➡ The prices of gold and silver have dropped significantly since the start of the Iran war. This is mainly due to the increase in bond yields, which are seen as more attractive to investors compared to gold and silver that don’t pay a yield. The rise in bond yields is also putting pressure on the US balance sheet. Despite various factors contributing to the price drop, the key reason to watch is the bond chart.
➡ The US is trying to negotiate a ceasefire with Iran, but Iran is not accepting the offer. Meanwhile, the US economy is showing signs of a possible recession. The situation in Venezuela is also mentioned, with the US praising some actions while also applying pressure behind the scenes. There’s confusion about Iran’s nuclear threat, with some saying it was eliminated by airstrikes, while others believe Iran intends to rebuild its nuclear capabilities.
➡ Iran is dangerously close to having the materials for nuclear bombs, possibly within weeks. Despite successful strikes on their nuclear sites, there’s a risk they could recover. Meanwhile, Iran’s wealth is being used for harmful purposes rather than benefiting its people. In financial news, gold and silver prices are affected by these tensions, and Dolly Varden Silver has increased its control over ounces and received approval for a merger with Contango ORE.

Ever since the Iran war broke out, the gold and silver prices have gotten clobbered. Gold’s gone from over $5,400 to as low as $4,128 earlier this week, while silver has gone from over $97 down to $6,121. And while there are a handful of reasons this has happened, we are going to look at the primary one because it’s a big one that impacts more than just gold and silver. And in today’s video, we’re gonna explain exactly what that is. The land of our kingdom! Well, hello there my friends! Chris Marcus here with you for Arcadia Economics, and in today’s show, we are going to dig into the real primary reason why you’ve seen gold and silver get slaughtered.

Ever since the Iran war broke out, as we can see here on Wednesday, the gold price is rebounding, currently up $161 just before noon. While the silver price also doing quite well on Wednesday, up $3.31, 4.76% to $72.90 after being as low as $61.20 just a couple of days ago. And while there are certainly a lot of reasons including margin calls, chaos in the market, confusion about how long things are gonna go on for with the war, and also the leverage that plays into these things which the BIS described in Bloomberg did a report about. Yet as I touched on in yesterday’s show, there’s one factor that really probably outweighs all of those.

And that is something that I wanted to dig into a little more deeply today because it really is important. I haven’t really seen many others mention it. That’s not to say that some have not yet. Here you can see the higher real yields are weighing on bullion. And when we take a look here at the 10-year yield in the U.S., which is currently at 4.32%, although was as low as 3.94% right before the Iran war began, you can see that’s quite an increase in the yield. And while I know that maybe gold and silver investors don’t always look at things quite like this, in the Wall Street world, that is a big deal because the way they view it is that gold doesn’t pay a yield, whereas the treasuries do.

So the higher the yield on the bonds, relative to gold and silver is viewed more attractively. In other words, imagine if you had a 5% return on your bonds compared to investing in gold versus if there was a 0% return on the bonds versus investing in gold, then there would be less relative opportunity cost. And that’s what you’re seeing exactly here. As they mentioned, higher real yields are weighing on bullion. While inflation-protected treasuries are paying more, gold typically pays nothing. And you can see here that at the exact same time when the yield has surged about 38 basis points, that’s the same time when the gold price has gone from $5,400 to as low as $4,128 before rebounding to its current $4,587 level.

And like I said, while there are a handful of reasons, there is the primary one, and let us dig in here. So when we look over here at this Bloomberg article that mentions gold edges up, snapping the losing run as war hurts the long time haven, first of all, worth considering why is it that the yields are rising right now? Well, you could say it’s partly due to the dollar index rising about two points during this same war period, although why is the dollar index rising? And all these things go back to the fact that we already had inflation up far more than expected.

There’s the PPI up to 3.4% annually, and that was covering February. And of course, since then, we’ve gotten this surge in the oil price, which began right as the war escalated. We went from the 60s and low 70s to as high as $1,950 on March 9th, which really puts a big hurdle in the Fed’s plan, which had previously called for some interest rate cuts. We had Kevin Worsch on the way, who seemingly was going to do a lot of interest rate cuts. And yet now the higher oil and energy prices that are going to be piling on what were already high levels of price increase.

And you can expect that to continue to go higher, especially over the month of March when we get those numbers next month. Here Bloomberg mentions, high energy prices resulting from the conflict have raised inflationary risk and prompted investors to ditch their relatively liquid and profitable positions in gold for other assets. Here they mentioned the expectation of interest rate hikes by the Federal Reserve and other central banks, which was hard to imagine perhaps even a month ago. Here’s Suki Cooper, who I met at the Silver Institute dinner back in November, mentions that the gold price correction has seen a steamer than usual underperformance.

Although it’s not unusual for gold to endure downside pressure for four to six weeks following a period of extreme distress. Here Peter Kinsella mentions, what you tend to see in big crises like these is investors selling heavily positioned, well performing assets in order to fund margin calls for underperforming assets. And they also mentioned that some countries that have been accumulating bullion are energy importers. So a steeper oil and gas bill resulting from the war means fewer dollars retained to be recycled into gold. And then here was another article from Bloomberg a couple of days ago, although it’s interesting what they mentioned here because gold pair dramatic losses as President Trump postponed military strikes.

So gold rising as we get less escalatory news from the war. And here Citigroup mentions how gold right now is trading like a risk asset. Although worth keeping in mind that while Trump had suggested that the US and Iran could jointly control the Strait of Hormuz, at least as of Tuesday Iran was raining missiles on Israel and mocking Trump’s talk of joint control of the Strait of Hormuz. So doesn’t seem like that is going ideally well. And while Trump posted on social media that very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East, Iran says that they have not had direct or indirect communication with Trump.

So who knows what is really going on? Although it doesn’t I don’t get the feeling that things that are said by the US government should at this point be translated literally on a word by word basis. Here they also mentioned how gold’s poor performance can partly be explained by a dash for cash as conflict sees investors ditch their relatively liquid and profitable positions. And here again they mentioned the higher rates and stronger dollar have added to the headwinds. While the Federal Reserve’s rate hiking probabilities have increased. Here you can see what that curve looks like.

This had been forecasting or pricing in that rates were going to get cut with 225 basis point rate cuts earlier. Now that’s been pushed out. You still see by the end of 2027 markets pricing in two cuts yet much different than what we saw even a couple of weeks ago. Let alone what was being implied by Kevin Warsh should he make it into the Federal Reserve. And here we see at least on Poly Market Kevin Warsh at 95% to be the next Fed Chairman. Amazingly Judy Shelton in second place at a 2% probability. So wouldn’t that be something if before it’s all said and done we saw Judy coming in there not expecting that to happen.

And here’s David Wilson director of commodities at BNP Parabas talking about something that I mentioned several times in the past couple of weeks having all these previous crises whether it was 2008. Gold goes from 1000 to 700 bucks before hitting 1900 a couple of years later or the sell off we saw in 2020 or in 2022. Gold initially fell as markets reacted to the news flow with investors typically selling assets to hold the US dollar. And analysts have also pointed to the possibility that the conflict triggered central bank gold sales or at least slow down purchases.

It’s likely that some central banks are selling gold to defend their currency or to fund energy purchases. Especially Gulf states that have seen some of their infrastructure damaged or crumpled by the closure of the Strait of Hormuz and here is Daniel Galli mentioning that USD surpluses were increasingly being recycled into gold. And that the Iran conflict blew that dynamic apart. So anyway hopefully that puts a little more color on the reasons that gold and silver have sold off. Although if you wanted that all summarized into one single key reason basically keep an eye on the bond chart.

Although here’s the other thing is that as the bond yield is going higher that is really putting a lot of pressure on the US balance sheet at a time when you probably didn’t really need any additional pressure on the US balance sheet. But that’s the kind of thing that gets people thinking again yes how is that going to be funded and look back towards the Federal Reserve. So anyway a lot to balance and in terms of how things are going with the war. Interesting when you look at the headlines here oil prices fall as Iran signals safe passage for non-hostile ships.

Although Iran won’t accept US effort at ceasefire and war. Meanwhile the recession odds climb as the economy shows cracks beneath the surface. And the Dow jumped earlier today after the US reportedly sent Iran a peace plan yet simultaneously Iran won’t accept US effort at ceasefire and war the state media reports. Although we did actually get some footage of the president with some recent comments on how things are going and let us take a look at that here. Again as I mentioned earlier at least this is what is being reported in terms of Iran’s response to the idea of jointly controlling the Strait of Hormuz and there’ll also be a form of a very serious form of a regime change.

Well at least if you’re wondering if part of the plan included regime change there you go. Don’t forget we’ve wiped out the leadership phase one phase two and largely phase three but we’re dealing with the man who I believe is the most respected and the leader you know it’s a little tough they’ve wiped out we’ve wiped out everybody. So it sounds like they might be talking with whoever is in control now although because so many people have been killed we’re not entirely sure but we think so. But the people that seem to be running it and they seem that based on really fact because things they’ve said have taken place.

Everybody’s been killed from the regime they’re really starting off there’s automatically a regime change but we’re dealing with some people that I find to be very reasonable very solid. That’s encouraging to hear they’re solid guys. I was a bartender now I own a boat. The people within know who they are they’re very respected and maybe one of them will be exactly what we’re looking for. Okay upcoming spoiler alert if you saw yesterday’s show you might remember I mentioned how I think that when they did this they were expecting things to go similarly to the way it went down in Venezuela.

Look at Venezuela how well that’s working out we are doing so well in Venezuela with oil and with the relationship between the president elect and us. Although for what it’s worth here you can see a story from Reuters about some of the unusual things that are going on in Venezuela and especially in oil gas and mining where Trump has he praised on Delcie Rodriguez for cooperating with the US saying she’s doing a great job. Although simultaneously behind the scenes the Trump administration has been applying pressure to achieve its objectives and US officials are actually threatening a legal case against Rodriguez that could include corruption and money laundering charges.

Maybe we find somebody like that in Iran so we want to see peace in the Middle East. If these thoughts go well and you reach a ceasefire ring with Iran do you believe Israel would abide by that agreement? I think Israel will be very happy with what we have. Although here was the news out of Israel just a day after Trump made those comments. Israel presses on with Iran strikes at full intensity. We just spoke to Israel a little while ago I think they’ll be very happy this will be peace for Israel long-term peace guaranteed peace.

Although back to what’s happening with Iran. They called I didn’t call they called. Yet simultaneously Iran won’t accept US effort at ceasefire and war. They want to make a deal. Although here we can see on Wednesday that Iran has rejected a US peace plan in a blow to the efforts to end the war. And we are very willing to make a deal. It’s got to be a good deal and it’s got to be no more wars no more nuclear weapons. They’re not going to have nuclear weapons anymore. They’re agreeing to that. Although what I think has left a lot of Americans confused about the nuclear threat is what reportedly happened last year during the airstrikes on Iran.

As a result of last summer’s airstrikes quote Iran’s nuclear enrichment program was obliterated and quote correct. That’s right. And is that in fact the assessment of the intelligence community. So the assessment of the intelligence community is that Iran’s nuclear enrichment program was obliterated by last summer’s airstrikes. Yes. In the opening statement you submitted to the committee last night also stated quote there has been no effort since then to try to rebuild their enrichment capability and quote correct. That’s right. And that’s the assessment of the intelligence community. Yes. The White House stated on March 1st of this year that this war was launched and was quote a military campaign to eliminate the imminent nuclear threat posed by the Iranian regime and quote.

That’s a statement from the White House quote the imminent nuclear threat posed by the Iranian regime. Was it the assessment of the intelligence community that there was an imminent nuclear threat posed by the Iranian regime. The intelligence community assessed that Iran maintained the intention to rebuild and to continue to grow their nuclear enrichment. Was it the assessment of the intelligence community that there was a quote imminent nuclear threat posed by the Iranian regime. Yes or no. Senator the only person who can determine what is and is not an imminent threat is the president. False. This is the worldwide.

This is the worldwide threats hearing where you present to Congress national intelligence timely objective and independent of political considerations. You’ve stated today that the intelligence community’s assessment is that Iran’s nuclear enrichment program was obliterated and that quote there had been no efforts since then to try to rebuild their enrichment capability. Was it the intelligence community’s assessment that nevertheless despite this obliteration there was a quote imminent nuclear threat posed by the Iranian regime. Yes or no. It is not the intelligence community’s responsibility. What would you say you do here to determine what is and is not an imminent threat.

I am worried. Although former director of the US National Counterterrorism Center Joe Kent was able to say a little more conclusively what he thought on that one. I cannot in good conscience support the ongoing war in Iran. Iran posed no imminent threat to our nation. Iran posed no imminent threat to our nation. How did you reach that conclusion. I think this is this is key. I mean this would be more challenging to explain had the Secretary of State the president and the Speaker of House the House not come out and said that we conducted this attack at this time because the Israelis were about to do so.

So that takes away the argument that there was an imminent threat as in Iran was planning to attack us immediately. That just simply did not exist. There’s got to be no more wars no more nuclear weapons. They’re not going to have nuclear weapons anymore. They’re agreeing to that any of that stuff is no deal. Although as you’ll see here in this clip with Chris Hedges and Max Blumenthal there apparently are concerns about nuclear actions or activities but that are a bit different than what President Trump was describing there. My fear Max is that Bibi will reach for the nukes.

Why do you fear that? Because I think Israel cannot sustain this kind of war of attrition. I think that’s a legitimate fear. I think one of the bigger stories of the year is that Israel likely tested a nuclear weapon in Dimona in I think early February. There was a massive earthquake near the secret nuclear facility in Dimona that was likely the result of the test of a nuclear bomb and Israel was sending a message but also preparing for the worst. And I think we should consider the possibility that Donald Trump could detonate some form of nuclear weapon or tactical nuclear weapon if he’s unable to simply walk away.

The Israelis do not want Donald Trump to walk away from this. He’s being urged to walk away by many of his advisors but the Israelis have all this leverage over him. So we should be concerned about whether they’ll drop a nuclear weapon and this is why it’s completely rational and legitimate for Iran to develop a nuclear weapons program as a means of deterrence against these forces that are coming to destroy them. Look at the way they attacked unexpectedly all of those countries surrounding them. There was not supposed to but nobody was even thinking about it. Certainly that part there about how no one expected them to respond before action was taken is a little bit concerning.

But they wanted to take over the Middle East. I had not previously heard the assertion that Iran wanted to take over the whole Middle East. Although on the other hand there is the Project for New American Century which talked a lot about taking over the Middle East. Although how a new Pearl Harbor would be required to facilitate that and of course that came out shortly before September 11th. And they wanted to knock out Israel permanently and if they had a nuclear weapon they would have been able to deal with it. They said Iran was not an imminent threat but that’s what the intelligence showed.

I think it was an imminent threat. I think that Iran if they if we didn’t bomb them with the B-2 bombers now that sent them back. But if we didn’t hit them with the B-2 bombers they would have had a nuclear weapon within two weeks to a month. Which sounds eerily similar to. If not stopped Iran could produce a nuclear weapon in a very short time. It could be a year it could be within a few months. They have the wherewithal the stored up preserved knowledge to make a bomb very quickly if they wanted to do it.

Iran is so dangerous weeks away from having the fissile material for an entire arsenal of nuclear bombs. They’re very close they’re six months away from being about 90 percent of having the rich uranium for an atom bomb. Iran is gearing up to have to produce 25 bombs atomic bombs a year 250 bombs in a decade. Ladies and gentlemen time is running out. And if they had a nuclear weapon they would have used it as soon as they got it. They obliterated their nuclear sites last summer with your strikes. Then how can you argue it was an imminent threat now? Oh we hit them so hard we obliterated them but obliterated them.

But that doesn’t mean with the right equipment you can’t dig down and go get it. We don’t want that and we don’t we won’t have that. But we obliterated that site they still haven’t been able to get it. That was a complete success. But if it wasn’t they would have had if we didn’t hit them if we didn’t use the B-2 bombers. Which are unbelievable. We just ordered 22 more of them modern version by the way super modern version. If we didn’t hit them with the B-2 bombers they would have had within two weeks of that attack.

That’s why we hit them because we knew they would have had a nuclear weapon. They would have used it on Israel and the entire Middle East. Do you still need 200 billion dollars? It’s always nice to have. Iran is an energy rich country could be should be instead like so many other places driven by radical ideology they’ve spent that money instead of investing in their people. That’s why you had millions of Iranians protesting because they felt like their condition quality of life didn’t match what it could be or should be. And what was the Iranian state? There’s a reason we come call Iran the number one state sponsor of terrorism because they took the money they they make and they invested in tunnels and they invested in missiles and they invested in launchers and UAVs and we are destroying and degrading that degrading that in historical portions.

So in either case there is your war update which probably leaves less clarity than would be ideal for the financial markets and has a lot to do with the gold and silver pricing. But hopefully today’s video especially focusing on the bond yields in the U.S. and really the impact that has had puts things a little bit in context and either case we have a $45.89 gold price as we wrap up along with silver just under the $73 level and fortunately Dolly Varden has done quite an amazing job in adding the number of ounces they have under their control as the rally has progressed.

They also did receive shareholder approval for their merger with Contango ORE. And to find a little bit more about that deal and how that came about well here is Sean Kunkin from Dolly Varden Silver as well as Rick Van Neuenheis from Contango ORE. It was very much like the Montreux project a million ounces and we see the ability to execute this direct shipping ore model for Johnson Track and that’s where the real synergies with Dolly Varden come in because Johnson Track it’s a high grade deposit it’s it’s over nine grams per ton gold equivalent it is gold silver copper lead and zinc so we can put those two projects together and as as Sean referred to I heard him say earlier we’ve gone from a five-year plan to a 20-year plan and and that’s that’s fundamentally what the merger does and it does it with a hundred million dollars when the merger happens we’ll have about a hundred million dollars in the bank we’ll have a we’ll be generating a hundred million dollars of free cash flow on average from Montreux and then that’s plenty of money to continue to advance all three of our other projects and then I think I heard Sean referred them as districts and that’s what they are.

Well thank you to Sean and Rick great to get that update I’ll actually be having them back on the show next week to talk more about the approval of the deal so hit the subscribe button and the notification bell and just in case you’ve been wondering where things stand with silver now after the big move up to 121 then back down to the low 60s now back higher into the 70s well here’s what’s been going on in China which has not gotten a lot of tension but to find out more well click on the video coming your way now
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