Gold prices have fallen 17 per cent over the past three months after a powerful rally, but some investors see the correction as a healthy reset rather than the end of the precious metal’s advance.
BNN Bloomberg spoke with David McAlvany, president and CEO of McAlvany Financial Group, about gold’s recent pullback, ongoing central bank demand, concerns surrounding equity valuations and why he believes investors could return to precious metals later this year.
Key Takeaways
- Gold’s recent decline follows a surge fuelled partly by momentum-driven investors and hedge funds, with prices retracing roughly half of the previous rally.
- Central bank buying remains a key source of support for gold, helping establish a floor for prices despite recent volatility.
- Concerns about government debt levels, fiscal pressures and the long-term outlook for bond markets continue to support the case for gold as a safe-haven asset.
- Elevated equity valuations and uncertainty around the timing and scale of AI-related productivity gains could increase risks for stock investors.
- McAlvany expects investor demand for gold to strengthen later this year as concerns grow about valuations, economic stability and capital preservation.
Read the full transcript below:
ROGER: Gold has been down 17 per cent over the last three months, well off last year’s high, when the price increased by nearly US$2,800. Let’s find out why the momentum for gold is shifting. Joining me now is David McAlvany, president and CEO of McAlvany Financial Group. David, thank you very much for joining us.
DAVID: Great to be with you, Roger.
ROGER: Okay. Gold had that surge. There was talk by the end of this year — some people were saying US$5,000, some people were saying US$7,000 — and now it seems like it’s stalled. What’s gone on since the start of the year when it came in on such a high?
DAVID: Well, for a little bit of perspective, we had central banks who have supported the price for a number of years now, and we began to see investor interest widen the base. By the middle of last year, sort of the third and fourth quarters of 2025, investors were certainly very interested. Their interest had peaked, and they came in, frankly, a little bit late as the rate of change was increasing to an unsustainable level.
Gold did well. Silver did even better. The hot-money crowd kind of got their hands slapped by the end of January. We’ve seen a normal correction since then, roughly a 50 per cent Fibonacci retracement of that US$2,800 move, and I think that between now and the end of the year we see a recovery and the setting of new highs.
ROGER: And what gives you the confidence with that?
DAVID: Central banks are still the buyer of first resort, and I think you may see investors as the buyer of last resort. I say last resort because investors typically don’t look at gold unless there’s concern.
What we saw in late 2025 and early 2026 was really a momentum crowd — a combination of late-to-the-party investors and hedge funds. They were in and they were out. I think they will be back, but the more common characteristic in a gold bull market is for people to buy because they want to preserve value. They see something wrong in the world and see gold as a safe haven.
It was not being bought as a safe haven. It was being bought as a pure momentum trade by the end of last year. So I think its more normal characteristics will show themselves as we get later into this year.
We certainly have concerns about valuations in the equity markets, as well as the sustainability of the AI narrative, as actual productivity gains are called into question, as well as things as simple as the rate of return on investment capital in the AI infrastructure buildout.
ROGER: All right. I just want to go back for a second to gold. Usually it’s perceived as a safe haven. With what unfolded in the Middle East and the war, it really didn’t turn into that. So what’s happening now that we may see another potential peace deal? Hopefully this one is the one. If we see oil dropping and calm returning in the Middle East, what happens with gold then?
DAVID: Yeah, I think there was a misconception in the trading circles that have pushed gold around quite a bit here of late, and it is that oil up equals inflation up equals interest rates up equals gold down.
In this particular scenario, very unlike the 1970s, if you look back to that decade, of course we had interest rates up and gold up at the same time.
I’m not sure the system can take materially higher interest rates with the amount of debt that is on government balance sheets these days. Japan is north of 200 per cent debt-to-GDP. Depending on how you measure it here in the U.S., it’s somewhere between 105 and 122 per cent debt-to-GDP.
Interest on the national debt now exceeds our defence expenditure. Not a great place to be, frankly. We just can’t afford higher rates.
So this notion that higher interest rates are somehow going to be a drag on gold, first of all, forgets the Summers-Barsky thesis that you need higher real rates, so inflation has to be tamed, and that has yet to occur.
Beyond that, I think in this round, very different from the 1970s, we can’t take interest rates much higher. It would be game over for the U.S. bond market. We would have our own version of the Liz Truss moment, not because of a policy choice relating to public spending, but because the interest expense is too great.
We’re already north of 20 per cent of total tax revenue going just to pay interest. A marginal adjustment higher in average interest costs, which currently sit at about 3.37 per cent, would be catastrophic for the Treasury.
So there’s not a lot they can do in terms of raising interest rates.
I think this is a very interesting setup for gold, both as we see investors clamour for safe havens — obviously that’s theoretical and future tense — and as central banks continue to buy.
We ran at about a 244-tonne rate in the first quarter. That was net of 125 tonnes of liquidations, so really a record pace in terms of purchases before you net out the liquidations from Turkey and a number of Middle Eastern countries that were liquidating to raise capital in light of reduced oil revenue.
I think central banks are still the drivers, but there will be plenty of catalysts as the year progresses.
Again, valuations are in the range of ridiculous. If you look at them in terms of standard deviations, we’re between two-and-a-half and three standard deviations. In other words, this is one of the most expensive equity environments we’ve ever had.
It’s difficult to argue from a historical basis that paying high prices is a great way of lining up future positive returns. I think you’re dealing with some investor expectations that are a little bit over their skis.
ROGER: And so what are you doing with the concerns about overvaluation and AI?
DAVID: Our recommendation is that people trim back their equity positions.
As enthusiastic as the AI theme is, infrastructure buildouts tend to get ahead of themselves. There’s such a powerful narrative and, in this case, a flat-out arms race. Who will lead and who will win in this arms race?
There’s not a lot of analysis on how this is going to pay for itself. Sort that out at some future point.
We’ve seen that in the past. It hasn’t played out well, both in the tech and telecom era and, if you go back even further, in the rail era. We’re building too much now.
Ultimately, the thesis was correct, so I’m not anti-AI. I think it is as revolutionary as people believe. But someone else often wins significantly after the initial boom.
In the rail era, J.P. Morgan stepped in and bought those assets for pennies on the dollar after debt and equity values collapsed.
To me, Roger, that’s a telling issue. We now have a clock started as soon as you introduce debt into an investment equation. This really does have to pay off sooner rather than later.
It’s not clear that’s how the people involved in the AI buildout are thinking. The view seems to be that it will pay off someday and that they simply need to be at the leading edge of victory.
ROGER: We’ve got to wrap it up there, David. I apologize. We’re running out of time.
DAVID: Great to be with you.
ROGER: Cheers, David. Thank you for joining us. David McAlvany, president and CEO of McAlvany Financial Group.
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This BNN Bloomberg summary and transcript of the June 12, 2026 interview with David McAlvany are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
