Which Asset Will Recover First? (Uncut) 04-08-2025

‘All Steps Point To Recession’: Which Asset Will Recover First? | Gary Wagner

As things are set up now, I don’t see a way out of not having a recession. This is still a fluid situation. Stocks are going down again.

They’re following through from last week’s brutal, brutal selloff and gold is moving lower now for the third consecutive day. So my sense is that we would see a recovery in gold before we do in equities. Global markets are in turmoil early in the week.

The S&P 500 is now officially in bear market territory. What does this mean for investors interested in not just equities but also precious metals? Gary Wagner is here to join us today to discuss this theme. He is the editor of TheGoldForecast.com. Gary, good to see you again.

Gold has been rocketing to new highs above $3,000 an ounce. It was at $3,100 not too long ago. It’s since fallen to below $3,000.

Today we’re speaking it’s now below $3,000. My first question is what is going on with the markets? Mr. Investor, somebody observing, are you worried about this progressing into some sort of greater depression that some people have been warning us about? I believe that as things are set up now, I don’t see a way out of not having a recession. All of these steps are taking us to that point.

How deep, how long that will last, we’ll have to determine at a later point because this is still a fluid situation. Stocks are going down again. They’re following through from last week’s brutal, brutal selloff and gold is moving lower now for the third consecutive day.

My sense is that we would see a recovery in gold before we do in equities, but it seems as though there’s further to go in terms of the selloff in U.S. equities as well as global equities. Why do you think there’s more further downside to go? Because the reaction that we are getting is directly tied to the revised set of tariffs that Trump announced last week, which are deeper, which involve more countries, which are more comprehensive, and more than that, it has developed into a full-blown trade war. Initially, Canada, the European Union, everybody talked about putting on reciprocal tariffs and China, of course, did.

But China came out when Trump raised the tariffs last week, and they announced that they were going to do a reciprocal tariff over 30%. Then Trump came out with a warning saying, well, if you do that, we’ll raise your tariffs to 50%. That is an escalating trade war.

As long as it’s escalating, I don’t see it beginning to diminish. We’ve got to see the damage done, where the markets want to fall, and some basic change, some optimism come into the market that this will work itself out before we see a conclusion to the current dilemma that we’re in. I know we’re going to talk about gold in just a minute, but I just want to show you an S&P 500 chart.

I pointed this out before on my show, Gary. This is the S&P going back to 2020, 2019, and 2018. In Trump’s last term, the same thing happened.

He implemented tariffs, and markets didn’t like that. I was covering this at the time, and every time he announced new tariffs on Chinese goods or any other country, the markets threw a hissy fit. I know at this time, things are different.

The scale is much larger. The magnitude is much larger. Take a look at 2019.

Markets were down about 19% when Trump implemented tariffs. I know this chart looks scary, but on a percentage basis, it’s about the same. It’s down 19%.

We’ve seen this before. My point is, is this just the start of a V-shaped recovery, which is exactly what happened in 2019? Can you see any parallels from today versus last time? I know nobody knows. Well, it’s certainly an interesting observation.

The fact that it is at a similar percentage decline, 19% then and 19% now, is truly a point we want to look at it for potential signs that we’re seeing either a slowing in the decline or some kind of base or sideways trade action of V-formation forming. It is something that we absolutely want on our radar because it did occur with him last time for the same reasons. It would be foolish of us not to put that into the different points that we’re using to interpret the economic environment as it stands right now.

Absolutely. What does this mean for gold? I ask because gold is supposed to be a safe haven. Arguably, it still is.

Is it still a safe haven after what’s been happening the last two days? Absolutely. Is it a safe haven now is the appropriate question and you have to say, no, it’s not acting like that. We’ve seen this before.

We’ve seen this when we’ve had massive equity sell-offs that spilled over into other ancillary asset classes that weren’t related to the equities. We’ve seen gold sell off. What we saw last week was largely, I believe, either profit-taking in gold and using that to cover margin calls or to add liquidity.

People were liquidating. It was a fire sale. When you that kind of brutal price decline, portfolios are getting hammered very quickly to a substantial degree.

You want to raise your level of liquidity. You want to do whatever you think is necessary to protect it. Now, is it the best move? Well, I don’t believe that that’s the way it should go, but it has done this in the past.

In that way, it does not surprise me. But what we also saw in the past is that the fact that they would run in tandem, gold would tend to find support much earlier than the actual meltdown in equities came to a conclusion. What happens now to the gold price? Let’s walk through some technical analysis, Gary.

I think what people are wondering is whether or not $3,000 is permanent. Nothing in life is permanent. Permanence is impermanence, but a medium-term ceiling above which it will be very difficult to sustain.

You mean the recent highs right below $3,200? I’m talking about futures, of course, not spot. Actually, I’m talking about specifically $3,000. I know it’s breached above $3,000 to $3,200 in the futures, but it didn’t stay there for very long, which is to my point.

It’s a ceiling. People have been taking profits above $3,000. Is that the right way to look at it, Gary? Absolutely.

On a technical basis, it hit that and it became the record high. It was unsustainable. More importantly, it came down fairly hard considering that it just moved back up over $3,000, but this morning it was trading below $3,000 per ounce.

We’re looking at it skirting that area. When you think about it, on Thursday, gold futures declined by $50. Friday, $82.

Today, $60 plus. We’ve had strong declines with substantial volume for the last three trading days, and it’s in unison with the equities that are under pressure. I’ll show you an interesting observation when we do look at some charts about the S&P, the NASDAQ, and the Dow, even though they’re lower, how they look in a candlestick format, an unusual scenario.

My sense is that at some point, I believe that it will hopefully occur this week, you will see gold begin to disconnect from the selling pressure that we’re seeing in equities. At that point, people will return to that as a safe haven asset to protect the portfolio that’s getting hammered by components within that, which specifically are the stock sale. Before we continue with the video, I want to tell you about one of the best performing assets this year, gold.

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Gary, can we pull up some charts here, maybe show the audience with some visuals to illustrate your point, some short-term and medium-term levels that we should be watching for? Not a problem. The first thing that I want to look at is short-term, and then we’ll look at longer-term charts to where we think we could find support. This is a very short-term chart, five minutes per candlestick.

The candlesticks are also candlesticks with volume. That’s why you see some wider and the corresponding volume below it. What is so interesting is that we saw this last week where we would get tremendous selling pressure.

So, the open on Monday, really this is Australia’s Monday, it takes it from $3,058 down to lows just below $3,029.88, and then you’ve got this long consecutive series of green candles with strong volume that move gold back up to $3,075, definitely countered the trend, and then you had a slow and methodical price decline for a period of hours, and that is kind of interesting. So, you make this next low that comes in, makes it slow, and then it spikes back up, but that is a false spike in that it was a counter trend that you wouldn’t expect and also unsustainable, and then you return, you make the lowest low of the day, and now we’re sitting just above that right around $3,000. So, on a short-term basis, we’ve seen selling pressure.

The selling pressure remains, but we’re also seeing points when there is either an attempt to recover or people squaring positions off, but it’s interesting. It’s not just straight selling with small kicks to the upside, so to speak. Typically, it’s a stair step.

It’ll move down three steps, move up one, down three, up one. This, it moved down one, and then it moved up one and a half. Tremendous spikes with a counter trend on a short-term basis.

Now, we also saw that in equities, and that was due to a rumor that began to circulate that said that they might have a 90-day pause on the tariffs. So, equities shot up, and the White House announced that that’s not true. Equities returned to their selling pressure, and so did gold.

But we’ve seen this kind of action last week where, on a short-term basis, you get tremendous short covering actually moving the market up above the beginning of the sell-off. In other words, $3,058 is the opening bid. It sells down to $3,000, and the recovery takes to $3,075.

So, an additional $20 or so in terms of the spike higher before returning to the prevalent trend direction, which is bearish. Would you be buying gold at current levels given that it was previously a little bit higher, and then now there was a big flash crash? Well, let’s go ahead and pull up a longer-term chart to answer that question, and this is a daily chart. You can see that these are the last three days, Thursday, Friday, and today.

Tremendous selling, and what I’ve done is I’ve created two Fibonacci retracement data sets. The first one is a short-term data set beginning at $2,875 up to the top that was achieved on Wednesday. The longer data set starts down at $2,650, the lowest in what I have labeled as the beginning of this current rally in the middle of December.

$2,650 basically moved you up to a series of new all-time record highs. When you do this, the reason we’re using two is we’re looking for confluence between different cycles of moving averages, in other words, the time sequence. This one is much longer and much deeper, and so the 23.6% matches up roughly with the shorter-term Fib retracement at 38.2%. Now, obviously, it barreled through that.

The next level that is interesting to watch would be this 38% retracement level that corresponds to the 61.8%, and the fact that you have these pure Fibonacci numbers, the 38 and 61.8 close together, is really, it’s kind of like, in music, it would be, an analogy would be a C and a high C. In other words, there’s very much the same resonance, but an octave higher or an octave lower, and you’re getting that. This is beautiful confluence when you have these, the 38 to the 23 or the 61 to the 38, when they’re that tight together, it tells you that even when you go further in time, the cycle of itself matches up beautifully to these numbers. So, I believe that we want to look at this current pricing.

The low that came in today was 29.72%. Of course, the key is going to be when gold is able to move back and sustain a close above 3,000, which it’s struggling to do, and at this point, it is just at 3,000, 3,001, and this is June futures. A break below this, and you would have to look at the area of the 78% at around 29.61, but my sense is this is an area we want to look at. If it drifts further, let me actually go ahead and hard code that in.

If it is unable to hold this current level, 29.46 is at 78% retracement. That would be the next level, and personally, I don’t think it would go much deeper than 29.50, the 78% retracement, and what I am saying is I’m going to have a harder time predicting when equities will begin to find some support. I think another question that we didn’t touch on is the correlation aspect between equities and gold.

I know during a fire sale environment, everything correlates to one, but I think gold investors are wondering when this correlation, or if we can look out for signs of this correlation breaking down anytime soon, which is to say if stocks continue to go down, gold would stay flat if not go up. I mean, that’s a very, very astute observation because my sense is that will definitely happen in that gold will recover before U.S. equities do. They’re trading in tandem lower, but the first of those two asset classes that will find support, unquestionably in my opinion, is going to be gold, not equities.

In other words, equities not going to get a soft landing, find support, and begin to move higher, but gold continues to slip lower. I don’t see that playing out. That’s not as probable as gold finding support with equities continuing to decline, hopefully slowing down the pace at which they’ve declined because this decline has been exceedingly quick.

It’s been a massive amount of damage, but over three days, when we look at other corrections in U.S. equities, they typically take a little bit longer to have an equal amount or an equal percentage decline that we’re witnessing now, much more than three days. What are the indicators for more bullish action in gold? So now we’ve converted our daily to a four-hour chart and included Elliott Wave. And if we look at Elliott Wave counts on a daily chart, we’re still fully embedded in that final fifth wave.

And the correction, of course, has begun, but it’s not really giving a wave count yet because it’s only been three days. But here, you see that on Wednesday, the 2nd of April, we hit a 5, 5, and 5. So on every time parameter, these are different parameters of days longer or shorter, it began an A, a B, and a C correction. Typically, we use the four-hour charts because they’re going to be much more sensitive to tops and bottoms, key reversals than the dailies, just because they are shorter time cycle and therefore will give you that indication much sooner.

But we are getting indications of the potential for a bottom. You can see that we do have a green candle that formed. This would be called a piercing line in terms of candlesticks, but we also saw it here and here.

So the A came down, it tried to sustain a upside move, was unsustainable, sold off to form our B wave, and now it then moved up for our B wave and now down to our C wave here at about 29.70. So that’s the key line in the sand that gold needs to hold in terms of June futures. If it can hold that and it begins to trade sideways, or we get more bullish momentum, such as the next few candles are green with a higher high and a higher low, we would call that confirming candles that are confirming that this in fact is indicating that support has come into the market. What was most interesting to me is as I watched the market trade overseas yesterday in Hawaii, of course, which is Monday in Australia, there were points of times when it really appeared as though there was some sort of recovery that was actually occurring.

However, it was unsustainable. We saw that again today, we saw that last week. So we have a market that is going counter to the fundamentals that it would typically have.

This is when you would look to utilize gold as a safe haven asset to protect the risk on, risk off, to protect the price decline of U.S. equities, and yet it moved in tandem. And so there is going to come a point when you get the true disconnect and gold begins to act as a safe haven. I would imagine that that could occur early this week.

When is gold hitting $3,500? That’s an interesting question. This is kind of a philosophical question because nobody knows exactly when. But if someone were to ask you, look, I think gold’s going to $3,500.

I think that’s reasonable given it’s already gone up 50% in the last year, more than that actually. $3,500 is not even 50%. What’s the timeline for that kind of increase? My sense is gold will trade to $3,500.

It’s the when that I’m a little bit more conservative than other analysts. Right now, I’m looking at the top, potential top of gold. And this, of course, our calculations done before the fall, but they’re still relevant.

Anywhere between $3,350 and $3,400 an ounce. $3,500 an ounce, if I had to calculate, I would have looked for a second quarter next year. It’s not a matter of if, but when, because I believe that that’s truly a logical price level for gold to ascend to, all things being equal.

I am just a little bit more conservative than some that are calling for it earlier than I am. What about silver? The question is, what do we do about silver now that silver, being an industrial metal or having an industrial component, is in the line of fire of these tariffs? Presumably if global trade slows down, we’ll need fewer industrial inputs. But silver also trades like a monetary metal in some way because it follows gold.

Here is a perfect example of competing forces at work. What’s your view? Well, silver has not been trading in tandem, but let me grab a silver chart here. And so we can take a look at it.

Let’s go to a daily. I mean, it’s acting interesting. If you recall from last week, for example, when gold was going down hard, silver was dropping 9% on Thursday, 7.5% on Friday.

And interestingly enough, today it’s actually up 1.9% or 56 cents after trading to an extreme low of 27.58. So it does appear as though silver is attempting to find some support and move higher from that. What’s interesting is that, as you pointed out, there is a component where we can call silver a sister precious metal to gold, because in some ways it does have a safe haven aspect to it. But the key component is industrial utilization.

So why do we have silver moving up when equities are moving down? And some of those equities are companies that rely on silver for their end product. They use it in their production. So the one thing that is easy to surmise is that silver was hit so much harder.

The decline in silver over the last few days of about 15% was so massive that there are traders right now that believe that it is absolutely undervalued. Another rationalization or another reason we could be seeing this is you’ve got massive short covering from those that went short when it was sitting at around $34, $35 and then dropped 15%. If you cover your shorts, you’re putting a buy order into the market and you would get the same symptomatic candlestick pattern that you’re seeing here.

Gary, final question. At what point would gold be considered in a bear market? Now, people are writing over the news that the S&Ps are ready in the bear market because it’s down 20% from its highest. Technically, that means bear market.

Does the same math apply for gold or are you approaching it differently? The first thing that you want to see is the depth. Let me go to a basic daily chart to answer this. This rally started middle of December at about $2,600, moved to $3,200.

So, you’ve had a tremendous move, $450, $5, $650 higher since the middle of December. We would have to see gold drop at least 50% to 70% of that. To give you an idea of where that was, before I would call this a bear market, we would need to see gold at $2,770 to $2,850, although I would look at this.

The other thing that we would want to do is take a look at our moving averages. I’m looking at a series of moving averages. This purple one is an exponential 20-day moving average.

This green one is what we look to to define if it is in a short-term bullish or bearish trend, above or below. The next one is an interim bullish or bearish trend in blue. And then, of course, this is the notorious 200-day moving average, which tells you on a long-term basis whether or not gold is in a bullish or bearish demeanor.

Flew through the 20. It recovered after trading below the 50-day. For us to say that to respond that we are in a bear market, we would need to see a lot more technical damage, at least to break below the 100.

Definitely, if it traded as low as at or below the 200-day, that’s the definition of a long-term bear market. Below the 100-day is the definition of an interim bear market. And a 50-day moving average, the fact that it’s currently above that, says that on a short-term basis, it has not gone into a bear market scenario.

We would need to see gold trade below and then sustainably either trade sideways or lower. And the fact that it isn’t, we can’t make that observation or we can’t come to that conclusion that gold is in a bear market. Right now, it’s not.

It’s corrected tremendous amounts of dollars, percentages, nothing in terms of the damage that’s happening in US equities, nothing like silver. And if we look at the moving averages, for example, in silver, it ripped through all of these. I believe that it is below the 200-day moving average, if I’m correct, but not gold.

Gold would need to break and close below the 50-day moving average before I even say it is in a short bear market. Right now, it doesn’t meet the criteria of any of them. If it does close below the 50-day moving average, typically, what does that imply? Do you start buying it because it’s oversold or does that mean it’s time to take more off the table because this is a sustained bear market now? If you get a break below the 50-day moving average on a closing basis and it either trades sideways or lower for a period of time, at least a couple of days, that is telling you that the selling pressure is not diminished.

You would obviously want to see what volume was doing at the same time. And you can see how these volume has, they spiked up, but they are declining. When you look at the volume of Thursday, it’s greater than Friday.

Friday is greater than today. If it breaks below there, you want to see whether or not these are large candles. Is it moving sideways or is it moving very quickly to lower lows? And that would help us determine it.

What would seal the deal, so to speak, is a pattern at a certain pivot point. In other words, this is a key area to watch because you have the confluence of the 38% Fib retracement and the 61.8% Fib retracement on two data sets, one starting on February 28th and the other one beginning in December right here. Once you have a solid break below this price point, obviously if it continues to show these large red candles on a daily chart, it’s not finding support.

But at a certain point, whether it is here or even the 78, which is at 29.46, we would want to see a recovery candle such as we saw here, a red to green. But we’re not seeing that. I believe that there’s a high likelihood, a high probability that gold could find support here as long as it doesn’t break today’s low of 29.72, call it 29.70. If it doesn’t make a lower low, there is a high probability that we will see it either trade sideways or form that classic V formation.

Yes. All right. Great.

Well, let’s end this discussion here. I think that was a very good overview of the gold and commodities markets. Where can we follow your work now, Gary? Thanks so much for asking.

On YouTube, we have thegoldforecast.com. It is where we keep our vault of videos. I think there’s 3,000 there, so you can see how we reacted at multiple points of time. You can go back to the 2011 spike and see how we dealt with that or any of the big corrections that we saw in U.S. equities and seeing what we’ve done.

Our primary designation where you want to find current information is thegoldforecast.com. Without a question, you can read through, and if it’s an older video, you can see the commentary. Most importantly, if you see something that you perceive is going to give you value and help you become a more successful trader, you can try us out and see if it’s of value to you. In other words, our goal is to give you actionable information, and if we can meet that criteria, we would want you to stay with us.

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