<p><span style="font-weight: 400;">In a recent episode of the Money Metals Midweek Memo, host Mike Maharrey discussed volatility in the gold and silver markets amid escalating geopolitical tensions and broader financial market turmoil. Maharrey opened by criticizing mainstream financial media coverage of a recent selloff that occurred as markets reacted to a conflict involving Iran.</span></p>
<p><span style="font-weight: 400;">He pointed to a CNBC headline claiming that “the momentum trades of 2026 are breaking with gold, silver, and South Korea down big.” Maharrey argued that the headline ignored the larger context. Stocks, Bitcoin, and even U.S. Treasuries declined during the same trading session, indicating </span><a href="https://x.com/MoneyMetals/status/2028850837200470365?s=20"><span style="font-weight: 400;">a broad-based market selloff</span></a><span style="font-weight: 400;"> rather than a specific collapse in precious metals.</span></p>
<p><span style="font-weight: 400;">According to Maharrey, gold and silver often decline alongside other assets during the early stages of market stress because investors liquidate positions to cover margin calls and other losses. These temporary declines should not be interpreted as evidence that the precious metals bull market has ended.</span></p>
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<h2><b>Gold and Silver Hold Strong Despite Volatility</b></h2>
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<p><span style="font-weight: 400;">Despite the sudden drop, Maharrey noted that precious metals remain historically strong. Gold closed just above $5,100 per ounce after the selloff, roughly the same level seen on February 20. </span><a href="https://www.moneymetals.com/news/2026/02/28/silver-strategy-and-a-structural-deficit-004727"><span style="font-weight: 400;">Silver briefly dipped below $80</span></a><span style="font-weight: 400;"> before recovering and closing back above that level.</span></p>
<p><span style="font-weight: 400;">The decline largely erased gains from the previous day when markets first reacted to the outbreak of hostilities. Gold briefly traded above $5,300 per ounce during that initial safe haven surge before reversing as broader market forces took hold.</span></p>
<h2><b>Inflation Concerns and Interest Rate Expectations</b></h2>
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<p><span style="font-weight: 400;">Market psychology also played a role in the selloff. Rising oil prices raised concerns about renewed inflation, which in turn led some investors to believe the Federal Reserve might keep interest rates higher for longer.</span></p>
<p><span style="font-weight: 400;">Because gold is widely viewed as a non-yielding asset, some traders assume that higher interest rates reduce the appeal of holding precious metals. Maharrey argued that this interpretation reflects a misunderstanding of inflation itself.</span></p>
<p><span style="font-weight: 400;">Historically, inflation referred to an expansion in the supply of money and credit rather than simply rising consumer prices. By that definition, Maharrey said inflation has already been increasing for months due to monetary expansion, government borrowing, and </span><a href="https://www.moneymetals.com/news/2026/02/26/could-the-ai-bubble-pop-and-cause-a-credit-crisis-004722"><span style="font-weight: 400;">structural debt pressures within the U.S. economy</span></a><span style="font-weight: 400;">.</span></p>
<h2><b>The Debt Black Hole and Federal Reserve Policy</b></h2>
<p><span style="font-weight: 400;">Maharrey emphasized that the Federal Reserve faces a structural dilemma driven by what he described as a debt black hole. The modern U.S. economy carries so much debt that it struggles to function under normal interest rate conditions.</span></p>
<p><span style="font-weight: 400;">Because of this, he believes the Federal Reserve will ultimately be forced to loosen monetary policy and cut interest rates regardless of short-term inflation concerns. Even if geopolitical developments temporarily delay policy changes, Maharrey argued that the underlying debt burden will eventually push policymakers toward monetary easing.</span></p>
<h2><b>How War Historically Impacts Gold Prices</b></h2>
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<p><span style="font-weight: 400;">The episode also explored </span><a href="https://www.moneymetals.com/news/2026/03/03/how-has-war-impacted-the-gold-price-in-the-modern-era-004733"><span style="font-weight: 400;">how gold historically performs during wartime</span></a><span style="font-weight: 400;">. Maharrey explained that gold often experiences its strongest gains before hostilities begin rather than during the conflict itself.</span></p>
<p><span style="font-weight: 400;">He cited the buildup to Operation Desert Shield in 1989 as an example. During the deployment of forces to the Middle East, gold gained roughly 15 percent to 20 percent. When the United States launched Operation Desert Storm, prices briefly surged another 10 percent before later giving up those gains after the short conflict ended.</span></p>
<p><span style="font-weight: 400;">A similar pattern occurred during the 2003 invasion of Iraq and during Russia’s invasion of Ukraine in February 2022. In the Ukraine conflict, gold surged above $2,000 per ounce at the onset of the war but later retreated after the Federal Reserve began raising interest rates on March 16, 2022. By October 2022, gold had fallen below $1,650 per ounce.</span></p>
<h2><b>Monetary Policy Drives Long-Term Gold Trends</b></h2>
<p><span style="font-weight: 400;">Over longer periods, Maharrey said gold’s largest price movements are driven primarily by monetary policy rather than battlefield developments.</span></p>
<p><span style="font-weight: 400;">Between 2001 and 2011, during the wars in Afghanistan and Iraq, gold surged from roughly </span><a href="https://www.moneymetals.com/gold-price"><span style="font-weight: 400;">$250 per ounce to more than $1,900</span></a><span style="font-weight: 400;">. Maharrey argued that the rally was fueled primarily by Federal Reserve monetary easing, the 0 percent interest rate environment, and quantitative easing programs following the 2008 financial crisis.</span></p>
<h2><b>War Spending and Economic Consequences</b></h2>
<p><span style="font-weight: 400;">Maharrey warned that prolonged conflict can intensify economic pressures by increasing government borrowing and spending. He quoted James Madison, who warned that war produces armies, debts, and taxes that can threaten public liberty and expand executive power.</span></p>
<p><span style="font-weight: 400;">If the current conflict with Iran becomes prolonged, Maharrey suggested it could produce economic consequences similar to those seen during the Vietnam era. War spending combined with domestic programs during the 1960s contributed to the stagflation that dominated the 1970s.</span></p>
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<p><span style="font-weight: 400;">Given the current level of government debt and structural economic weakness, Maharrey argued that the modern economy may be even more vulnerable to similar pressures.</span></p>
<h2><b>Growing Institutional Interest in Precious Metals</b></h2>
<p><span style="font-weight: 400;">The episode concluded with a critique of mainstream financial advisers who dismiss gold as an investment. Maharrey referenced comments from finance professor Peter Rakuti, who told USA Today that he remains skeptical that gold is ever a good investment.</span></p>
<p><span style="font-weight: 400;">Maharrey contrasted that perspective with a recent recommendation from Morgan Stanley CIO Michael Wilson. Wilson suggested that investors consider shifting away from the traditional 60 percent stocks and 40 percent bonds portfolio structure and instead adopt a portfolio that includes a 20 percent allocation to precious metals.</span></p>
<p><span style="font-weight: 400;">According to Maharrey, even modest increases in precious metals allocations could significantly increase demand. Most investors currently hold little or no exposure to gold and silver, and any shift toward higher allocations could create substantial new buying pressure in the market.</span></p>
<p><span style="font-weight: 400;">He concluded that investors should focus on underlying economic fundamentals rather than short-term headlines when evaluating </span><a href="https://www.moneymetals.com/programs/monthly-program"><span style="font-weight: 400;">the outlook for gold and silver</span></a><span style="font-weight: 400;">.</span></p>
