Is the short gold myth facing its reckoning? Citi warns of a 50% drop

When Wall Street giants raise their voices, the market trembles. Citi has just broken an uncomfortable silence: the supposed safe haven of gold may be caught in an unprecedented overvaluation episode. Far from being a reliable hedge, the bank warns that we are facing a short-lived myth that will soon face devastating corrections. What data support this thesis? What does it mean for the crypto world?

Three signs of overvaluation that dismantle the short gold myth

Citi’s analysis is based on solid quantitative pillars. It’s not speculation, but a set of indicators that have historically preceded major adjustments.

First warning: disproportionate gold spending relative to GDP. Resources allocated to gold currently represent 0.7% of global GDP, a record not seen in 55 years. If markets return to historical normal levels, gold prices would have to decline significantly, to around $2,500 per ounce. That’s nearly a 50% drop from current levels.

Second sign: profit margins at 50-year highs. Gold mines are experiencing unprecedented profits. Prices have already diverged completely from extraction costs, a phenomenon that often precedes brutal corrections. When speculation separates from fundamentals, gravity always wins.

Third alarm: the gold-to-broad money ratio has surpassed crisis levels. This ratio has exceeded even the peaks of the 1970 oil crisis, suggesting a severe overheating in safe-haven markets. Historically, such deviations are not sustainable indefinitely.

The countdown: when will the bubble burst?

Citi recognizes a complex dynamic in the short term. Over the next 0 to 3 months, the bank expects a technical rally that could push gold toward $5,400–$5,600. But here’s the crucial part: these movements are more like final fireworks than a lasting structural change.

The real risk emerges in the medium term. From the second half of 2026, Citi anticipates that pressures will manifest collectively. By 2027, the bank estimates a reference price of $4,000 per ounce. In extreme scenarios, it could even fall to $2,500. This is not a gradual adjustment but a potential break of the short myth that has supported prices in recent years.

If gold falls, where does safe-haven capital go?

This is where cryptocurrencies come into the conversation. Gold and Bitcoin (BTC) are historically considered safe-haven twins—instruments of protection against macroeconomic uncertainty and monetary devaluation. Both compete for capital flows aimed at safeguarding wealth.

With BTC currently trading at $67,720 and demonstrating resilience as a non-correlated asset, a fundamental question arises: what happens when the short gold myth collapses? Will the trillions of dollars seeking protection sink along with the precious metal, or migrate to digitally scarcer alternatives?

Bitcoin has a unique feature: programmed scarcity, a fixed supply of 21 million units, and a decentralized network immune to central bank decisions. If the gold narrative is questioned, the logical question is whether Bitcoin could capture a significant portion of that capital seeking refuge.

Crypto markets remain attentive. TOKEN reports an 8.69% bullish movement, while STABLE shows gains of 9.30%. Although modest, these movements reflect that some traders are already considering alternative scenarios.

The short myth and the future of defensive capital

What Citi proposes is a profound questioning of the short myth that has supported gold investment for decades. It’s not a total rejection, but an acknowledgment that current prices have disconnected from fundamentals and are sustained by speculative dynamics.

For the crypto ecosystem, this analysis opens a crucial debate: is Bitcoin the digital gold of the 21st century, or just another bubble? The answer will likely depend on where that capital flows when the short gold myth finally yields.