Gold Has Worst Day Since 2013. Is It Time To Buy Or Sell?

Core Viewpoint - The price of gold has experienced a significant decline of over 5%, marking its worst day in more than a decade, yet it remains above $4,100 per ounce, raising questions about the timing for investment in gold [2] Historical Performance - Gold has historically experienced bubbles followed by prolonged periods of underperformance, with notable examples in the late 1970s and early 2010s, where prices peaked and subsequently fell significantly [3][4] - From January 1978 to September 2025, gold's average annual return was 6.03%, compared to 10.79% for the S&P 500 Index, indicating that a $10,000 investment in gold would have grown to over $95,000, while the same investment in the S&P 500 would have exceeded $400,000 [5] Current Demand Dynamics - Current demand for gold is strong, driven by various buyers including retail investors, institutional investors, central banks, and industrial companies, suggesting a bullish outlook [6][10][11] - Retail investors are increasingly purchasing gold through ETFs and physical forms, often entering the market during the final stages of a bubble [9] - Institutional investors, referred to as smart money, are also significantly increasing their gold investments, with inflows into gold-backed funds up 25% from the previous year [10] - Central banks, including China and Poland, have shifted to buying gold, contributing to the overall demand [11] Investment Considerations - The recent decline in gold prices may present a buying opportunity for those not currently invested, as the bullish case could outweigh the bearish case despite the current downturn [12] - The demand for gold is also influenced by global fears related to geopolitical tensions and economic uncertainties, which may drive further interest in gold as a safe-haven asset [13] - While the price of gold may continue to rise, it is important to recognize that it will eventually peak and decline, with larger bubbles typically leading to more significant downturns [14]