Cathie Wood Warns Gold Bubble Is Peaking as AI Fears Miss the Real Risk

Cathie Wood has doubled down in early 2026 on a view that runs counter to much of the current market narrative: the most pronounced bubble is forming in gold, not in artificial intelligence.

In comments made in late January, she argued that gold’s recent parabolic rise was less a sign of safety and more a classic late-cycle signal, a warning that came just days before the metal experienced a sharp intraday sell-off.

Wood’s framing is not based on short-term price action, but on longer-term valuation relationships that she believes have become historically stretched, placing gold in a vulnerable position if macro conditions shift even modestly.

Why Wood Sees Gold as the Primary Bubble

At the core of Wood’s argument is gold’s valuation relative to the U.S. money supply. She highlighted that gold’s market capitalization, measured as a share of U.S. M2, reached an all-time high in late January 2026.

According to her analysis, this ratio moved beyond levels seen during both the 1980 inflation peak and the 1934 period following the Great Depression, two historical extremes often cited to justify gold’s role as a monetary hedge.

Wood also pointed to currency dynamics as a key risk factor. She has argued that a sustained rebound in the U.S. dollar, similar to the multi-decade strengthening cycle between 1980 and 2000, could exert severe downward pressure on gold. In that historical context, she noted, gold prices declined by more than 60%, a move she believes remains plausible if today’s macro environment evolves in a comparable direction.

From a broader economic perspective, Wood questioned whether current conditions truly support gold’s recent surge. She emphasized that the present economy does not resemble the double-digit inflation of the 1970s, nor the deflationary collapse of the early 1930s, making what she described as gold’s “out-of-this-world” advance difficult to justify on fundamentals alone.

Why AI Still Looks Like a Growth Cycle, Not a Bubble

In contrast, Wood remains notably calm about concerns surrounding an AI bubble. Rather than viewing widespread fear as a warning sign, she sees it as evidence that the market has not yet reached euphoric extremes. In her view, artificial intelligence represents the foundation of what she has described as the most powerful capital spending cycle in history, driven by productivity gains rather than speculative demand alone.

She has repeatedly highlighted the revenue trajectories of AI-native firms as supporting evidence. Companies such as OpenAI and Anthropic reportedly recorded revenue growth of roughly 12.5-fold and 90-fold respectively by late 2025, figures Wood cites as indicative of genuine commercial adoption rather than purely narrative-driven valuation expansion.

While acknowledging that headline valuation multiples across parts of the AI sector remain elevated, Wood argues that rapid earnings growth, fueled by AI and robotics, has the potential to absorb those valuations over time. She has drawn parallels to the mid-1990s, when high price-to-earnings ratios ultimately proved sustainable as productivity gains translated into accelerating corporate profits.

Takeaway

Wood’s thesis draws a clear distinction between assets driven by defensive psychology and those tied to structural productivity shifts. In her framework, gold’s valuation now reflects extreme macro hedging that may not align with current economic realities, while AI remains in an earlier phase of a long-term growth cycle.

Whether markets ultimately validate this view will depend on how currency trends, inflation dynamics, and corporate earnings evolve, but for now, Wood’s message is consistent: the risk of excess appears more concentrated in gold than in artificial intelligence.

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