➡ The Federal Reserve recently held a policy meeting where they decided to keep rates unchanged. This decision was made amidst rising inflation rates and a significant drop in gold and silver prices. The situation is complicated by increasing oil prices and job losses, making future decisions for the Fed more challenging. Despite the current market fluctuations, the underlying issues contributing to the pricing of gold and silver, such as war efforts and debt issues, remain unresolved.
➡ The price of silver has risen significantly due to supply issues and high demand, particularly from China and India. This demand has led to a decrease in silver stockpiles in COMEX and Shanghai, and withdrawals from silver ETFs. Despite the high prices, silver is still being used in industries, preventing the price from dropping significantly. Additionally, Dolly Barton Silver has received approval for a merger with Contango ORE, which will help fund the development of more silver mines.

Federal Reserve just had their latest policy meeting where, largely as expected, they left rates unchanged. Although, regardless of what mumbles got up there and said during his press conference, here’s the reason why. Their plan just got punched in the face even before the meeting happened. And we saw both gold and silver sell off sharply on the news. So if you’re a precious metals investor and you’re wondering what to make of this, well, you’re in the right place. Well, hello there, my friends. Chris Marcus here with you for Arcadia Economics on Wednesday, March 18th. Certainly an exciting and active day in the financial markets.

Obviously, by this point, you’re probably well aware that the Federal Reserve held their latest meeting and left rates unchanged, although what was really the stunner of the day for me, and I think for most people, at least if they’re aware of it, is that you just had the PPI inflation report come out this morning and it surged more than expected to a 3.4% annual rate, which means that the decisions facing the Fed just got extremely more difficult. And that’s coming from a place where I don’t really think that there was a solution that fits something that they would want to say out loud publicly.

And while that was happening, at least at about noontime, you saw the gold and silver futures were down quite a bit. Gold was down $131 to $4877, below the $5,000 per ounce mark. Silver also getting hit pretty hard on Wednesday. And again, at about 1130, the price was down 278 to 77.15. So silver dropping below $80. Although what’s interesting about these moves is you can see they began far earlier. Here we are at 6.20am Eastern time. Then there is the inflation report. Took a little while to react. Then another one of those plummets right on down.

And by the way, I know I mentioned yesterday that in terms of some of the nefarious side of the trading, at least in the manipulation zone, if you will, we will be digging into that a little bit more tomorrow because yes, there are things that the banks do here. Although after thinking about this for about 15 years and having some interesting conversations along the way, I do think there is another entity that often acts as the hand of God in some of these situations. So you can hit the subscribe button and the notification bell and join us here tomorrow at 4pm.

And we’ll dig into that one. But other days you can see silver was declining even a little bit more bizarre in the gold chart because here is 830 where that PPI report is released and you can see gold was coming down quite a bit, went down a little farther. But again, the bulk of the sell off occurring before that report came out. And what really is shocking about this is that this was covering February. So this is before we had the oil price spike. Here you see the Brent crude chart where at the end of February, we’re still in that 60 to $70 range.

And then this spike up to 109 as of late morning on Wednesday. That’s a curve in what we will see next month in which any of the costs that then get passed on will show up next month. Of course, we continue to hear about fertilizer not making it through that Strait of Hormuz, which in the middle of planting season in particular is something that is quite concerning the longer that stays closed. And if you have shortages of things that are not getting through, that’s all going to be coming out next month. So if they’re already having inflation rates shoot up this month, certainly very concerning and leaves the Fed in a very difficult position because here you can see their core PC index was up to 3.1% that came out last week.

Here you see the PPI, which has been generally rising. Here’s the 3.4% number that we got today. Yet keep in mind that this is in the context of the Federal Reserve previously being forecast by the markets to do some interest rate cutting this year. Of course, we still have Kevin Moore’s conceivably coming in to take over as the Fed chairman if he gets confirmed. And Trump has said he would not have been in that position had he not been on board with Trump’s views on interest rates, which are not only that they should be lower, but at one point, Trump said when asked how low 1% or lower.

But now you have this problem where even before the oil prices, surged, you were getting an uptick in inflation. Yet at the same time, the last labor report that came out was a complete disaster. Here you go. There’s the 92,000 jobs that were lost when the forecast was for 58,000. So a big miss into negative territory. Here’s the unemployment report, which has gone back up to 4.4% on the last reading. So when you combine that with the fact that, well, they probably wanted to cut rates. Certainly Trump has made clear that he wanted to cut rates.

They got Steven Myron, Trump’s former chairman of the Council of Economic Advisers, who wrote that 41 page paper about restructuring the global trading system and talked ad nauseam about how the dollar was too high. And he’s in the Fed now. So a lot of desire for lower rates. I don’t know if the Fed’s really all that against lower rates themselves. Yet you have that big problem in that now. PPI is already soaring and the oil price is at 109 while things continue to get blown up around the world. And while I will say that, it’s kind of confusing, especially if you’re searching out things, especially if you browse on Twitter or social media where I’m seeing the degree to which AI is creating things that are not real is quite stunning.

Be just staggering the amount of that that you have to see. So I’m going to skip through, although while I have heard that there is a social media blackout in Israel, I see and read a lot of things suggesting that Iran is firing a lot of missiles into Israel and doing a lot of damage not there. So can I confirm that? No, but that is certainly what they continue to see and will filter through. But in either case, it does not strike me that we are near an immediate resolution or reopening of the strait. I will say that in situations like these, it’s always possible.

I mean, who knows who wakes up tomorrow and is in enough pain that they say, all right, we got to end this now. Yet while something like that can happen quickly, at least from what we’ve seen historically, I do not see indications that that is the case right now. So going back to the gold and silver pricing on one hand, you could say, well, if inflation comes in hotter than expected, then that means that the Fed is going to be less likely to do the rate cuts, which I don’t know if that captures the totality or essence of the situation.

Also, the fact that a lot of decline was happening before and significant pullback at this point from where the markets were when they opened the day after the war broke out. Now, in terms of how to look at that, especially if you’re a precious metals investor. Well, of course, if you’re looking at your portfolio and you’re already invested, then maybe best not to spend all day just staying fixated on that. Although for some people who were looking for a pullback, if there was something you missed or wanted to add to your position, I guess that’s at least how I look at it.

Partly because, as you’ve heard me say many times before, I find on days like this, it’s really helpful to think, okay, well, the price is down. But is this the end of the bull market or is this something similar to what we saw in 2008 or 2020 where before the rally we saw the liquidation and we saw prices drop? I tend to think it is more the latter just, I mean, at the end of the day, it seems counterintuitive that gold and silver would be selling off as much as they have in the midst of what’s happening.

Yet that doesn’t change. That silver was introduced as a strategic critical mineral. That doesn’t change that the debt issues that contributed to the gold and silver pricing are really only set to go higher from here based on what is happening with the war efforts. So at least if you’re sitting there thinking with the prices down, how do I move forward? Of course, I’ll preface this. I am not in a position to give licensed financial advice to several thousand different people, but that’s again why I would suggest that going through that thought process of remembering the different things that have led to this point.

I don’t think many of them are really resolved. So, that’s part of the art and science of participating in these financial markets. And especially on the silver side, and we’ll mention that, well, we have 77ish dollar silver right around noon on Wednesday. We also have 86 dollar futures in Shanghai and on the MCX in India at 83.88, which is indication of the demand for metal. I think that’s what drove the price to 121. I think that’s what drove it past 50, and then we saw it more than double. It took 45 years to get back to 50 dollars, then doubled in the two months.

More than doubled, almost like a two and a half bagger from there in the following two months. And still at 78 bucks, it was 30 dollars this time a year ago. But what was it that drove these prices? I would say that mainly it was the tightness, the supply issues that go back to last year, where we saw a shortage in India lead to a shortage in London, which necessitated metal coming from the COMEX and from China over to London. And after that happened, we started reading time and time again that they were short on supply in China, which is why that spread started widening out.

It wasn’t always like that. Here’s the spread, and you can see how it widens out right in the end of 2025, going into 2026. We had mining executives talk about how they were getting phone calls from Chinese and Indian solar panel manufacturers trying to lock in their production at an 8 to 10 dollar premium. And not only that, but especially as I continue to have conversations with a variety of different people in different parts of the silver industry, I continue, even when I’m not asking for it, I’ll hear people say, hey, by the way, everything I’m hearing is that there’s still a lot of tightness in China.

So I think that is what has kept the price as high as it has, why you haven’t had it go back to 50 or 60 dollars. And also there is metal continuing to be on the move. There’s COMEX. They had gotten to a peak of 531 million ounces back in October. They continue to see metal leave their stockpile down to just under 338 million ounces. And certainly in the past six months, we’ve seen quite a decline, which you can see right there from the peak. Again, remember, there was a whole truckload of metal that went in last year while there was uncertainty about the tariffs.

Where does that leave us? Well, at about 338. We’re below the 2021 peak. Certainly quite a sharp drop compared to what has been in there historically. Still a fair amount of silver, yet how much more metal comes out? That to me is one of the key questions. Has not stopped so far. And interesting that at the same time, metal is coming out of the COMEX. We continue to see metal come out of the Shanghai inventories. This was over 20 million ounces last week. So perhaps not a ton that came out, but another million ounces or so, which I still think 19 million sounds incredibly low to me, given that the LBMA had an overt crisis when their free float got down to about 141 million.

And then on top of it, you have the ETFs continue to see silver go out of there. All these red lines mean withdrawals. The blue line here shows you how much total silver is being stored in those ETFs. And here, the gray line, that’s the price. So even as silver was going up to 120, you were back here when it was around 80 bucks. And that’s when metal started coming out of the ETFs. Where is it going? Well, I think that ties back to what I just mentioned about China, the heart of the industrial center.

We’re still on track running a deficit. I would say that if you continue to see metal come out of the ETFs, that would help a bit because if we go back two years, you can see quite a bit of silver was added in the year in 2025. So that continues. You’re going to have real issues, at least some of that being freed for supply theoretically, although I think that it’s being taken by what is needed for industry, both China and India, as well as other locations. But that’s why you haven’t seen the price go down to 50 or 60 bucks.

And also why I still believe that, again, when the price was up at 120, you had people talking about 200, $300 silver. And I remember thinking back then, is that really likely? Could that happen? And certainly, if you have an overt shortage in any of those locations, like we did actually have happened last year in some locations, that’s the kind of thing that actually could make that possible and remains a big glaring elephant in the room. Although, for today, we currently have about $77 silver. Yet, if you hit the subscribe button, the notification bell will keep you posted as things develop.

And one last note before we wrap up, we did have some news this week from Dolly Barton Silver, as they have received shareholder approval for their merger with Contango ORE, which we talked about with Dolly Barton CEO, Sean Kunkun, a few weeks ago, actually had Rick Van Neuenheis, who is the CEO of Contango, join us as well to explain the synergies and why they’ve decided to merge the two entities at a time when Dolly Barton was acquiring a lot more ounces in their inventory. And now they have the benefit of some of the producing mines that are owned by Contango ORE to help fund the development of that.

And let’s take a little listen to what Rick Van Neuenheis had to say about the deal. It was very much like the Moncho 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 Barton come in, because Johnson Track, it’s a high grade deposit. 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 Sean referred to, I heard him say earlier, we’ve gone from a five-year plan to a 20-year plan.

And that’s fundamentally what the merger does. And it does it with $100 million. When the merger happens, we’ll have about $100 million in the bank. We’ll be generating $100 million of free cash flow, on average, from Moncho. And then that’s plenty of money to continue to advance all three of our other projects. And I think I heard Sean referred to them as districts, and that’s what they are. Well, thank you to Rick and Sean. Certainly, even with the prices down a bit, this is an incredible price for the mining companies. So if prices stay even remotely where they are, let alone if they did end up going higher, which I do still anticipate over time will be the case.

And despite the decline in the midst of things getting kind of rocky in the world, that’s not something that I’m too particularly concerned about. And certainly for the mining companies, that is going to be incredibly good news for them. And to find out a little bit more about some of the drilling results that Dolly Barton has had leading up to this deal, well, just click on the video. That’s coming your way now. [tr:trw].

See more of Arcadia Economics on their Public Channel and the MPN Arcadia Economics channel.