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Gold isn't 'a sound investment' now, warns investor who predicted Black Monday crash

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  Published in Stocks and Investing on Wednesday, October 15th 2025 at 16:32 GMT by Finbold | Finance in Bold
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Gold has long occupied a pedestal in the portfolios of investors who fear market turbulence, but a seasoned market commentator who famously forecast the infamous “Black Monday” crash has now issued a stark warning: gold may no longer be the safe‑haven it once was. In a comprehensive interview with Finbold, the veteran analyst unpacked why the precious metal’s appeal has waned and what this means for both individual and institutional investors.

From Prediction to Precaution

The investor, whose name has appeared in a slew of market analyses over the last decade, gained notoriety in 2023 for correctly predicting the sudden plunge that earned its nickname “Black Monday.” The event, which saw a sharp decline in equity markets amid rising inflationary concerns and a tightening of U.S. monetary policy, was a stark reminder that markets can be volatile even in seemingly stable times.

In the Finbold conversation, the analyst explains that his Black Monday prediction came from a close examination of macroeconomic indicators—particularly the interplay between real interest rates, inflation expectations, and commodity pricing. “Gold had been a hedge against inflation for years,” he notes, “but the fundamental drivers that supported its price have shifted.”

The Changing Landscape of Inflation

Gold’s traditional role as an inflation hedge has been undercut by the current trajectory of inflationary data. The U.S. Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) index, both primary measures of inflation, have shown a gradual decline in the most recent months. Simultaneously, the Federal Reserve’s policy statements have increasingly emphasized the need to curb inflation through higher policy rates.

The analyst points to the Fed’s latest “monetary policy report,” where the committee signaled a willingness to keep rates elevated for an extended period. “Real interest rates are expected to rise,” he says. “When real rates climb, the opportunity cost of holding gold increases because gold offers no yield.”

Gold’s Correlation With the Dollar and Yield

Another key point in the interview is the evolving relationship between gold and the U.S. dollar. Historically, gold has traded inversely to the dollar: a weaker dollar often boosts gold prices as it becomes cheaper for foreign investors. However, in the current environment, a strengthening dollar coupled with rising bond yields has started to erode gold’s attractiveness.

The analyst cites the latest “Treasury yield curve” data, noting that the 10‑year Treasury yield has moved from sub‑2% territory to over 4%. “When yields rise, investors are attracted to fixed income assets that offer tangible returns, and gold becomes comparatively less appealing,” he explains.

Market Dynamics and Gold Mining Stocks

Gold mining companies have also felt the impact of these macro shifts. The interview references the “Gold Mining Index” performance, which has lagged behind the broader market due to higher operating costs and weaker commodity prices. In a recent “Gold Mining Conference” held virtually, the investor noted that mining stocks, once a draw for commodity‑heavy portfolios, now face headwinds from declining gold prices and tighter capital constraints.

He also points out that the high valuations of gold mining companies—often measured by forward earnings multipliers—have not been supported by robust fundamentals. “We’re seeing a disconnect between the price of gold and the earnings prospects of the companies that produce it,” he says.

Practical Implications for Investors

For investors, the warning is clear: hold gold positions with caution and consider diversifying into assets that benefit from rising rates and stronger economic growth. “If you’re looking for an inflation hedge, consider commodities that are more closely tied to real economic activity—like industrial metals—or even inflation‑linked Treasury securities,” the analyst advises.

He emphasizes the importance of portfolio allocation: “Gold should not dominate your allocation if you expect a sustained rise in real rates.” Instead, the investor recommends a more balanced approach that includes equities with growth potential, fixed‑income instruments with decent yields, and a modest allocation to gold as a defensive buffer.

Looking Ahead: What Could Happen to Gold

The analyst is not pessimistic about gold’s long‑term prospects, but he warns that the short‑term outlook is precarious. “Gold could see a 10‑20% correction in the next 12 to 18 months if the current policy trajectory continues,” he cautions. He acknowledges that unforeseen geopolitical events could still trigger a surge in gold demand, but the window for such a rally appears narrower than in the past.

In closing, the veteran investor stresses the need for vigilance: “Investors should stay informed about policy changes, inflation data, and gold market fundamentals. The narrative that gold is a safe‑haven is only as strong as the economic environment that supports it.”

Final Thoughts

The interview on Finbold serves as a timely reminder that market assumptions must evolve with shifting macroeconomic realities. Gold’s allure as a hedge has weakened under the twin pressures of rising real rates and a strengthening dollar. For those who once relied on gold as a bulletproof asset, the message is clear: re‑evaluate exposure, monitor policy developments, and consider diversifying into other instruments that can capitalize on the new economic landscape.