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ARK Invest founder and CEO Cathie Wood has delivered a contrarian take on markets, arguing that gold, and not artificial intelligence (AI), is showing signs of a bubble. Her reasoning is based on historical valuation metrics, macroeconomic context, and the US dollar’s trajectory.

In a social media post on X on January 30, hours before gold prices recorded their biggest intraday decline since the early 1980s amid a 12% crash to below the $5,000 level, Wood hinted that the odds of gold prices nearing a peak are rising.

According to her, a key warning signal comes from gold’s market capitalisation as a percentage of the US money supply (M2), which recently hit an all-time high.

The data shows this ratio has now surpassed its 1980 peak, a period marked by runaway inflation and interest rates soaring into the mid-teens. More shockingly, Wood pointed out that the gold-to-M2 ratio reached such levels during the Great Depression in 1934.

That era was defined by extraordinary economic stress. During that crisis, she said, the US government devalued the dollar against gold by nearly 70% in January 1934, banned private gold ownership, and the money supply collapsed.

Wood argued, “The US economy today looks nothing like the double-digit inflation-prone 1970s or the deflationary bust of the 1930s.”

While she highlighted that it's true that foreign central banks have gradually diversified away from the US dollar, she suggested that it has been happening for years. A World Gold Council report for Q4 of 2025 showed that central bank gold purchases remain historically elevated and geographically widespread but have slowed from their recent pace.

Additionally, Wood said that despite this gold buying, the bond market has been stable. "The 10-year Treasury bond yield peaked at 5% in late 2023 and is now 4.2%," she highlighted, clearly signalling that the financial conditions are far from crisis levels.

She further warned that parabolic asset moves and “out-of-this-world spikes” in asset prices tend to signal a trend reversal. "While parabolic moves often take asset prices higher than most investors would think possible, the out-of-this-world spikes tend to occur at the end of a cycle," Wood said in her social media post.

Therefore, she said the bubble today is not in AI but in gold. Gold, on the other hand, appears vulnerable if the US dollar strengthens. She draws a historical parallel to the period between 1980 and 2000, when a rising dollar coincided with a more than 60% decline in gold prices.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions.

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