Gold analyst warns of 2011-style 'blow-off top'

Carley Garner is a long-time futures trader who has seen a thing or two over a career that has lasted over twenty years, including gold market rallies and sell-offs.

The massive rally in gold stocks this year to north of $3,357 per ounce has caught her attention, and not in a good way.

Gold prices are up over 28% year-to-date in 2025, and the size and speed of the move (and the reasons behind it) remind her of a similar rally 14 years ago in 2011. Back then, the outcome for gold bugs wasn't fun.

“The 2011 top was met with a 45% haircut that took nearly a decade to recover,” according to Garner.

Gold has rallied over 28% in 2025, but not everyone is convinced it can continue to climb higher.

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Why gold rallied so much this year

Gold has enjoyed a perfect storm this year as macro crosscurrents hamstring the Fed's monetary policy, GDP slips, and the US debt outlook worsens.

Unemployment has risen to 4.2% from 3.4% in 2023, CPI inflation of 2.7% is stubbornly above the Fed's 2% inflation target, the World Bank says GDP is expected to fall to 1.4% from 2.8% last year, and debt experts say the One Big, Beautiful Bill Act passed this year will add $3.4 trillion to the US debt by 2034.

The risks have hammered the US Dollar, causing the Dollar Index to tumble 10% in 2025. Since gold is priced in USD, the Dollar's struggles have made it more attractive to overseas buyers eager to diversify their holdings away from US Treasuries in protest of President Trump's tariff policy.

The significant uncertainty has also made antsy investors far more interested in gold than Treasuries as a safe haven.

“Safe haven dollars can purchase gold, an asset that doesn’t produce income, at an all-time high without a risk parachute, or they can buy Treasuries at multi-decade lows with a yield of 4% to 5% to cushion downside price risk,” said Garner in a TheStreet Pro post. “Ironically, the masses select the former and pass on the latter.”

Many are indeed giving up on Treasuries' relatively juicy yields, fearing the worst. That may not be the best move, though, for newer gold bugs, given that gold has already rocketed to all-time highs this summer.

Gold's rally echoes the past

Troubling times always increase interest in gold, and this isn't the first time that gold has put on a show.

In 2011, gold similarly rallied sharply to all-time highs amid uncertainty around major banks and the economy, and aftershocks following the Great Recession, which was still fresh on investors' minds.

Remember the S&P cut the US debt rating for the first time in history in August 2011 because of the growing deficit, prompting a massive 5.5% drop in the S&P 500 on Aug. 8. The situation was so bad that Warren Buffett famously back-stopped Bank of America on Aug. 25, providing a cash influx in exchange for preferred stocks and warrants that eventually made Buffett's Berkshire Hathaway a mint when risk assets found their footing and gold lost its luster.

“Although gold is known as a safe-haven asset, it has a history of stunning corrections,” reminded Garner. “For instance, the 2011 top was met with a 45% haircut that took nearly a decade to recover.”

Is gold still worth buying now?

Like most investments, momentum can drive assets higher and lower than logic may dictate, making betting against it a risky endeavor.

Still, most money is made or lost by acting ahead of the turning points that mark tops and bottoms. Given that gold has already made a major move higher, investors are wise to consider whether we're closer to a top like 2011 than a bottom like a few years ago.

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“Gold is an asset that should only be bought when nobody wants it. If everyone is buying it, it’s probably too late for anyone with a time horizon of less than a decade or longer,” said Garner.

There's certainly an argument that gold bullishness is widespread, with many talking positively about it as a hedge worth owning.

“If you are looking for bearish analyst calls or news, you won’t find it,” said Garner. “But don’t let this detract you from being skeptical.”

Gold was panned as a “dead dog acting as a drag to portfolios” three years ago, says Garner. Today, she says, “it is considered a must-hold in those same portfolios.”

In other words, contrarian thinking, akin to buying when everyone is selling and selling when everyone is buying, may make more sense today regarding gold than three years ago.

“Just as conventional thinking was misguided then, it might be wrong today,” wrote Garner.