The gold and silver prices continued their sell-off this past Friday, as the gold futures are currently down another $60 to $4,546, while the silver futures are down $2.20 to $69.01.
In case you were wondering if the sell-off happened to by any chance be an indication that maybe we were headed towards a resolution, here’s the war headline on CNBC.
President Donald Trump on Friday said the U.S. could end Iran military operations “right now” and leave Tehran unable to rebuild its military capabilities for a decade.
But that’s not “an acceptable situation,” Trump told MS Now’s Stephanie Ruhle in a phone interview.
“If we left right now, it would take them at least 10 years to rebuild, but rebuild they will,” Trump said in the roughly 15-minute call.
“If we stay longer, they’ll never rebuild,” he said.
Trump’s comments came after multiple news outlets reported that the Pentagon is sending up to 2,500 more Marines to the Middle East from San Diego. It’s the second reported deployment of thousands of U.S. troops to the region in the past week.
Trump said in the Oval Office on Thursday that he would not put boots on the ground in Iran.
Later that same day, Israeli Prime Minister Benjamin Netanyahu said “there has to be a ground component” to ensure meaningful regime change in Iran.
Netanyahu appeared to be referring to the Iranian people in his remarks, saying they must ultimately “rise to the moment.” But he added that there are “many possibilities for this ground component.”
Trump, in Friday’s interview with Ruhle, said the U.S. and Israel share “largely similar” goals for Iran.
Given that the Strait of Hormuz remains closed, and all of the implications that come along with that, this latest announcement doesn’t seem like a good step for the world.
I’ll also repost what I shared recently from Luke Gromen, who I highly respect, is the opposite of a fearmonger, and I would suggest should be listened to carefully when he lays out the risks of the Strait remaining closed.
That Brent crude would only be up $4 seems a bit counterintuitive, but keep in mind that Treasury Secretary Scott Bessent talked about the different steps the U.S. is taking to control the oil price.
So perhaps that’s the perfect way to cap off this week, in pointing out how despite what the major developments might suggest for the oil price, we see once again how governments get involved, and how they have the ability to impact the pricing.
Keep in mind that as Treasury Secretary, Scott Bessent also controls the Exchange Stabilization Fund, and while it doesn’t get as much attention as the banks or the Fed, this is the type of situation the ESF tends to be active in, and you can see even on their website how they talk about their intervention in the gold and foreign exchange markets.
Can I say conclusively that the ESF has been active in the precious metals sell-off that’s now three weeks old, while the global economy is perhaps closer to implosion than at any point in our lifetimes? Perhaps not, although if forced to make an even-money bet, I know which side I’m taking.
But in the end, we’re now looking at a Middle East intervention that’s more dangerous economically than anything we’ve yet seen, the oil price has already surged, and could well surge further, and God only knows what the cost of all of the war equipment and subsequent damage will be before it’s all said and done. That ultimately ends up getting paid for with more debt and printed money.
So while financial markets do quirky things, I suppose in the entire time I’ve been following the gold and silver markets, I’ve never personally felt more confident that a massive sell-off was a short-term correction, rather than the end of a rally. Which isn’t to say I’m guaranteed to be correct this time, although at least when I listen to my gut, it makes me continue to hope that the money I wired in to establish a bullish option position yesterday clears before the prices rebound.
Again, there are no certainties in the financial markets, so even the best bets are only higher probabilities than some of the other ones. And I’m not recommending for anyone to trade options, but only mentioning it to whatever degree that sharing my true inherent gut reaction might be helpful. And perhaps to put it in even simpler terms, if we’ve had the gold and silver rally that we’ve had over the past two years, and this war turned out to be what ends that, that would certainly be one of the more unexpected outcomes that I can remember in financial history.
Perhaps it’s also worth noting this other tweet from Luke Gromen, which he has talked about often in his fantastic weekly column, about how in three of the last four months, the U.S.’ biggest export has been gold.
That would seem like an unusual thing to end one of the strongest bull markets in gold trading history. Similarly, with the silver market already experiencing tightness in the Far East, and with it seeming unlikely that the military lowered their regular monthly silver order any time recently, it would also seem like an unusual time for a vicious silver rally to just turn around and go into bear market territory. And my guess is that there will be a day in our not-too-distant future where we see a sizable gold and silver rebound rally.
But that’s where we’re at, and at least it’s time for a break, and to go out and get your mind away from it for a while. Although if you were interested in hearing some commentary about the different dynamics at play right now, and some more of the reasons why I do think this is a correction rather than an end to the rally, I was invited on to The Free American Press, where I had a fun conversation with Alexander Horat, in what I think came out as a nice overview of the current state of the gold and silver markets.
So hopefully you’re getting set for a great weekend, and remembering what’s important in life, and I’ll look forward to checking back in with you…
Sincerely,
Chris Marcus
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