’s latest debt-financed conflict with Iran, which has unfolded largely as many analysts feared.

As a result, certain central banks and gold-focused investors in affected regions have been selling gold holdings. Since most global assets and expenses are still denominated in fiat currencies, many households are liquidating “rainy day” gold savings instead of taking on additional debt.

From a broader perspective, advocates of hard assets argue that the global financial system would be more stable if it were centered on gold-backed savings rather than fiat-driven debt expansion.

Over time, the Strait of Hormuz is expected to reopen, potentially under a more permanent toll structure. Ironically, oil prices could climb even further after the conflict ends than they have during the war itself, raising the possibility of crude prices reaching $200 or even $300 per barrel.

Mainstream commentators have gradually shifted away from expecting aggressive rate cuts and renewed waves of quantitative easing, instead acknowledging at least part of the reality of this unfolding supercycle: interest rates may need to move higher.

What many still fail to recognize, however, is that rates could remain elevated for an extended period as policymakers struggle to offset the combined pressures of a long-term commodities boom and governments’ deep reliance on debt financing.

Notice the blue arrows on the left side of the chart: during the previous 40-year supercycle, interest rates experienced four separate periods of decline.

The current cycle is likely to follow a similar pattern: interest rates may trend higher overall, but with intermittent periods of decline along the way. That initial downward phase now appears to be approaching its conclusion.

A closer examination of the US rates chart highlights the move clearly. In late 2023, yields retreated from around 5% to roughly 3.5%, forming what technicians describe as a bullish triangle or pennant pattern.

An upside breakout now appears increasingly likely, potentially paving the way for a fresh advance toward the 6%–7% range.

What about gold? The weekly chart suggests that a sizable flag pattern may be developing, though rather than attempting to forecast the next major move, investors may be better served focusing on important accumulation zones.

From that perspective, the $4,100, $3,900, and $3,500 levels stand out as potential buy areas below the current market price where long-term gold investors could step in aggressively.

Meanwhile, the Stochastics oscillator (14,5,5) points to the possibility of further near-term weakness. The latest buy signal failed to gain traction and was triggered prematurely from above the oversold 20 threshold, indicating that downside pressure may not yet be fully exhausted.

A look at the daily chart shows several highlighted buy zones, both above and below the current market price.

For investors — particularly those involved in mining stocks — one of the most dependable strategies is to accumulate within these support zones during price pullbacks rather than chasing bullish breakouts after prices have already surged.

At present, the $4,500 area can still be viewed as a buy zone, though mainly for more aggressive traders, as the current pullback remains relatively modest.

As stagflation pressures deepen, additional gold selling from central banks in countries facing severe economic strain from the Strait of Hormuz disruption remains possible. That outlook aligns with the ongoing consolidation pattern on the charts and the indecisive behavior currently shown by momentum oscillators.

The long-term chart comparing GDX to gold shows that the market is currently pausing near the neckline of a massive inverse head-and-shoulders formation — a consolidation phase that many gold-stock investors had been warned to expect.

At this stage, patience may be the most important requirement. If the breakout eventually materializes, the rally that follows could be exceptionally powerful — and it may arrive sooner than many anticipate.

In simple terms, there is a crucial distinction between investors selling government bonds because economic growth is strong and selling them because confidence in governments’ ability to repay debt is beginning to erode.

At some point, institutional investors may stop avoiding gold because it offers no yield and instead start accumulating it out of concern that governments worldwide are losing control of their debt burdens. Such a shift could trigger an intense wave of buying in mining stocks as well.

What may lie ahead resembles a more extreme version of the inflationary 1970s environment — though for now, patience remains essential, because in this market, patience could prove golden.