Gold & Rates: A New Reality

By Stewart Thomson | GoldSeek, August 19, 2026 — Original article

In 1973, the OPEC oil supply crisis sent gold soaring while US interest rates surged at the same time. That episode opened a decade in which gold climbed from its post-Bretton Woods price near $35 an ounce to more than $800 by January 1980, while US inflation and interest rates both reached double digits. Retired Merrill Lynch broker Stewart Thomson argues that this historical episode undermines what he calls a false narrative promoted by government narrators today — the claim that skyrocketing oil and rising rates are supposedly very negative for gold. It is a direct challenge to conventional macro analysis, in which higher real yields are typically treated as a headwind for a metal that pays no interest.

An overvalued stock market keeps the narrative alive

Pointing to the CAPE/Shiller inflation-adjusted PE ratio — a valuation gauge popularized by Nobel laureate Robert Shiller that divides index prices by ten years of inflation-adjusted earnings — Thomson contends the US stock market is outrageously overvalued. CAPE has spent recent years well above its long-run average of roughly 17, in territory historically associated with major market peaks such as 1929, 2000, and 2021. The rates-oil-gold narrative, in his view, survives only on life support for as long as equities avoid collapse.

Investors chasing AI stocks, he writes, should instead be exhibiting patience. In his view, a major drop that can be bought is only a matter of time, and most current buyers will likely be badly underwater by the time that tumble reaches its crescendo.

On the fiscal front, Thomson projects that the US government's $40 trillion debt will almost certainly reach $50 trillion — and that wild money printing could ultimately take it to $100 trillion — before the house of fiat cards collapses. This unfolds against a backdrop in which debt service has already grown into one of the largest line items in the federal budget.

Rates breaking higher toward a 6% target

Rates are on the move again, and not because the debt-themed economy is strong, Thomson writes. In his assessment, the rates currently offered to government bond investors are simply too low to compensate them for the growing risks they are taking.

Technically, he sees rates breaking to the upside from both a bull triangle and an inverse head-and-shoulders (H&S) pattern — the latter a formation chartists read as a precursor to upward reversal — with a technical target of 6% for the next move. Every percentage-point move higher in US government bond rates, he argues, puts more pressure on the false rates-oil-gold narrative, because it causes interest costs for the technically bankrupt government to skyrocket.

Describing his long-term US rates chart as his "death of the US government chart," Thomson argues it is only a matter of time before the false narrative implodes and gold, rates, and oil surge together — reflecting, in his words, the reality of the 40-year US stagflation cycle.

Gold: $4,800–$5,000 target, with $8,000 beyond

Gold's broader advance has coincided with record official-sector demand: the World Gold Council has reported more than a decade of consecutive net central-bank purchases, including record annual tonnage between 2022 and 2024. Against that backdrop, on the short-term gold chart, Thomson says all current scenarios favour the bulls. A pullback may not happen at all, but if it does, he expects it to halt in the $4,200–$4,100 zone and create a right shoulder for the inverse H&S pattern, whose target is the $4,800–$5,000 resistance zone.

The flag-like drift on the daily chart targets the same $4,800–$5,000 area, he notes. On the weekly chart, a much more massive flag-like drift is apparent, suggesting the $4,800–$5,000 area could function as just a "pitstop" en route to at least $8,000.

Silver's new range: $50–$120

For silver, Thomson identifies a new range trade of $50–$120 — territory that sits above the metal's former record ceiling near $50, set during the 1980 Hunt brothers squeeze and revisited in 2011 — and from there a surge to $190–$200 as the next order of business for what he calls this spectacular metal.

A "gold-oriented Monaco"

Thomson criticizes the US government for wasting the precious little time it has left pretending to count and audit its gold when, in his view, it should instead be aggressively buying more. He argues there is almost always a huge opportunity for late-stage empires to get physically smaller and financially bigger by abandoning their debtor lifestyle and becoming savers focused on gold.

In a nutshell, he writes, America could become a giant gold-oriented version of Monaco — the Mediterranean principality long synonymous with low taxation and discreet private banking. With a gold or gold-backed currency, no corporate or income taxes, and total bank secrecy, millions of businesses would race to move their residency there. Because of US military might and the power of the dollar, Thomson argues global governments would have to embrace this approach too, creating a dramatic surge in real freedom for most citizens of the world.

While the US government fails to make this move, he says citizens can do it themselves: rather than being left to rot in fiat, mining stock profits need to be parlayed into supreme money — gold.

Miners: CDNX "rocket launch" and GDX at $112–$116

The CDNX index — the S&P/TSX Venture Exchange composite, home to many of Canada's junior resource listings — is, in Thomson's view, a powerful lead indicator of what could lie ahead for all miners: junior, intermediate, and senior. He highlights a bull flag with a vertical flagpole — a continuation pattern in which price drifts sideways after a sharp vertical rise — which he calls incredibly positive for future price action. Junior mine stock investing, he cautions, isn't for everyone, especially with size, but as this gargantuan gold bull era rollout continues, he expects these miners to outperform everything.

On the long-term CDNX chart, Thomson sees a "rocket launch" event as imminent, especially given the bull flag action occurring on the daily chart. Because the inverse H&S price pattern is so large, he expects the bull run to carry the CDNX to well beyond 2,000, and probably beyond 3,000.

On the GDX daily chart — GDX being the VanEck Gold Miners ETF, one of the most widely tracked benchmarks for gold-mining equities — a flag-like drift similar to gold's is in play, targeting a move to the $112–$116 area highs.

Thomson closes by telling gold, silver, and mining stock investors that they are living in one of the most exciting times in the history of markets, with the death of fiat, debt, and potentially of government itself all in play. For readers tracking the debate rather than taking sides, the observable datapoints include the direction of long-term Treasury yields, the quarterly central-bank gold demand figures published by the World Gold Council, and the trajectory of federal debt and interest costs.

About the author

Stewart Thomson is a retired Merrill Lynch broker. He writes the Graceland Updates daily between 4am and 7am, with issues sent out around 8am–9am. The newsletter uses a numbered point-form format intended to give clarity and save reading time. Further information is available at gracelandjuniors.com.

Risks and disclaimers

Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only, and readers are urged to consult multiple properly licensed, experienced, and qualified investment advisors before taking any action. Thomson notes that the minimum risk on any investment is a 100% loss of all money, that investors may be taking leveraged positions without knowing it and exposing themselves to unlimited risks — particularly in derivatives products — and that there is an approximate $700 trillion OTC derivatives iceberg with only a tiny portion written off officially.