Bespoke Investment Group looked at historical data and concluded gold might cool off. They charged money for this. Someone paid them.
History shows things that go up sometimes go down. Groundbreaking stuff. Really earning that subscription fee. Next month they'll reveal that stocks trading at all-time highs occasionally experience pullbacks. The month after that, water is wet.
Retail traders read this headline and panic-sold their GLD calls at a loss because a firm named after tailored suits told them a chart looks toppy. These are the same people who bought gold at $2,400 because their cousin's podcast said the dollar was collapsing. Now they're holding bags because Bespoke drew some lines on a screen and said the squiggly thing might squiggle differently soon.
The analysis relies on historical data. Which historical data? Doesn't matter. Could be from the Nixon shock. Could be from last Tuesday. History shows everything if you cherry-pick the dates hard enough. History also shows that analysts who predict reversals are wrong roughly half the time, which makes them as useful as a coin flip but significantly more expensive.
Gold rallied because central banks bought it and geopolitical tensions existed and people wanted inflation protection. Now it might cool off because... history. Not because of any fundamental shift. Not because demand collapsed or supply surged. Because a pattern on a chart looked like another pattern from a different year when completely different things were happening.
Bespoke could have saved everyone time and just said "valuations mean revert sometimes" but that doesn't justify a research report. So they dressed it up with historical analysis and probability ranges and published it as insight. Retail read it as prophecy. The prophecy is that numbers sometimes get smaller after they get bigger.
Technical analysis is astrology for people who wear business casual.
Photo by Dash Cryptocurrency on Unsplash
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