The global commodities market is sending a clear and somewhat counterintuitive signal that war is no longer automatically bullish for precious metals. In the wake of escalating conflict between the U.S., Israel, and Iran, oil prices have surged past $100 per barrel, while gold and silver have sharply declined, upending traditional “safe haven” expectations and raising new concerns about inflation and economic stability.
At the center of the market turmoil is the disruption of global energy flows, particularly through the Strait of Hormuz a chokepoint that handles roughly 20% of the world’s oil supply. Iran’s effective blockade, combined with direct strikes on key energy infrastructure, has triggered a supply shock reverberating across global markets. Recent attacks, including strikes on Iran’s massive South Pars gas field and broader regional energy infrastructure, have compounded fears of prolonged shortages. Brent crude has surged above $100 per barrel! So gasoline prices globally are climbing sharply. It's not talked about but the supply chains from fuel to fertilizers are under strain hitting farmers once again.
Even if the conflict cools, analysts warn oil prices could remain structurally elevated due to damaged infrastructure and long term geopolitical risk premiums. Not only that the oil spike is feeding directly into inflation expectations arguably the most important driver behind the unusual behavior in metals. The International Monetary Fund has warned that sustained energy price increases could push global inflation higher, reduce economic growth and increase recession risks... This inflation shock is changing how markets price assets. Instead of fleeing to gold, investors are reacting to the possibility of higher interest rates for longer.
My portfolio is representative of the recent move pulling back from recent highs. I'm glad I unloaded all my metal and paper silver near the top!
