➡ The Strait of Hormuz remains closed, causing negative economic impacts and affecting global oil and fuel supplies. This situation has led to protests and shortages in various countries. Despite a brief ceasefire, the situation hasn’t improved. The closure is also influencing gold and silver prices, although their long-term impact remains uncertain.
➡ The article discusses the ongoing inflation issue, which has been above the Federal Reserve’s 2% target for five years. The market predicts a rate cut in the next two years, despite inflation not showing a significant increase recently. The article also mentions concerns about another wave of inflation similar to 2021, and the impact of rising energy costs on the economy. Lastly, it talks about the silver market, with a lot of silver being sold back and melted down into industrial bars, and the decrease in silver in ETFs.
➡ The article discusses the impact of global events on the price of silver, noting that despite fluctuations, the price remains high. It mentions the role of Exchange-Traded Funds (ETFs) and military demand in influencing the price. The article also highlights the performance of First Majestic, a silver mining company, and its plans to restart a gold mine. It concludes by suggesting that the price of gold and silver will likely continue to rise in the future due to economic factors.

If you may remember just a couple of days ago, there were some pretty negative economic outcomes if the Strait of Hormuz remained closed. Then you had the ceasefire, which lasted less than a day. Now the strait remains closed. Traffic isn’t expected to normalize anytime soon, which really is not good news, and we will look at how the gold and silver prices are reacting. Well hello there my friends, Chris Marcus here with you for our Katy Economics. On Friday April 10th, where let us just say that the conditions in the world have not really gotten resolved this week, even though we had a ceasefire, lasted less than a day.

I think it did last over 12 hours, but not very much longer than that. Then we had the ceasefire fall apart, and now here we are on Friday, where it was last week, some really negative things happening economically that were on the verge of getting exacerbated if the Strait of Hormuz remained closed. Then we had the ceasefire, which fell apart rather quickly, and it’s almost as if the impact of that has been lost, because sure enough here we are, and we see that based on the events of the past couple days, the strait remains closed.

You can also see here on the breach of the ceasefire, and at least CNBC, not saying that’s always necessarily how things are, but reporting that traffic won’t normalize anytime soon. Here, they mentioned that traffic through the Strait of Hormuz has yet to see any meaningful rebound with just four transits recorded on Wednesday, according to Global Market Intelligence. Now on the positive side, oil was up a bit more earlier, and we’ll take a look at the price of that in just a moment. Although the oil rally lost steam after Israel agrees to negotiate with Lebanon, I would put this in the category of headlines that I would take with a grain of salt.

If there’s any truth to that, that they’re actually negotiating, I’m all for that. Because at some point, either there’s an agreement, people learn to live in peace, or else they just keep killing each other inevitably as the decades and get to the point where centuries roll by seems pretty unideal. Although, I guess things like this go a little more smoothly theoretically than in real-world applications, so we’ll hope they reach a deal. I’m not sure that I would assume that that is done just based on this headline, but at least I think it’s useful to show what is being portrayed out there, and in terms of a look at the oil price, we can see crude oil at 98.05.

Interesting that it’s still trading over Brent, which is quite unusual, although as we can see here, not going too well internationally. Irish fuel protests enter the fourth day as the government seeks to head off shortages, open blocked roads. I point this out because when you have food or fuel issues that can get people out in the streets, you hope that you don’t see that spread. Although, jeez, it was just a couple months ago, we were rolling into the new year and there were people talking about being frustrated paying taxes as they saw money stolen from Minnesota with…

at least to my knowledge, not a lot done about it, and so some already hectic conditions in the public, and here 17 hours ago, diesel and jet fuel shortages. For some time, warns the IMF. There you go, Reuters. Warfuel diesel crunch hits Bangladesh farmers in key planting season, fuel shortages in France by department. So, I mean, these things are happening now, and that’s why it’s so concerning because it looked, at least for a while, like we might have some sort of calming down or resolution of what has been happening, yet seeing that is not quite the case.

So anyway, with that said, let us take a look at how this is impacting the gold and silver prices today, where you see gold down 26 bucks, so not a big move down, and silver has now ventured into a real positive territory by one penny, or two-tenths of a penny at the moment, and now down by a tenth of a penny. So exciting move, basically flat on the day, you could call it. Why are they flat on the day? Well, I think you also have to understand that there’s some degree that nobody really knows.

Well, maybe there are some people who actually do know how this will play out. Probably, so I don’t even know the people… certainly you could say the people running and making the decisions don’t know how this is gonna play out, so along with that, how is the market supposed to react? And actually reminds me of the old trading days, where if you were making markets and some big piece of news came out where it was still being filtered, or you didn’t know how something was gonna play out, that’s when you would have a wider market, because you just naturally have less confidence of which way something is gonna go.

Now if you are a long-term gold and silver stacker, I think you can leave your metal sitting there in the vault or on the floor, or whatever it’s doing, and in due time, gold and silver will do what they’ve done for the last hundred years, and I would imagine will be a similar form of the next hundred years, because all of these events, whether a higher oil price is gonna hurt growth and lead us to a period of deflation that I continue to anticipate, would be met rather rapidly with the amounts of quantitative easing and fiscal spending that would make 2008 or 2020 look like a Sunday school picnic, so that’s coming.

Really difficult to see anyway that that’s not coming, so with that said, if you do have the oil price spike, the deflation, and liquidation, you can see the prices sell off. Although if you’re a longer-term investor, that’s the part that I think is nice, where you don’t really have to worry all that much about those types of things, and either case, just pointing out that we already saw the the shortages building last week, just showed you the continuation of that this week. At least my best guess at understanding is that with each hour or day that goes by the not necessarily a one-to-one, but an accelerating amount of damage is done by this, so certainly pretty alarming to see what’s happening, especially that maybe now they’re in Lebanon rather than Iran yet.

Seems like a lot of innocent people also being killed, which is of course not an ideal thing, although perhaps we won’t dig into that today and just hope for the best of all the people affected in these different areas, although in terms of things that we can dig further into, just one note, I heard this in an interview with Luke Roman and Lin Alden, where for all the talk about whether Iran was close to getting a nuke, whether they have a right to a nuke when others do or they don’t, we’ll leave that aside yet.

Lin pointed out this story, this was from the White House last year, Iran’s nuclear facilities have been obliterated and suggestions otherwise are fake news, just pointing that out that that’s what the White House put out. I saw that Trump also was not happy with Tucker Carlson and Candace Owens and others, which I’ll leave my thoughts on that aside, although interesting, I know they did play a role in helping him to get elected, so it at least is a divisive or combative environment in terms of the politics. I won’t go deeper into that today except similar with how I mentioned with the stuff that came out about Jeffrey Epstein.

How does that relate to gold and silver? There’s some event risk in there and that’s as an option trader, which was my background, you’re essentially trading volatility and you look at the, you don’t know what’s gonna happen a given day in the future, but it’s a science of balancing that, so when you had like an earnings day, you’d bake in a higher volatility level for that specific day, and I’m just saying there are a lot of events that you would bake in some probability risk. Think about it like this, if you have a hundred, one percent, hundred events that are one percent to occur, but you have a hundred of them, that does not guarantee that you’re 100% to have one occur, but you start to get the math going against you, and in either case, we see Kevin Warsh’s Fedshare confirmation plan hits a snag as the nomination hearing is delayed.

Committee apparently hasn’t received the paperwork, so seems like the system there is at the same caliber that the Pentagon can never pass their audit, although I’m sure it will be quite a hoot over the next month or so. They say Warsh’s finances may be complicated, and I can only imagine the back-and-forth. I’ll try to avoid that mostly, at least to the matter of what ends up happening. We still have Kevin Warsh at 94% on Polymarket for whatever that’s worth, although whether it’s Kevin Warsh or anyone else, we still have what I mentioned yesterday.

The PCE came in at 3%, which obviously is bigger, as you may have ascertained, than the Fed’s 2% mandate, which now that we’re in April of 2026, and basically inflation went above the Fed’s mandate in April of 2021, so that would make five years since Jerome Powell was telling us about the transitory inflation, and I was thinking about it. That one may go down in history as like a bigger mistake even than Bernanke saying subprime was contained, and that’s actually that’s tough territory to be venturing into, although certainly with time that does not look good, and some of the reasons why is that first let’s take a look at our Fed futures curve where you can see the markets pricing in a rate cut in October of next year and in December of next year, so saying basically two years from now almost that we’ll have interest rates 50 basis points lower, which is actually not all that different from what this looked like heading into the war, which I thought was missed price based on the fact that you had Trump’s guy coming in, who even Trump said wouldn’t have gotten the job if he wasn’t on board, now with the fact that inflation certainly on the latest numbers did not show a big increase in March, which seems unusual, although still even with the latest numbers it does really call into question some of the projections that came out just back on March 18th, so that’s only about three weeks ago, and here was the Fed’s dot plot, and it’s kind of fun to take a look at some of these because here is the PC inflation, they expected that it was going to go down to 2.7%, keep in mind back in December they thought it was going to come down to 2.4%, so after a couple months had ticked off the calendar, they once again raised that forecast, and if we look at the data here you can see the PCE index, this is the non-core, and let’s take a look at the two-year, it hasn’t spiked yet, although at least versus last April when you were down to 2.1%, you can see that it is risen, and that came in at 2.8%, if you want to see the core, I know some of you inflation hawks out there love the core numbers, but here’s the core up at 3%, actually came down to a tick in March, which seems a bit counterintuitive yet nonetheless nowhere near the Fed’s mandate of 2%, and also you wonder if the Fed had to redo these numbers today, would they still be expecting 2.7% at the end of 2026, or at any point in 2026, I’m guessing they already would have revised these numbers higher, which makes at least some probability that you’d have to revise these other numbers higher since 2027 and 2028 would also be including the 2026 data, so that means that probably even the Fed would not be as audacious as to claim that inflation is going to come down to their 2% mandate, even by 2028, continuing the streak for seven years.

God only knows what’s going to happen by then in terms of inflation, although at least giving Jerome Powell a chance of being more wrong than Bernanke’s subprime is contained by the time we see how long the transitory inflation actually lasts. I’m a bit concerned, especially when you see those headlines that we looked at earlier, do we get another wave of inflation like what we saw back in 2021 where it spiked enough that it was a common topic? Certainly seems if they don’t get this straight reopened soon that we could be at least headed to that territory.

Speaking of which, in my Bloomberg feed, sorted for the latest silver stories, inflationary pressures are still building, and even if the straight were reopened tomorrow, I think you’re going to continue to have issues like that. Here’s Bloomberg mentioning bad inflation reports are often like cockroaches, which is not ideally what you want. CPI was up 3.3% in March, also in excess of 2%, and Modern History suggests that monthly surges in inflation are often the start of something broader. Similar episode in 1950 with the Korean War, then obviously we know how this worked out in the 1970s, and many of you remember quite well how it worked out in 2021.

This gives you some insight into how it might work out this time here. Also worth noting, since Trump has come in, we’re year and a half in. Last year was the tariffs causing quite a bit of chaos in the market. This year it’s the war. We still have two and a half years left, and one of the things I was most optimistic about was at least wondering if there was some possibility that the debt and monetary system issues might be addressed. I’m not saying we’re headed towards a gold reset, but I guess anything is possible at this point.

As Bloomberg notes here, the economy wasn’t exactly in the greatest of shape before all of this started, and this is certainly not helping things, although another piece of evidence of that, pawn shop loans are spiking as high gas prices weigh on Americans. We’ll have to get Brian Kuzma, the gold and silver shop owner, back in Florida. I have to get him on the show soon. He could comment on this because one of the things I was surprised about was ever since silver got around 30 dollars, the dealers had reported a lot of selling.

I thought it would have been people who were sitting there saying, man I’ve been holding this silver forever, finally get out ahead. Although Brian and the other dealers that I’ve talked with routinely said it was people who were hard pressed for cash, needed money, or who had inherited the silver and just didn’t want to hold on to it yet. That’s the case, and now we have energy cost going up, which is going to factor back into the cost of everything. I wonder what we will see, and if more of that silver will be coming back onto the market.

What was interesting is that a lot of it was getting melted down and recast into industrial bars, which was in some ways helping the supply where you still have that premium in China, indicating that even in the midst of this, that there’s still the tightness in demand spread about nine bucks today. In fact there was so much silver being sold back, that actually you finally had a bottleneck because the refiners couldn’t process all of it, and obviously sad to see that people are selling their gold and their guitars.

It breaks my heart to hear that, so hopefully no one has to be selling their guitar, but we’ll check in with Brian at some point. I’ve talked with him about doing perhaps his own show maybe every Saturday, where he talked about what things were like in the retail conditions for both gold and silver, so let me know what you think about that. If you’d like to have Brian deliver a Saturday show, it could be fun, and some other silver data. Here we have the COMEX. You can see the metal continues to come out down to 325 million ounces.

Here let’s take a look at the two-year chart. So here’s when the LBMA broke back in October. Metal consistently coming out. I suppose you can say it’s slowed a bit. Here is from our friend Pug Pack, who tracks the data. COMEX doesn’t publish this. Fortunately he keeps track, and you can see at least some of the recent withdrawals have been less than a million. For a while we were at two to four million a day, then it was one to three million a day, and here you even have 231,000 ounces came in back on March 30th, and anyway as the metal is coming out of there, we can see Chinese inventories at 21.3 million ounces.

Not any big changes there. Here’s what is really interesting though. These are the ETFs. As we see this blue line where that goes down, that means metal is coming out of the ETFs, and also as I mentioned earlier this week, that the Silver Institute is putting their numbers out. I believe they come out Wednesday morning. We’ll be reviewing those later Wednesday afternoon, so that is a great reason to not only hit the subscribe button and the notification bell, although perhaps if you go a step further, if you go over to arcadeyeconomics.com and put your name and email, then we do send an email out.

Just one email a day when the show is posted, so that way if you do want to stay up to date on the latest news in the silver market, such as when the Silver Institute’s latest numbers come out, that way you can make sure that you don’t miss that. And here’s the thing that I think will be really important, especially for the rest of this year, is that if you do not include the ETF demand this year, then the size of the deficit shrank considerably in 2025. If you do include what the ETFs did in 2025, where here you can see the big chunk, there they are about 1.1 billion ounces and got up to 1.35, 36 billion ounces.

So a lot of silver went into the ETFs, and if you include that, then you had one of the largest deficits on record. And interesting that the metal started coming out, you see the blue line going down there, while the price, which is the gray line, was still going up, and what the ETFs do, which can change quickly, but certainly will be a key as we see what happens in the rest of the year. It’s stunning, we’re now April 10th, so back in end of January, rough over 121, seems like a long time ago, and my guess is that once there’s some sort of clarity on this war, and people at least have some idea of what we’re looking at, which is really hard to ascertain right now with how quickly things change and how much information out there is not actually what is going on yet.

I think at some point, especially based on how those premiums have not come in, and here you can see this chart, the bottom part here, saw the premium when the price had spiked, got over 18 bucks, had come in quite a bit, so still elevated, and I’m guessing we have not seen the end of that, and especially I was talking to someone, I’ll leave him nameless today, yet wondering, well at least you would think the military’s order for silver did not get smaller, and that not necessarily just the U.S.

military’s order. He was mentioning that while that information used to be public, now they just won’t tell you, which is not entirely shocking given that silver’s a strategic critical mineral, so some of the things to keep in mind, I personally am of the school of thought, and if I had to give one particular reason, I would say it’s this spread here that we run into further issues this year, mix that in with the fact that here is China’s inventory, and things are getting rebuilt, and especially if the military needs more silver, sets up an exciting second half of the year, although here’s something to keep in mind, just saw this, that Missouri voters voted against their data center, so while you have thrifting going on in solar, and a lower solar number this year, one of the things that I’d wondered whether that could pick up some of that demand would be the data centers, which are also silver intensive, and just interesting to see that there is some pushback on those, yet either case, that still leaves us with a silver price that even last quarter, when the average silver price was substantially lower, left first majestic with some record earnings, first majestic did have some news at this week as they reported their 2026 production numbers, which were slightly down from the fourth quarter, although keep in mind that was record territory, especially following the gato steel, so slightly lower than the fourth quarter, although certainly going to be interesting when their earnings come out next month to see how things look, because that whole spike to 121, that was in the first quarter, and I think the fourth quarter average realized silver price was about $59, and even despite the sell-off, here we are sitting here at $76.50, and of course first majestic did also announce last week their plans to restart the Jarrett Canyon gold mine with production expected to commence in the second half of 2027, that’s something that Manny Alcafaji talked about when he joined me a couple of weeks ago, and I’ll make sure we get Keith or Manny back on here soon to hear more about the plans there at Jarrett Canyon, and certainly the elevated gold and silver prices have helped, will be interesting to see how some of these things look in the coming years, because despite the sell-off we’ve seen since the war began, as I look at the world that we’ve just described over the last 20 or 25 minutes here, it sure seems difficult to imagine that that is what is going to end a gold and silver rally, where gold really been rallying for about 25 years now, and when you think about how these things go, unless you’re of the school of thought that the US is about to balance its budget regardless of which party is in power, it’s a lot easier to imagine that the next 25 years you at least have continued increases in the gold and silver price if not an outright reset or an even further spike at some point, so of course we will keep you posted on that, and in case you missed it yesterday we did go through the back and forth of how this ceasefire blew up, leading to the conditions that we just described here, and to make sure you are up to date on the latest, which actually got pretty wild, we’ll just click on the video coming your way now.

[tr:trw].

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