Stop Worrying About a Correction in Precious Metals -

Amateur investors and wannabee analysts are panicking over gold and silver being overbought, without realizing that persistent overbought conditions are a hallmark of every strong bull market.
In the days since gold broke out of its summer doldrums, it has sparked a frenzy of reactions from investors, traders, and analysts at every level, from retail to professional. 
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Many are suddenly panicking and calling for a correction in both gold and silver. I've also been inundated with worried messages and comments asking if precious metals are about to plunge. 
The typical claims are circulating again: gold has risen too far and too fast, it's overbought, it's too expensive, and it must be due for a correction. Some are even calling the bull market a bubble.
What’s striking is that most of these critics failed to foresee the gold bull market over the past two years, yet they are now quick to dismiss it. Whether they are motivated by envy, fear of missing out, or simple ignorance, their arguments are deeply flawed. 
In this update, I want to respond directly to these concerns, dismantle the bearish claims, and reassure you that gold and silver are not only holding up well but are also in one of the most powerful bullish setups in years. The skeptics will be proven wrong in dramatic fashion.
The primary reason many investors and analysts are calling for a correction in gold is its overbought condition following <a href="https://www.moneymetals.com/news/2025/09/03/gold-silver-officially-confirm-their-breakouts-004311" rel="noreferrer">last week's breakout</a>. 
An asset is considered overbought when it becomes technically stretched to the upside after a sharp rally. This status is typically measured using momentum-based technical indicators known as oscillators, such as the Relative Strength Index (RSI) or Williams %R. 
In the gold chart below, the Williams %R indicator is shown beneath the price action and currently reflects gold’s overbought condition.
<img src="https://www.moneymetals.com/uploads/content/Chart-1-Gold-Spot-Price-Overbought-Jesse-Colombo-Money-Metals-min.png" width="800" height="504" alt="" style="display: block; margin-left: auto; margin-right: auto;" />
While I acknowledge that gold is indeed overbought according to the most widely followed oscillators, I want to emphasize that this is not a negative development, contrary to what the gold bears are claiming. 
In fact, it's quite the opposite. Overbought conditions can be a sign of strength and improving sentiment—both of which are bullish traits. I’ll expand on that point shortly.
The current gold bears and many amateur traders often misinterpret overbought or oversold conditions by assuming they are always negative or positive signals. 
In reality, my extensive research and experience show that these conditions are highly context-dependent. Their meaning varies depending on whether the asset is in an uptrend, a sideways trend, or a downtrend. 
<img src="https://www.moneymetals.com/uploads/content/Chart-2-Uptrend-Diagram-Jesse-Colombo-Money-Metals-min.jpg" width="800" height="511" alt="" style="display: block; margin-left: auto; margin-right: auto;" />
Calling attention to these conditions without understanding the broader trend is a classic example of how a little bit of knowledge can be a dangerous thing—and that is exactly the mistake the gold bears are making right now.
One of the most powerful and reliable techniques in trading and investing is learning how to identify the trend of an asset and trade in the direction of that trend, not against it. As the old sayings go, “the trend is your friend” and “trade with the trend, not against it.” 
By aligning with the prevailing trend, you dramatically improve your odds of success, since assets are more likely to continue in their current direction than to reverse unexpectedly.
There are several ways to identify the trend of an asset, but in my experience, the most efficient and effective method is to examine the slope of its 200-day moving average (MA). 
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If the moving average is sloping upward, the asset is in a confirmed uptrend. If it is flat, the asset is in a sideways trend. If it is sloping downward, the asset is in a confirmed downtrend.
Once the trend of an asset is established, it helps define your trading or investing bias. For example, if an asset is in an uptrend, I focus solely on the bullish case and look for opportunities to maximize gains from long positions. 
I intentionally ignore negative commentary, such as the current claims from gold skeptics, because it distracts from the broader upward trend. 
Conversely, when an asset is in a downtrend, I concentrate on the bearish outlook and avoid giving weight to positive news, since it often fails to change the overall direction and is usually followed by further weakness.
With that foundation in place, I’ll now explain how to interpret overbought, neutral, and oversold oscillator readings depending on the type of trend. Each scenario is very different and requires a distinct approach.
<ul>
<li>In a confirmed uptrend, the best approach is to "buy the dips" when oscillators show oversold conditions. Overbought readings should be ignored, as they are completely normal during strong uptrends and should actually be welcomed as signs of strength and momentum. That’s why I’m not at all concerned about the current overbought readings in gold and silver, unlike the Chicken Littles who are panicking and calling for a correction.</li>
<li>In a sideways trend, which I generally prefer to avoid trading, overbought and oversold conditions carry more weight. These signals are more likely to result in quick snapbacks toward the mean, as represented by the 200-day moving average. This environment is where many amateur traders form their habits—reacting to oscillator readings without considering the broader trend. The problem is that this approach does not translate well to strongly trending markets, where those same signals behave very differently.</li>
<li>Finally, in a confirmed downtrend, the most effective strategy is to "sell the rips" when oscillators signal overbought conditions. Oversold readings should be ignored, as they are completely normal in strong downtrends and actually serve as confirmation of continued bearish momentum. Amateur investors often misread these oversold signals as buying opportunities, only to watch the asset drop even further. This is known as "trying to catch a falling knife.”</li>
</ul>
Now let’s apply these principles to some charts, starting with gold over the past two years. First, notice that the 200-day moving average has been sloping upward throughout that entire period, confirming a strong and sustained uptrend. 
As expected, the price of gold has shown powerful momentum. Also, take note of the Williams %R oscillator below the price chart. It has remained in overbought territory for much of the bull market, yet gold has continued to climb, setting one new high after another.
Anyone who panicked at the first overbought reading in October 2023 would have sold gold around $2,000 and completely missed out on the $1,600-and-counting gain that followed. 
This is a valuable lesson. Overbought conditions persist during a bull market because strong uptrends naturally produce them. Instead of fearing these conditions, we need to embrace them, understand what they really mean, and avoid reacting emotionally when they appear.
<img src="https://www.moneymetals.com/uploads/content/Chart-3-Gold-Spot-Price-Upward-Sloping-200-Day-MA-Jesse-Colombo-Money-Metals-min.png" width="800" height="488" alt="" style="display: block; margin-left: auto; margin-right: auto;" />
Next, let’s take a look at silver, which is in a confirmed uptrend as shown by its upward-sloping 200-day moving average. 
While the Williams %R indicator shows that silver is currently overbought, this is not a concern because overbought readings are normal in confirmed uptrends. 
Rather than indicating weakness, the evidence points to something much more encouraging: silver is showing clear signs that <a href="https://www.moneymetals.com/news/2025/09/02/why-silver-may-hit-50-in-september-004308" rel="noreferrer">a new bull market has begun</a>.
<img src="https://www.moneymetals.com/uploads/content/Chart-4-Silver-Spot-Price-Jesse-Colombo-Money-Metals-min.jpg" width="800" height="478" alt="" style="display: block; margin-left: auto; margin-right: auto;" />
Like gold and silver, mining stocks are <a href="https://www.moneymetals.com/news/2025/09/07/etfs-continue-to-pile-in-gold-004321" rel="noreferrer">also in confirmed uptrends</a>, as shown by their upward-sloping 200-day moving averages. They, too, are currently overbought according to the Williams %R indicator, which is completely normal and expected in this type of environment. 
Here is the VanEck Gold Miners ETF (GDX):
<img src="https://www.moneymetals.com/uploads/content/Chart-5-VanEck-Gold-Miners-ETF-Jesse-Colombo-Money-Metals-min.jpg" width="800" height="478" alt="" style="display: block; margin-left: auto; margin-right: auto;" />
Here is the Global X Silver Miners ETF (SIL):
<img src="https://www.moneymetals.com/uploads/content/Chart-6-Global-Silver-Miners-ETF-Jesse-Colombo-Money-Metals-min.jpg" width="800" height="478" alt="" style="display: block; margin-left: auto; margin-right: auto;" />
Another key point is that those calling for a severe pullback in gold fail to recognize the true dynamic at work. 
We are rapidly approaching the endgame of the global fiat money system and the broader Keynesian monetary experiment, as the world drowns in unsustainable debt. 
This is exactly what gold and silver are responding to, and it explains why they continue to soar.
<img src="https://www.moneymetals.com/uploads/content/Chart-7-Global-debt-rose-to-a-new-record-high-Jesse-Colombo-Money-Metals-min.jpg" width="800" height="658" alt="" style="display: block; margin-left: auto; margin-right: auto;" />
In a situation this extraordinary, where fiat currencies are in the process of losing credibility, the bearish case collapses. 
It is not so much that precious metals are rising, but rather that fiat currencies are imploding. 
Anyone who is waiting for a big correction in gold and silver is going to be waiting for a very long time, and it may never occur, given that fiat currencies are crashing. 
My expectation is that gold will reach $15,000+ an ounce and silver $300+ in real terms within the next decade. In nominal terms, I quite literally expect to see them at something outrageous like $15,000,000,000,000,000,000,000++ as a result of hyperinflation.
Imagine what the Williams %R and Relative Strength Index (RSI) overbought readings in gold and silver will look like when that happens!
A clear example of this phenomenon can already be seen in gold priced in Turkish lira over the past decade. It skyrocketed from around 3,000 to 150,000—an astounding 50-fold increase.
Of course, most of that move was driven by the collapse of the lira rather than gold itself rising, but it serves as a powerful preview of what lies ahead for gold priced in all fiat currencies, <a href="https://www.moneymetals.com/news/2025/09/08/the-dollar-is-on-the-brink-of-a-major-move-004322" rel="noreferrer">including the U.S. dollar</a>, euro, British pound, Japanese yen, and others.
This is certainly not the kind of scenario where you want to be selling gold just because of an overbought reading.
<img src="https://www.moneymetals.com/uploads/content/Chart-8-Gold-Turkish-Lira-Jesse-Colombo-Money-Metals-min.png" width="800" height="578" alt="" style="display: block; margin-left: auto; margin-right: auto;" />
To further illustrate the collapse of the Turkish lira, here is its chart against the U.S. dollar:
<img src="https://www.moneymetals.com/uploads/content/Chart-9-Turkish-Lira-US-Dollar-Jesse-Colombo-Money-Metals-min.png" width="800" height="577" alt="" style="display: block; margin-left: auto; margin-right: auto;" />
Another striking example of gold soaring to astronomical levels in nominal terms is the hyperinflation of Weimar Germany from 1918 to 1923. 
In that case, gold was not truly rising in value since it remained relatively stable when measured in stronger currencies, but the German Papiermark was collapsing catastrophically.
Although it may sound far-fetched to many today, I believe this episode foreshadows what lies ahead for all fiat currencies in the not-too-distant future. 
Imagine a German investor selling their gold in 1919 because it looked overbought, only to watch it multiply in price as the currency imploded. That is the same mistake today’s gold bears are making.
<img src="https://www.moneymetals.com/uploads/content/Chart-10-Germany-Value-Gold-Mark-Paper-Marks-Jesse-Colombo-Money-Metals-min.png" width="800" height="934" alt="" style="display: block; margin-left: auto; margin-right: auto;" />
Source: <a href="https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?q=https://substack.com/redirect/54ae162d-90cc-4743-b097-f1cb48fae21e?j%3DeyJ1IjoiMWI5YWl3In0.o-RJcumCJm32z0-fPDbsH8ksWzk3G2-ENra_QtGncpM&amp;source=gmail&ust=1757506226513000&usg=AOvVaw2nLH0UB7lHzMtT7E5QeH4Y">Wikipedia</a>
The severe suffering caused by Germany’s hyperinflation was one of the key factors that paved the way for Adolf Hitler’s rise to power. Economic collapse often breeds political radicalism, and I remain deeply concerned that similar dynamics will play out again when today’s fiat currencies fail. 
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This is one of the reasons why I have spent the past 21 years publicly warning about looming economic and monetary crises and advocating for a return to sound money. Sadly, those warnings have largely fallen on deaf ears.
To wrap things up, I hope I have helped ease some of the concerns about overbought conditions in precious metals and mining stocks. 
For many amateur investors, this is a classic case of a little knowledge being a dangerous thing—the old saying applies perfectly: “to a man with a hammer, everything looks like a nail.”
Overbought and oversold readings are important, but only when considered within the proper context of the trend. Recognizing the type of trend you are in is the most critical factor of all. 
Thankfully, precious metals are in a clear and powerful uptrend right now, and that is where my focus remains as I tune out the negativity. This approach has served me well in the past, and I believe it will continue to do so.
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