So gold's had a bit of a rough patch lately. After a blistering run in 2025 and into early 2026, the metal hit a snag. But if you're thinking the rally is over, Wells Fargo would like a word. They're not ready to write off gold's broader trajectory just yet.
Sure, there's been some volatility, largely thanks to the outbreak of the U.S.–Iran war. But for institutions like Wells Fargo, gold still looks like a compelling medium-term opportunity, not a trade that's run its course.
Let's rewind. Gold's recent pullback was a stark contrast to its previous performance. In 2025, it was a standout, fueled by strong central bank purchases, lingering inflation worries, and elevated geopolitical tensions. That strength carried into early 2026 before sentiment shifted. March was particularly rough, posting the worst monthly performance since 2008, as war-driven inflation dashed hopes for rate cuts. Since then, the market has recovered a bit. The SPDR Gold Trust (GLD) is up 11% year-to-date.
The Debasement Trade Marches On
For the big players, though, the bigger picture hasn't changed. It's all about the "debasement trade." And no, debasement doesn't happen overnight. It's the slow, structural shift away from fiat currencies like the U.S. dollar toward neutral reserve assets—things you can't just print more of, like gold.
Currency debasement is what happens when governments expand the money supply or rack up debt in ways that chip away at purchasing power. Those actions push central banks and institutions to park their money in hard assets that can't be printed or easily politicized.
"We're in the fourth currency debasement cycle, which started in 2022," said Ohsung Kwon, Wells Fargo's Chief Equity Strategist, according to reports. "Looking at the three drivers, all of them suggest that currency debasement will deepen further from current levels."
A key part of Kwon's analysis is the M2/gold ratio. M2 is a broad measure of the money supply—cash, checking deposits, savings, and other liquid investments. When the growth of currency supply outpaces the valuation of hard assets, it signals potential upside for something like bullion as it plays catch-up.
Following the Money (Supply)
The data seems to back up Kwon's optimism. Looking at a long-term trend, M2 increased from 3,661.9 billion in February 1996 to 22,667.3 billion in February 2026 (the latest official data point). That's a clear pattern of increase—at least 80% every decade. This trend supports Kwon's view that these debasement cycles tend to pop up during periods of economic stress and last, on average, about 8.5 years.
So, if the current cycle kicked off in 2022 amid geopolitical stress and aggressive monetary tightening, we're less than four years in. That means we haven't even hit the midpoint yet.
Wells Fargo's optimism isn't coming from nowhere. The bank sees how, in four out of five economic scenarios they model, further debasement pushes gold higher. Their price target now sits at $8,000 per ounce by 2027. That implies more than 60% upside from recent levels near $4,800. It's a big bet on the idea that when currencies get watered down, people still want something solid to hold onto.
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