Why Did Gold Prices Drop? Insights from Alex and Larry Elder

Why Did Gold Prices Drop?

With gold experiencing one of the most remarkable rallies in modern history, many investors are now asking the same question: why did gold prices drop? After surging to record highs, gold has recently pulled back, causing concern among some investors and sparking debate about whether the bull market has come to an end.

In a recent interview, Allegiance Gold Chief Operating Officer Alex Ebkarian joined nationally syndicated radio host and political commentator Larry Elder to discuss the forces driving today’s economy, including inflation, Federal Reserve policy, geopolitical tensions, and the recent decline in gold prices. During the conversation, Ebkarian explained why short-term corrections are a normal part of long-term bull markets and shared his perspective on what the current economic environment means for investors, retirees, and those looking to preserve their purchasing power.

The following is an excerpt from that discussion.

Larry, let me put this in perspective. Gold ran from around $2,600 in Jan of 2025 to $5,600 in a little over a year. That’s a once-in-a-generation move. No asset on earth goes straight up — not gold, not stocks, not real estate. So is the run over? No. What you’re watching is a consolidation and a correction inside a bull market, and there’s a big difference.

Here’s what’s actually happening. The following 3 simultaneous factors have been a headwind for Gold:

 

War:

The price of oil and dollar relationship. When war escalates and markets panic, the first thing big institutions do is sell what’s profitable to cover what’s losing. Gold was their biggest winner, so it got sold first to raise cash — not because gold failed, but because gold worked.

 

Federal Reserve’s Interest Rate Policy:

At the beginning of the year, the market had factored 3 rate drops and now possibly one.

We saw the exact same thing in 2008: gold dropped almost 25% in the crash, then tripled over the next three years. Same script in March of 2020.

And look at what hasn’t changed. We’re $39 trillion in debt and counting. Central banks around the world are still buying gold by the ton — they’re not selling into this dip, Larry, they’re buying it. Inflation just printed above 4% for the first time in three years. Every single force that drove gold from $2,600 to $5,600 is still on the table.

So I tell my clients: a correction is not a crisis, it’s a discount. The people who panicked out of gold at $1,200 in 2015 missed the run to $5,600. Ray Dalio — one of the most successful investors alive — says hold up to 15% in gold. He didn’t say 15% only when it’s going up. For long-term investors, especially those protecting retirement savings, this pullback is the opportunity, not the warning.

 

Jobs, Warsh, and 4.2% Inflation: What It Means for the Dollar

Larry, here’s the headline behind the headline: inflation just went up three months in a row — 3.4%, 3.8%, now 4.2%. That’s the wrong direction, and it’s the highest in three years. And here’s the trap the Fed is now caught in. Strong jobs report plus rising inflation means Kevin Warsh — the man who was brought in to cut rates — may not be able to cut at all. The futures market is actually betting the next move could be a hike in December. Think about that: the President finally got his man at the Fed, and the data just took the keys away.

Now what does 4.2% mean for the dollar in your pocket? It means every $100,000 sitting in cash loses over $4,000 of purchasing power this year alone. You don’t get a statement in the mail showing that loss — that’s why I call inflation the silent tax. Nobody votes on it, nobody signs it into law, but it taxes every dollar you’ve ever saved. Gas is up over 40% from a year ago. Groceries, electricity, medical care — all the things retirees actually buy — running hotter than the headline number.

You know who benefits from inflation?

The rich that has assets and, the government. We’re $40 trillion in debt, and the easiest way to pay back old debt is with cheaper dollars. That’s been the playbook for fifty years — the dollar has lost over 90% of its purchasing power since we left the gold standard in 1971.

Gold is the one asset that’s been the mirror image of that story. The dollar buys less every decade; gold buys the same ounce it always did. That’s not speculation, Larry — that’s preservation. And preservation is the first of what I call the Five Golden Ps.

 

What This Moment Means for Someone 50+

Larry, this is the most important question of the night, because if you’re 50 or older, you are playing a completely different game than a 30-year-old. A 30-year-old has time to recover from a crash. You don’t. You have what I call a shrinking runway — and right now you’re facing both engines failing at once: inflation eating your cash, and volatility threatening your stocks.

Think about what happened to retirees in 2000 and 2008. The market dropped roughly 50% both times. If you were retired and pulling income from that account, you never fully recovered — because you were selling shares at the bottom just to pay your bills. That’s called sequence risk, and it’s the number one destroyer of retirements in America.

Now add 4.2% inflation on top. Your cash is losing four cents on the dollar guaranteed. Your bonds are paying yields that barely keep up. And your stocks are riding a market priced for perfection in a world at war. That’s the squeeze.

So what does this moment actually mean? It means it’s time to check your diversification — real diversification. Not ten different stock funds that all drop together, but assets that don’t move with Wall Street. And here’s the beautiful part: most people don’t realize you can do this inside your existing retirement account — a Gold IRA — tax-free, penalty-free, without touching your paycheck. Same tax advantages, but with something real and physical backing it. You insure your house, your car, your health. This is how you insure your life savings. Don’t wait for the next headline to do it for you.

 

 

Disclaimer

This article is provided for informational and educational purposes only and should not be construed as investment, legal, tax, or financial advice. Past performance is not indicative of future results. All investments involve risk, including possible loss of principal. Readers should consult qualified financial professionals before making any investment decisions. References to central bank activity, gold purchases, or market trends are based on publicly available information and should not be interpreted as a recommendation to buy or sell any asset.

 

 

 

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