Precious Metals News & Analysis - Gold News, Silver News from Money Metals Exchange

How a Silver Shortage Sparked a Historic Price Rally

Thu, 16 Apr 2026 00:00:00 EST

The silver’s supply deficit finally caught up with it in 2025.

Late last year, the price surged above the $50 resistance that had been in place since the 1980s. The rally continued into the first month of 2026, as the silver price rocketed to over $100 per ounce before correcting and settling in the $80 range.

As Metals Focus explained in its World Silver Survey, “Lower inventories and metal being pulled out of London or tied up in exchange-traded products (ETPs) created explosive conditions for lease rates and prices. Against that backdrop, silver delivered a remarkable year.”

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The speed of the rally was truly astonishing. In fact, silver languished most of the year as gold took the spotlight.

Silver opened 2025 at $28.84 and didn’t crack $40 until September. When the year ended, the price sat at $71.30. At its peak, silver was up 147 percent intra-year. The average price came in at $40, a 42 percent increase.

While gold hogged the spotlight through most of the year, silver stole the show at the end. According to Metals Focus, several factors converged to drive the rally.

“Exceptionally strong physical demand, tight inventories, and robust industrial metal prices, copper in particular, fueled silver’s outperformance of gold during that period. This trend eventually became self-fulfilling, as investors that had previously favored gold shifted their attention to the white metal.”

We can see the trajectory of the silver rally in the movement of https://www.moneymetals.com/news/2024/03/25/what-is-the-gold-silver-ratio-why-should-we-pay-attention-to-it-003075";>the gold-silver ratio. This ratio tells you how many ounces of silver it takes to buy one ounce of gold, given the current spot price of both metals.

In the modern era, the gold-silver ratio has averaged between 40:1 and 60:1. Through the first 10 months of 2025, the gold-silver ratio was historically high, averaging 91:1. The ratio peaked in April at 107:1. By the end of the year, the ratio had plunged to 61:1 before falling into the sub-50s early this year. This indicates a significant correction in the silver price.

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A Growing Silver Shortage

Silver took off in October as https://www.moneymetals.com/news/2025/10/20/london-india-and-the-anatomy-of-a-silver-squeeze-004422";>a silver squeeze gripped the market.

A convergence of factors from market dynamics to logistical problems led to an unprecedented silver shortage. While the market dynamics that got us here might be difficult to untangle, the situation is about as basic as it gets.

There’s not enough silver.

The silver market recorded a supply deficit for the fifth consecutive year in 2026.

Last year, demand outstripped supply by 40.2 million ounces (1,252 tonnes). That drove the 5-year market deficit to 716 million ounces. To put that into perspective, total silver mining output last year was 846 million ounces.

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Metals Focus forecasts a 46.3-million-ounce supply deficit this year.

Before this string of successive market deficits, there was a cumulative above-ground stock rise of 243 million ounces between 2010 and 2020. Taken together, there has been a stock rundown of around 473 million ounces in the last 15 years.

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A Silver Squeeze

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When silver demand outstrips mining and recycling output, silver users must tap into aboveground stocks. That generally means rising prices to incentivize those holding silver to give it up.

As Metals Focus explained, that’s exactly what happened last fall.

“Against this backdrop, shifts in inventories into CME vaults, rising ETP holdings, and a spike in physical demand created an unprecedented liquidity squeeze in October.”

The stage was set for a silver squeeze in the spring of 2025 as Trump began levying tariffs. Worries that silver would get caught up in the tariff net drove a massive movement of silver from London to Chicago Mercantile Exchange (CME) vaults in New York.

As silver streamed into the U.S., CME silver holdings eclipsed the record set during the pandemic at 531 million ounces.

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Much of the silver remaining in London vaults was already committed to ETFs. That left very little “free float” metal to provide liquidity to the London market. According to Metals Focus, the share of London silver stocks, not allocated to ETPs, fell to just 17 percent by the end of September 2025.

A surge in Indian silver demand last fall was the pin that popped the bubble. As Indian consumers began to pivot toward silver, the price premium began to rise. Typically, Indian prices run a few cents higher than global averages, but that spread began to grow. It was slow at first – from a few cents to 50 cents. And then to a dollar. And then above a dollar. At the peak of the squeeze, premiums rose as high as $5 an ounce.

Initially, Indian buyers were primarily sourcing silver from Hong Kong, but they reportedly shifted more toward London during the Chinese Golden Week Holiday in the first week of October.

But London vaults were already tapped out.

As the squeeze intensified, silver lease rates exceeded 200 percent, reflecting the strain in the market.

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Metal has flowed back into London vaults, easing the strain for the time being. However, the fundamental dynamic has not changed. There is still a shortage of metal. And unlike fiat currency, governments can’t just print silver.

Metals Focus calls this “the crucial point.”

“The market has clearly entered an era of reduced stocks. Tightness will not be constant, but liquidity will generally be thinner, lease rates more volatile and price moves likely to be larger than investors have grown used to. With deficits set to remain in place, however, it is unlikely that we will see a return to the previous status quo any time soon.”

Fort Knox Gold Scandal?

Thu, 16 Apr 2026 00:00:00 EST

Mike Maharrey’s latest Money Metals Midweek Memo zeroed in on two big themes with major implications for sound money investors.

First, much of the gold supposedly backing America’s financial credibility may be lower-quality metal that https://www.moneymetals.com/news/2026/04/09/ft-knox-full-of-impure-gold-unfit-for-international-transactions-as-far-as-we-know-004824";>does not meet modern international standards.

Second, the silver market could be heading into even tighter supply conditions as a new disruption tied to China threatens copper production and, by extension, silver output.

The result was an episode that tied together history, monetary policy, and today’s metals markets in a way that made the stakes feel immediate.

Maharrey’s central argument was simple.

Physical metal still matters, and the flaws in the fiat system become easier to see when you look closely at what the United States actually holds in reserve and what is happening in global silver supply chains.

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Most of Fort Knox Gold May Be “Non-Standard”

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Maharrey opened with a colorful analogy, comparing the difference between beer league hockey and the NHL to the difference between lower-purity gold and true investment-grade metal. Gold may be gold, but not all gold is created equal when it comes to reserve quality.

He explained that https://www.moneymetals.com/news/2026/04/09/ft-knox-full-of-impure-gold-unfit-for-international-transactions-as-far-as-we-know-004824";>24-karat gold is essentially pure, generally .990 fine or higher in the United States. By contrast, 22-karat gold is 91.6% pure, and 14-karat gold is only 58.3% gold.

That matters because while lower-purity gold may work well in jewelry, reserve gold intended for international settlements is expected to meet much stricter standards.

According to Maharrey, that is where the United States has a problem.

Officially, U.S. gold reserves total 8,133.5 metric tons, or about 261.5 million troy ounces, the largest national gold stockpile in the world. About 147.3 million ounces are reportedly stored at Fort Knox, with the rest held at the Denver Mint, the West Point Bullion Depository in New York, and the Federal Reserve vault in New York City.

But much of that metal, especially at Fort Knox, reportedly consists of non-standard bars that would not qualify for use in modern international settlements.

Maharrey noted that the London Bullion Market Association (LBMA) requires a minimum fineness of .995 for acceptable good-delivery bars, with the global market increasingly favoring .999 fine gold.

Based on documents released during a 2011 House Committee on Financial Services hearing, Maharrey said only about 17% of the gold bars at Fort Knox meet that modern standard. He cited a breakdown showing that 64% of the bars fall between .899 and .901 fineness, 2% fall between .9011 and .9154, 17% fall between .9155 and .917, and only the final 17% are .995 or higher.

That would put the average fineness of U.S. gold reserves at .9167, or 91.67% pure. In other words, much of America’s reserve gold is closer to 22-karat gold than the high-purity bullion expected in today’s global market. Maharrey’s point was not that the gold is fake, but that much of it may be illiquid or impractical in an international settlement context without refining.

The Fort Knox Audit Problem

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The bigger issue, Maharrey argued, is that Americans still do not really know what is in Fort Knox with any confidence. He stressed that U.S. gold holdings have not been properly audited since at least the 1970s.

He dismissed the famous 1974 Fort Knox event as a media spectacle, not a real audit. During that exercise, the Treasury opened only 1 of the depository’s 15 vault compartments for politicians and reporters. Maharrey pointed out that none of the bars shown were matched to serial numbers, assayed for purity, or verified against a full inventory.

He also criticized subsequent Treasury reviews for failing to meet normal accounting standards. In his telling, there is no complete public record of comprehensive assaying, weighing, or transactional history. That last point is critical because even if the gold is physically present, the public still would not know whether some of it has been leased, loaned, or otherwise encumbered.

Maharrey mentioned legislation introduced by Senator Mike Lee, along with a House companion bill from Representative Thomas Massie, that would https://www.congress.gov/bill/119th-congress/house-bill/3795/text"; target="_blank" rel="noopener">require a full audit of U.S. gold reserves and an accounting of any transactions involving that gold. The measure would also require non-standard bars to be refined so they meet modern international standards.

Why the U.S. Holds Lower-Purity Gold

Maharrey traced the problem back to President Franklin D. Roosevelt and Executive Order 6102, signed on April 5, 1933. That order effectively made most private gold ownership illegal and pushed gold out of private hands and into government control.

Americans who turned in their gold were paid $20.67 per ounce. But Maharrey noted that Roosevelt then revalued gold to $35 per ounce six months later, effectively devaluing the dollar by about 40%.

In his view, this was a pivotal step in allowing the government to expand the money supply beyond what the old gold standard had permitted.

Much of the gold taken in during that period came in the form of circulating U.S. gold coins, which were typically 90% pure. Once private ownership and redemption were curtailed, the government melted those coins into bars.

According to Maharrey, that is why so much of the gold now associated with Fort Knox is lower-purity “coin gold” rather than high-grade bullion.

That history matters because it shows how America’s reserve gold became a relic of the old monetary order. Maharrey argued that the metal composition inside Fort Knox reflects the transition from a gold-backed system, where gold flowed in and out of the banking system, to a fiat system where dollars can be created without hard restraint.

China’s Sulfuric Acid Move Could Hit Silver Supply

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In the second half of the episode, Maharrey turned to silver and flagged a development he believes could worsen an already tight market. Chinese officials have reportedly indicated they will https://www.moneymetals.com/news/2026/04/11/chinese-sulfuric-acid-export-ban-could-exacerbate-physical-silver-shortage-004833";>stop exporting sulfuric acid beginning in May, and the restriction could last through the rest of 2026.

That matters because sulfuric acid is a key input in copper mining. If copper production slows because miners cannot get enough sulfuric acid or face sharply higher costs, silver output could suffer as well. Maharrey emphasized that about 70% of the annual silver mine supply comes as a byproduct of copper production.

He connected the sulfuric acid issue to broader geopolitical disruption involving Iran and shipping constraints through the Strait of Hormuz.

The Middle East produces about one-third of the world’s sulfur, and Maharrey said the resulting squeeze has already sent sulfuric acid prices surging.

In Chile, the world’s top copper producer, prices have reportedly jumped 44% in the past month. Chile also buys about 1 million tons of sulfuric acid from China each year.

Silver Deficits Keep Building

Maharrey argued that this new supply threat is landing at exactly the wrong time. Silver demand is already forecast to https://www.moneymetals.com/news/2026/03/09/silver-demand-expected-to-outstrip-supply-and-other-silver-news-004749";>outstrip supply for a sixth straight year in 2026, driven in part by a projected 20% increase in physical investment demand.

Using preliminary Silver Institute data, he said the market ran a deficit of about 95 million ounces last year, marking the fifth consecutive annual shortfall. Over five years, cumulative deficits are on track to exceed 800 million ounces, roughly equal to an entire year of global mining output.

He also pointed to falling inventories across major silver hubs. London Bullion Market Association vault holdings are down about 40% over the last five years, COMEX registered inventories in the United States are down nearly 70%, and Shanghai inventories have fallen to their lowest level in a decade.

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That does not mean the world is out of silver, but it does mean above-ground supplies are being drawn down. Maharrey’s argument was that tighter physical availability eventually forces higher prices as the market tries to draw metal out of private hands.

Why the Episode Matters

At its core, this episode argued that physical precious metals still https://www.moneymetals.com/news/2026/04/14/mainstream-economists-vs-gold-who-is-winning-the-fight-004835";>expose the weaknesses of fiat money. America may claim the largest gold reserves in the world, but much of that gold may be lower-quality, under-audited, and not ready for modern international use. At the same time, silver faces another possible supply shock in a market already defined by repeated deficits and shrinking inventories.

That combination made Maharrey’s message especially clear. You can print dollars, but you cannot print gold or silver. And when the financial system grows more fragile, that difference starts to matter very quickly.

What's Really Inside Those Fort Knox Gold Vaults?

Wed, 15 Apr 2026 00:00:00 EST

We don't really know what's inside the Fort Knox gold depository because the government refuses to do a comprehensive audit. But even if we take the government's claims at face value, we do know that the bulk of the U.S. gold reserves is made up of impure “non-standard” bars that don’t qualify for use in international settlements.

In this episode of the Midweek Memo, Mike Maharrey explains the Fort Knox audit problem, how all that impure gold got there, and why it matters. Along the way, he also underscores the failure of the fiat money system.

This week, Mike also covers an interesting move by the Chinese that could exacerbate shortages in the physical silver market.

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Mike opens the show by reminding the audience he is a hockey player.

"At this point in my life, I’m what is known as a beer league player. That’s hockey code for adult rec league hockey. The game we play is the same as the NHL game. But it’s not. We’re much slower, less skilled, and more uncoordinated. People will pay hundreds of dollars to watch an NHL game. Nobody wants to watch a beer league game. Friends and family might show up, but they don’t really want to be there. They're either being nice or they were offered a post-game beer if they showed up.

"My point is, all hockey isn’t the same.

"And in a similar sense, all gold is not the same. 24-karat gold is fundamentally different from 14-karat gold. You might call the 14-karat variety the beer league of gold.

"So, here’s an interesting factoid. Most of the gold stored in Fort Knox is of the beer league variety."

Simply put, the bulk of the U.S. gold reserves held in Fort Knox is made up of impure “non-standard” bars that don’t qualify for use in international settlements.

Mike explains the varying purity of gold and how the karat system measures it, noting that 14-karat gold jewelry commonly sold in mall jewelry stores is only 58.3 percent gold.

Much of the gold stored in Fort Knox (assuming it is there) is closer to 22-karat than 24.

"Based on documents released during a 2011 House Committee on Financial Services Hearing, we find only around 17 percent of the gold bars held by the U.S. government in Fort Knox meet any modern-day purity standards."

Mike emphasizes that we're working on guesswork here.

"The U.S government's gold holdings have not been audited since at least the 1970s."

Mike gives an overview of the audit history and explains why it comes nowhere close to generally accepted accounting principles.

"In sum, the U.S. Treasury's management of U.S. gold reserves is replete with audit 'no-nos' that would never pass muster at a responsibly run private depository."

So, how did the U.S. end up holding so many non-standard gold bars?

"It is the legacy of U.S. policy that abandoned the gold standard, leaving us with the fiat system we live with today."

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Mike explains how President Franklin D. Roosevelt began taking the U.S. off the gold standard. When he ordered the confiscation of the public's gold to expand the government's supply and enable more money printing, the 90-percent pure coins were melted into bars without proper refining.

"In some ways, it makes sense that U.S. gold reserves are impure and useless on the international market. It reflects the nature of the fiat system that replaced it."

Mike closes the show with some news from China that could exacerbate physical silver shortages.

Chinese officials have indicated they will stop exports of sulfuric acid beginning next month. The ban could last through the rest of 2026.

"You’re probably wondering what this has to do with silver. Well, sulfuric acid is a key input in copper mining. Miners pour the acid over crushed ore to dissolve out the copper. A significant shortage of sulfuric acid, or even spiking prices, could impact copper output. You’re probably thinking, OK, Mike. But copper isn’t silver. Here’s the catch. About 70 percent of the annual silver mining supply is a byproduct of copper production."

China will reportedly stop sulfuric acid exports to protect domestic supplies as the conflict in the Middle East disrupts the market.

"Even with some apparent progress in resolving the conflict, some analysts say the damage to the sulfuric acid supply is already done, and China will likely keep the export ban in place for an extended period. This comes at a time when the silver supply is already under significant pressure."

Mike notes that the silver demand has outstripped mining and recycling supply for five straight years, and the Silver Institute projects 2026 will be the sixth.

"When silver demand exceeds the supply generated by mining and recycling, users are forced to tap into above-ground stocks. This generally requires higher prices to incentivize those holding silver to release it into the market."

Mike notes that it's unclear just how much China’s move will impact copper mining and silver production by extension, but it is definitely worth watching. It is yet another factor pressuring the persistent silver shortages.

Mike emphasizes that, unlike fiat money, they can't print silver. That's why it's better money. The recent correction in prices presents a buying opportunity if you want to switch out devaluing paper for real money - gold and silver. Mike closes the show, urging listeners to take action today and call 800-800-1865 to talk to a Money Metals precious metals specialist.

Articles Mentioned in the Show

https://www.moneymetals.com/news/2026/04/14/mainstream-economists-vs-gold-who-is-winning-the-fight-004835";>Mainstream Economists vs. Gold: Who Is Winning the Fight?

https://www.moneymetals.com/news/2025/10/20/london-india-and-the-anatomy-of-a-silver-squeeze-004422";>London, India, and the Anatomy of a Silver Squeeze

https://www.moneymetals.com/news/2025/12/29/silver-squeeze-20-drives-price-over-80-004576";>Silver Squeeze 2.0 Drive Price Over $80

U.S. Government Spending Addiction Drives Yet Another Big Monthly Deficit

Tue, 14 Apr 2026 00:00:00 EST

This is your monthly reminder that the U.S. government still has a massive spending problem.

The federal government’s https://www.moneymetals.com/podcasts/2025/11/12/the-debt-black-hole-004473";>Debt Black Hole got a little bigger in March, as Uncle Sam ran yet another big budget deficit.

According to the Monthly Treasury Statement, the Trump administration spent $164.1 billion more than it took in last month. That was about 2 percent bigger than last year’s March deficit, despite a significant increase in revenue.

Halfway through fiscal 2026, the federal budget deficit stands at 1.17 trillion.

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For context, the biggest deficit run by the Obama administration was $1.41 trillion in 2009.

The relentless monthly budget deficits keep https://www.moneymetals.com/news/2026/02/19/no-the-national-debt-problem-isnt-getting-better-004701";>pushing the national debt higher. After eclipsing $38 trillion in October, it https://www.moneymetals.com/news/2026/03/19/national-debt-quietly-eclipses-39-trillion-004774";>blasted through the $39 trillion mark last month.

The good news is the 2026 deficit is down about 11 percent from the same period last year, thanks to a big boost in revenue, primarily generated by tariffs.

The bad news is that federal spending is still out of control.

The Money Is Flowing

Uncle Sam took in $384.86 billion last month. That was up 5 percent from March ’25 and set a March record.

Through the first six months of fiscal 2026, the federal government has collected $2.48 trillion, 10 percent more than the same period in fiscal 2025.

Much of the revenue increase derives from tariffs, but customs receipts are softening.

The U.S government collected $22.2 billion in tariffs last month. That was up over 170 percent compared to March 2025. But customs receipts were down from $26.6 billion in February and from an average of $30 billion per month late last year.

So far in fiscal 2026, the federal government has collected $173 billion in customs duties.

Spending Like Drunken Sailors

Meanwhile, the Trump administration continues to spend money hand over fist.

The government blew through another $548.96 billion last month. That was up 4 percent over the same period last year.

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The March data did not reflect the full costs of the Iran War. Military spending was up, but just by $2 billion (3 percent) over February. https://www.reuters.com/markets/asia/us-march-budget-deficit-rises-slightly-164-billion-war-outlays-delayed-2026-04-10/"; target="_blank" rel="noopener">According to Reuters, “A Treasury official told reporters that many war-related outlays, such as for replacing expended weapons, would come in later months.”

Administration officials estimate the war cost around $11.3 billion just through the first six days.

In total, Uncle Sam has spent $3.65 trillion through the first half of fiscal 2026. That’s up about 2 percent over the same period in fiscal ‘25.

A 2 percent increase in spending might not sound significant. But weren't we told there would be spending cuts?

In fact, there were some cuts.

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The increased spending comes despite cuts to the EPA and the Department of Education budget that are now showing up in the data. Lower disaster spending also helped moderate spending levels through the first two months of fiscal ’26.

Looking at the big picture, the spending trajectory is up. Even with all the hype about DOGE and some lip service to cutting spending during the early days of the Trump administration, the U.S. government spent just over $7 trillion last year. That’s an average of $583.3 billion per month or $19.2 billion per day.

And now there's a war.

Despite some non-specific talk about “spending cuts,” there seems to be little to no commitment to dealing with the runaway spending substantially.

The Big Beautiful Bill trimmed some spending but increased it in other areas. Furthermore, those “cuts” were from projected spending increases. Actual expenditures will still go up, just not as fast as originally planned. The bottom line is that even with the Big Beautiful Bill, spending will increase on an absolute basis. We’re seeing it now.

And all that waste uncovered by DOGE? Virtually none of it was removed from the budget.

This is par for the course. It’s a lot easier to talk about spending cuts than it is to actually cut spending.

You might recall that President Biden promised that the [pretend] spending cuts would save “hundreds of billions” with the debt ceiling deal (aka the [misnamed] Fiscal Responsibility Act).

That never happened.

Supporters of the Big Beautiful Bill expect economic growth stimulated by tax cuts to boost revenue and narrow the deficit. However, https://www.moneymetals.com/news/2025/06/07/will-tax-cuts-pay-for-themselves-004111";>history casts significant doubt on this claim.

The ugly truth is the government isn't committed to cutting spending in any meaningful way, and it always finds new reasons to spend even more, whether for "crises" at home or wars overseas.

Debt Is Expensive

Uncle Sam must pay interest on the nearly $40 trillion debt. Interest expense has grown into the second-largest spending category in the federal budget behind only Social Security.

In March, the Treasury forked out $102.64 billion on interest payments alone. That pushed interest expense to $622.6 billion through the first half of fiscal 2026. That was up 6.9 percent compared to the same period in fiscal ’25.

Interest on the national debt cost $1.2 trillion in fiscal 2025. That was up 7.3 percent over 2024.

Net interest (interest expense – interest receipts) was $94 billion in February.

Through the first half of the fiscal year, the federal government spent more on interest on the debt than it did on national defense ($519 billion) or Medicare ($502 billion). The only higher spending category is Social Security ($818 billion).

Much of the debt currently on the books was financed at very low rates before the Federal Reserve started its hiking cycle. Every month, some of that super-low-yielding paper matures and must be replaced by bonds yielding much higher rates.

When people say the spending is unsustainable, it feels like an understatement. In fact, it’s fair to call https://www.moneymetals.com/news/2026/03/26/the-us-government-is-insolvent-yes-that-matters-004791";>the federal government insolvent.

However, very few people in the political class seem the least bit interested in tackling the problem. The bad news is that at some point, the problem is going to tackle them.

Mainstream Economists vs. Gold: Who Is Winning the Fight?

Tue, 14 Apr 2026 00:00:00 EST

Mainstream economists have been at war with gold for years.

And gold is winning.

Aaron Brown formerly served as head of market research for AQR Capital Management and now works as a columnist for Bloomberg. In https://www.bloomberg.com/opinion/articles/2026-04-08/gold-proves-its-enduring-power-over-modern-monetary-institutions"; target="_blank" rel="noopener">a recent op-ed, he chronicled gold’s ongoing war with economists.

John Maynard Keynes fired the first salvo in 1923 when he declared gold a “barbarous relic.” He argued that the gold standard was a primitive monetary system that “enlightened modern economies” had outgrown. He believed the future belonged to fiat currencies managed by economic technocrats.

Of course, government people loved this theory because they want to control your money. Gold is a hindrance to big government spending. By tying the issuance of paper money to a fixed amount of gold, governments found it difficult to expand the money supply. This limited politicians’ ability to fund the burgeoning warfare/welfare state.

Round 1: Winner -- The Economists

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President Franklin D. Roosevelt began to put this idea into practice during the 1930s.

Needing to expand the money supply to support his spending plans, FDR decided to expropriate the public’s gold and add it to the national reserves. More gold meant the government could issue more paper money under the gold standard in place at the time. On April 5, 1933, President Franklin D. Roosevelt signed https://www.moneymetals.com/news/2024/05/31/did-fdr-really-confiscate-everybodys-gold-003226";>Executive Order 6102, effectively making private gold ownership illegal.

Americans were urged to turn in their gold for $20.67 per ounce. But six months later, FDR formally devalued the dollar by some 40 percent when he declared gold was worth $35 per ounce. This allowed the government to print even more paper money.

The West took another step away from the gold standard in 1944 with the Bretton Woods agreement.

The conference involved 730 delegates from all 44 Allied nations, hoping to establish a new international economic order to prevent the economic instability that had contributed to the Great Depression and the rise of fascism. Under the plan, Western currencies were anchored to the dollar, with the greenback convertible to gold at a set price of $35 an ounce. As Brown put it, Bretton Woods effectively demoted gold to a figurehead status.

“Gold was caged.”

Round 2: Winner -- Gold

However, the yellow metal was still nominally involved in the system, and in the 1960s, it became problematic. As the U.S. ramped up spending for the Vietnam War and President Lyndon B. Johnson’s Great Society, the dollar began to devalue. In response, many countries started taking advantage of the dollar’s convertibility to gold, and metal began to flow out of the U.S.

This is exactly how a gold standard is supposed to work. It puts limits on the amount the money supply can grow and constrains the government’s ability to spend.

While gold was in a cage, it still served as a brake on U.S. money creation. When the government began to “print” too much money, other countries began to redeem the devaluing currency for gold. As gold flowed out of the U.S. Treasury, concern grew that the country’s gold holdings could be completely depleted.

In response, President Richard Nixon severed the dollar's last connection with the gold standard in the Summer of 1971, making it a purely free-floating fiat currency.

In practice, Nixon ordered Treasury Secretary John Connally to uncouple gold from its fixed $35 price and suspended the ability of foreign banks to directly exchange dollars for gold. During https://www.youtube.com/watch?v=7_Xw5tWsOQo&;amp;feature=youtu.be" target="_blank" rel="noopener">a national television address, Nixon promised the action would be temporary to “defend the dollar against the speculators."

As Brown noted, “economists mostly cheered.”

“Milton Friedman had long argued that floating exchange rates managed by disciplined central banks were superior to the gold standard's rigidities. The profession was nearly unanimous: Gold was a historical curiosity. You couldn't run a modern economy tethered to something you dug out of the ground.”

Nixon went on national TV to reassure Americans that all was well.

“Let me lay to rest the bugaboo of what is called devaluation,” he proclaimed as he promised, “Your dollar will be worth just as much as it is today.”

Brown called gold’s revenge “swift and embarrassing.”

“Within nine years, it had risen from $35 to $850 an ounce — a gain of more than 2,300 percent. The 1970s, which were supposed to demonstrate the superiority of managed currencies, produced instead stagflation and a dollar that lost more than half its purchasing power. Investors who held cash lost 87 percent of their real wealth. Those who held the barbarous relic quadrupled theirs.”

Round 3: Winner -- The Economists

Fed Chairman Paul Volcker came to the rescue, driving interest rates to 20 percent to slay the inflation dragon. Gold fell from $850 per ounce in 1980 to $255 by 1999. This seemed to restore the credibility of managed money. Many European central banks sold off gold reserves. The Bank of England reduced its gold holdings by 395 tonnes. (Ironically, the gold sale came just as the market hit bottom.)

Round 4: Winner -- Gold

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Things looked good for the economists and monetary technocrats. But there were signs of trouble. It started with the dot-com bust and morphed into a full-blown financial crisis in 2008.

Gold climbed from $800 at the depth of the crisis to $1,921 by 2011. Brown said, “The economists' institutions were visibly struggling.”

“Gold, which has no management, no board of directors, and no leverage, sat there looking smug.”

Current Round -- Gold Is Winning

Brown called the current battle “the most consequential round in the modern era,” noting that its spark had nothing to do with inflation.

“It was about something more fundamental: whether dollar-denominated assets are truly safe.”

After Russia invaded Ukraine, the U.S. and its Western allies imposed aggressive economic sanctions, effectively locking Russia out of the global dollar system. This https://www.moneymetals.com/news/2024/02/29/could-weaponization-of-the-dollar-as-a-foreign-policy-billy-club-accelerate-de-dollarization-003013";>weaponization of the dollar was a warning shot for a lot of countries. As Brown pointed out, “Every non-aligned central bank got the message.”

“Assets held in dollars, euros or pounds could be confiscated. There was precisely one major reserve asset that could not be frozen by SWIFT, seized by court order or inflated away by someone else's monetary policy. It cannot be hacked and it doesn’t require trusting any institution or government.”

That one reserve asset is gold.

Central banks have loaded up on the yellow metal over the last several years.

In fact, 2025 was the fourth-largest expansion of central bank gold reserves on record. The all-time high was set in 2022 (1,136 tonnes). It was the highest level of net purchases on record, dating back to 1950, including since the suspension of dollar convertibility into gold in 1971.

While central bank gold purchases declined to 863.3 tonnes last year, they were still well above the 2010-2021 annual average of 473 tonnes.

Late last year, https://www.moneymetals.com/news/2026/01/08/gold-tops-treasuries-as-worlds-biggest-foreign-reserve-asset-004597";>gold surpassed Treasuries and now makes up the largest share of reserve assets for the first time since 1996.

Brown said this is effectively a vote of no confidence in the system the economists built.

“This is what separates the current gold rally from previous ones. Earlier bull markets were driven by retail investors and inflation fears. This one is being driven by sovereign institutions making a deliberate, long-term strategic choice. It is not inflation hedging. It is geopolitical insurance. And it is a vote of no confidence in the system Keynes and his successors built.”

Brown says this journey through time reveals a legible pattern.

“Gold doesn't perform best when inflation is high. It performs best when trust in monetary institutions is low — when the world's central banks look at their reserve assets and quietly conclude they would prefer something no government can confiscate.”

Brown concedes that Keynes was right about one thing: Gold’s monetary role is a convention, not a law of nature.

What he underestimated is how hard it is to replace a convention that combines liquidity, neutrality, durability, and freedom from political risk — especially when the institution maintaining the alternative is also the world's largest debtor, the issuer of its own reserve currency and the aggressor in a major war. Gold has been making this argument for five thousand years. The economists have been rebutting it for about three hundred. The current score, on points, favors the metal.”

Are Morgan Silver Dollars a Good Investment? What Investors Should Know - Money Metals

Mon, 13 Apr 2026 00:00:00 EST

Are Morgan Silver Dollars a good investment? For most investors, no. While Morgan Silver Dollars have historic appeal and some collector value, common-date coins often carry high premiums, wide resale spreads, and less upside than standard https://www.moneymetals.com/buy/silver";>silver bullion.

That does not mean Morgan Dollars have no value. Certain rare dates and high-grade examples can be valuable. But for buyers focused on https://www.moneymetals.com/investment/investing-in-silver";>silver investing, liquidity, and preserving purchasing power, Morgan Silver Dollars are usually better collectibles than investments.

However, more often than not, Morgan Silver Dollars are numismatic collector's items. They are not investment-grade silver bullion, which is often what silver investors purchase. These coins are not eligible for a precious metals IRA, and most of their value comes less from their silver content and more from their condition.

What that means for investors is that Morgan Silver Dollars often sell at high markups over their silver value. When investors go to sell their coins, they cannot always recover those premiums. More often than not, buyers are paying for a connection to history, not the metal. That can make common-date Morgans far less practical than standard bullion products or even pre-1965 90% silver coins.

The Short Answer: Collectors May Benefit, Investors Usually Do Not

If you are an experienced coin collector who understands dates, mint marks, grading, rarity, and dealer spreads, certain Morgan Silver Dollars may deserve a place in your collection.

If you are a typical precious metals buyer looking for liquidity, lower premiums, and straightforward pricing, Morgan Silver Dollars are usually the wrong place to start. Common examples often trade with wide buy-sell spreads, and those spreads can eat up a large chunk of your money before silver prices move at all.

So, why might a Morgan Silver Dollar be attractive to buyers? To understand this, we have to take a look at the history of the Morgan Silver Dollar.

What Are Morgan Silver Dollars (And What Is Their Appeal)?

The Morgan Silver Dollar was first minted in 1878, and it came at a remarkable time.

In 1878, the US was midway through the Wild West era. The country was expanding across the continent. It was a time of incredible growth, optimism, and adventure.

The Morgan Silver Dollar came to be held as a symbol of this exciting period. Many numismatic collectors love these coins for the tangible link they provide to American history.

The Biggest Problem: High Premiums Over Melt Value

https://www.moneymetals.com/buy/silver/silver-dollars/morgan-dollars";>Morgan Silver Dollars have an enduring legacy and retain popularity. So, why do they often make bad investments?

The problem comes from the premium on the coin.

A Morgan Silver Dollar contains about 0.7734 troy ounces, not a full ounce. However, many online sales pitches encourage buyers to compare the coin's price to a one-ounce silver product. This trick makes a steep premium look smaller than it actually is.

For investors, premium matters because it affects break-even.

The more you pay above a coin's intrinsic value, the more silver has to rise before you can even break even.

Example: Why a Morgan Dollar Premium Can Be Misleading

A Morgan Silver Dollar contains about 0.7734 troy ounce of silver, not a full ounce. At a silver price of $25 per ounce, the coin's melt value is about $19.34. If a dealer sells a common-date Morgan for $32, the premium is not a modest 28% over silver. It is actually about 65% above melt value.

Now assume that same dealer, or another buyer, would only pay $21 to $23 for the coin on resale. Even if silver prices stay flat, the investor could lose a meaningful percentage immediately because the original markup was so high. That is why common Morgan Silver Dollars often work better as collectibles than as low-premium silver investments.

Wide Buy-Sell Spreads Can Crush Returns

Let's say you find a Morgan Silver Dollar that is priced fairly by numismatic standards. Does that make the coin an efficient investment?

Not necessarily. Common-date Morgans can involve large spreads between what you pay and what a dealer will offer when you sell. The first draft noted that the spread on common Morgan Dollars can be around 30% or more, while standard bullion products often trade with much narrower spreads.

That means two things:

You may need a major https://www.moneymetals.com/price/why-is-silver-price-rising";>rise in silver prices just to break even
You may discover that resale is far less favorable than the original sales pitch suggested

For someone buying silver primarily as a store of value, that is a serious drawback.

Most Morgan Silver Dollars Are Not Rare

This is where many investors get into trouble.

Some Morgan Dollars are absolutely scarce and desirable. Certain years and mint marks can make Morgan Dollars extremely valuable, especially if they're in good condition. As an example, the 1893-S Morgan Silver Dollar has sold for over $2 million dollars. This coin was graded at MS-65, placing it in gem uncirculated.

However, most Morgan Dollars are not especially rare, nor are they in good condition. In fact, you can find many Morgan Silver Dollars at ordinary precious metals exchanges. You can often find them for modest retail values in ordinary collectible ranges.

That is why the phrase “rare coin” can be misleading when applied to ordinary Morgan Dollars.

A coin can be old without being rare. It can be collectible without being a smart investment. Worse, it can carry a premium without offering a good upside for a buyer who does not fully understand the market.

Graded Morgan Dollars Add Another Layer of Risk

A huge part of numismatic coin prices comes from its grade/condition. A high grade coin can be worth a lot of money. So, why would graded dollars add risk to your purchase?

Most dealers sell Morgan Dollars in certified holders with grades from third-party https://www.ngccoin.com/";>grading services like the NGC. In theory, that grading helps standardize coin quality. In practice, it also adds complexity for inexperienced buyers.

Two coins that look similar to a newcomer may have very different values based on:

Date
Mint mark
Strike
Eye appeal
Certified grade

Grades can make a coin's price seem more authoritative than it may actually be. This does not mean buying graded Morgan Dollars is inherently a bad idea. The problem is that many investors are asked to pay a large premium for a graded coin, not understanding how hard it could be to recover that premium later.

When Morgan Silver Dollars Might Make Sense

Morgan Silver Dollars can make sense in a few limited situations. They may be a reasonable choice for knowledgeable collectors who understand key dates, mint marks, grading, and dealer pricing.

They may also appeal to buyers who care more about history than efficiency and are willing to pay a higher premium for the coin's age, design, and connection to the past.

In addition, truly scarce dates or exceptional high-grade examples can be very different from generic circulated Morgans, since their value depends more on collector demand than on silver content alone.

When Morgan Silver Dollars Are Usually a Bad Investment

Morgan Silver Dollars are usually a poor fit for buyers who want the lowest-premium silver possible, since standard bullion and pre-1965 90% silver coins are often more cost-effective.

They are also less attractive for investors who want easy resale, because wide buy-sell spreads can make it harder to recover the original purchase price. And if the case for buying depends heavily on sales language like “rare,” “private,” “non-reportable,” or “can't lose,” investors should treat that pitch with caution.

Morgan Silver Dollars vs Bullion: Which Is Better for Investors

https://www.moneymetals.com/buy/silver/silver-dollars/morgan-dollars";>Silver bullion is generally a better investment than Morgan Dollars.

Bullion products are typically priced much closer to melt value. They are easier to compare, easier to value, and easier to resell. Common Morgans are often worth little more than their melt value despite what rare-coin dealers may imply.

This table shows the practical differences between the two commodities:

Product Type	Main Value Driver	Premium Level	Resale Simplicity	Best For
Common Morgan Silver Dollars	Silver content plus collectible premium	Often high	Moderate to difficult	Collectors, niche buyers
Silver bullion coins and rounds	Metal value	Usually lower	Generally easier	Investors, stackers
Pre-1965 90% silver coins	Metal value	Often competitive	Generally easier	Budget-minded silver buyers

For a buyer focused on ounces, liquidity, and minimizing markups, standard bullion is the better asset for your portfolio.

What to Ask Before Buying Morgan Silver Dollars

Before you buy Morgan Dollars, ask these questions:

What Is the Actual Silver Content?

Do not compare the price to a full one-ounce coin unless the silver content is actually one ounce. A lower-premium silver product typically gives investors more efficient exposure to silver prices, since more of the purchase price goes toward metal value rather than collectible markup.

Is This Coin Genuinely Scarce, or Merely Old?

Age alone does not create rarity.

What Is the Dealer's Buyback Price Today?

The spread matters more than the sales story.

Is the Premium for Collector Value or Metal Value?

Know which market you are entering.

Am I Buying a Collectible or Making a Silver Investment?

Those are not the same decisions. You must know what you're looking for before you purchase a numismatic coin.

So, Are Morgan Silver Dollars a Good Investment?

For most investors, no.

Morgan Silver Dollars are usually better collectibles than investments. Common-date examples often carry high premiums, wide resale spreads, and too much room for dealer hype. That makes them a risky place for beginners to put serious money.

For experienced https://www.money.org/official-grading-standards/";>collectors who understand grading, rarity, and pricing, select Morgan Dollars can still have merit. However, that is a specialized market, not a simple silver https://www.moneymetals.com/investment";>investment strategy.

If your goal is to buy silver efficiently, reduce your downside, and preserve liquidity, standard bullion products are usually the smarter choice.

FAQ: Are Morgan Silver Dollars a Good Investment?

Are Morgan Silver Dollars worth more than their silver content?

Some are, especially better dates or higher-grade examples. But many common Morgans are worth only modestly more than melt, despite aggressive marketing.

Are Morgan Silver Dollars good for beginners?

Usually not. Beginners are often better served by simpler bullion products with clearer pricing and tighter spreads.

Are graded Morgan Dollars a better investment?

Not necessarily. Grading can add value, but it also adds complexity. Buyers who do not understand the market can still overpay.

What is a better alternative for silver investors?

For many investors, silver bullion coins, rounds, bars, or https://www.moneymetals.com/buy/silver/junk-silver";>pre-1965 90% silver coins are more cost-effective choices.

What makes one Morgan Silver Dollar more valuable than another?

A Morgan Silver Dollar's value depends on its date, mint mark, rarity, condition, and whether it has been professionally graded. Coins with lower mintages, stronger collector demand, and higher grades usually command much higher premiums than common circulated examples.

Are common-date Morgan Dollars better than junk silver for investors?

For most investors, common-date Morgan Dollars are usually not better than junk silver because they often carry higher premiums and wider resale spreads. Junk silver is typically a more cost-effective way to gain silver exposure, especially for buyers focused on metal value rather than collectible appeal.

Chinese Sulfuric Acid Export Ban Could Exacerbate Physical Silver Shortage

Sat, 11 Apr 2026 00:00:00 EST

A move by China could exacerbate already tight silver supplies.

Chinese officials have indicated they will stop exports of sulfuric acid beginning next month. The ban could last through the rest of 2026.

According to Mining.com, “Some sulfuric acid producers in the country recently received notifications about the change, and one large buyer has been told about it by their Chinese supplier, according to people familiar with the matter, who asked not to be identified discussing confidential information.”

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You’re probably wondering what this has to do with silver.

Well, sulfuric acid is a key input in copper mining. Miners pour the acid over crushed ore to dissolve out the copper. A significant shortage of sulfuric acid, or even spiking prices, could impact copper output.

You’re probably thinking, OK, Mike. But copper isn’t silver.

Here’s the catch. About 70 percent of the annual silver mining supply is a byproduct of copper production.

Blue Line Futures Chief Market Strategist Phillip Streible summed it up succinctly.

“Less copper mined means less silver produced.”

Iran War Logistics Problems

The Iran conflict has squeezed global sulfuric acid supplies, and prices have skyrocketed in recent weeks. The Middle East produces about one-third of the world’s sulfur, and the closure of the Strait of Hormuz has limited outbound shipments.

According to Mining.com, “That squeeze will hit the copper-mining industries in key producers such as Chile, the Democratic Republic of Congo and Zambia.”

China will reportedly stop exports of the acid to protect its domestic supply.

Chile ranks as the world’s top copper producer. Sulfuric acid prices in the South American Country have already spiked by 44 percent in the last month. Chile buys around 1 million tonnes of acid from China annually.

According to an acid analyst quoted by Mining.com, “the loss of Chinese volumes will be difficult to offset, given the parallel shortage of sulfur feedstocks.”

Even with some apparent progress in resolving the conflict, some analysts say the damage to the sulfuric acid supply is already done, and China will likely keep the export ban in place for an extended period.

Silver Market in a Multi-Year Supply Deficit

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This comes at a time when the silver supply is already under significant pressure.

https://www.moneymetals.com/news/2026/02/12/silver-market-expected-to-run-sixth-straight-supply-deficit-this-year-004686";>Silver demand is forecast to outstrip supply for the sixth straight year in 2026, driven by a 20 percent increase in physical investment offtake.

Based on preliminary data compiled by the Silver Institute, silver demand outstripped supply by about 95 million ounces last year, leading to the fifth straight market deficit. Including last year’s shortfall, the 5-year market deficit will climb above 800 million ounces, an entire year of mining output.

When silver demand exceeds the supply generated by mining and recycling, users are forced to tap into above-ground stocks. This generally requires higher prices to incentivize those holding silver to release it into the market.

Persistent supply shortfalls have taken their toll on above-ground stocks. https://economictimes.indiatimes.com/markets/commodities/is-silvers-150-rally-fueled-by-fear-or-is-a-real-supply-squeeze-underway/articleshow/126202857.cms"; target="_blank" rel="noopener">According to the Economic Times of India, “Inventories across COMEX, London vaults, and Shanghai have steadily declined over recent years, reinforcing concerns about tightening physical availability.”

London Bullion Market Association vaults have lost around 40 percent of their holdings over the last five years, while COMEX registered inventories in the United States are down nearly 70 percent. Meanwhile, Shanghai inventories have fallen to their lowest level in a decade.

The shortage of metal was a factor in the https://www.moneymetals.com/news/2025/12/29/silver-squeeze-20-drives-price-over-80-004576";>two recent silver squeezes that drove the price to over $100 per ounce.

It’s unclear just how much China’s move will impact copper mining and silver production by extension, but it is definitely worth watching. It is yet another factor pressuring the persistent silver shortages.

CPI Spikes on Energy Prices But That's Not the Real Inflation Story

Sat, 11 Apr 2026 00:00:00 EST

The expected surge in prices due to the Iran War showed up in the March CPI data. However, it doesn't tell the real inflation story.

Without a doubt, price inflation is up. The cost of the basket of goods the BLS uses to calculate the CPI rose 0.9 percent month-on-month, https://www.bls.gov/news.release/cpi.nr0.htm"; target="_blank" rel="noopener">according to the data released Friday. That was the largest single-month jump since the height of the post-pandemic surge in 2022.

The big monthly rise in prices pushed the headline annual CPI to 3.3 percent. The last time it was that high was March 2024.

https://www.moneymetals.com/uploads/content/monthly-cpi-march-26.png"; width="500" height="394" class="mx-auto p-3" alt="" />

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Both numbers were in line with forecasts.

The surge in CPI was almost entirely due to skyrocketing energy prices. The energy index rose 10.9 percent month-to-month. That was driven by a 21.2 percent monthly increase in gasoline prices.

However, stripping out the more volatile food and energy prices, core CPI was relatively cool, rising just 0.2 percent from month to month. Annual core inflation nudged up slightly, from 2.5 percent in February to 2.6 percent in March.

As CNBC noted, based on the CPI, underlying inflation is “relatively tame.” (It is not -- a point I’ll get to in a moment.)

It’s important to point out that core CPI remains above the Fed’s stated 2 percent target and has been mired in this range for well over a year.

https://www.moneymetals.com/uploads/content/annual-cpi-march-26.png"; width="500" height="374" class="mx-auto p-3" alt="" />

Digging deeper into the data, we find that many indices showed no price increases at all. For instance, food prices were unchanged from February to March. Service prices were also relatively tame, rising by 0.2 percent month-on-month.

https://www.moneymetals.com/uploads/content/cpi-detail-march-26.png"; width="800" height="366" class="mx-auto p-3" alt="" />

As I mentioned, any time I report on government CPI data, it’s important to take this (and every) CPI report with a grain of salt. It is still factoring in https://www.moneymetals.com/news/2025/12/21/november-cpi-data-was-basically-just-made-up-004562";>November data that they basically just made up. And the constant https://www.moneymetals.com/news/2026/02/12/the-government-job-eraser-strikes-again-004689";>revisions to the labor data should also make you skeptical of government numbers.

You also need to remember that the CPI data understates price inflation by design. The https://www.moneymetals.com/news/2024/01/15/the-cpi-lie-price-inflation-is-even-worse-than-advertised-002930";>government revised the CPI formula in the 1990s so that it understated the actual rise in prices. Based on the formula used in the 1970s, CPI is closer to double the official numbers. So, if the BLS used the old formula, we’d be looking at CPI closer to 6 percent. And using an honest formula, it would probably be worse than that.

However, this government data drives decision-making, so we need to pay attention to what it tells us.

The Real Inflation Story

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As https://www.moneymetals.com/news/2026/03/30/whats-the-real-inflation-rate-004797";>I reported last month, the CPI doesn’t tell the full inflation story. It simply reflects the price movements of a basket of goods made up out of thin air by the number crunchers at the BLS. Yes, this does give some indication of the trajectory of price inflation. However, it tells us little to nothing about the inflation https://www.moneymetals.com/news/2024/01/12/common-definition-of-inflation-you-hear-today-is-wrong-government-propaganda-002925"; target="_blank" rel="noopener">trajectory as historicallyhttps://www.moneymetals.com/news/2024/01/12/common-definition-of-inflation-you-hear-today-is-wrong-government-propaganda-002925";> defined by economists.

Inflation is not “rising prices.” Increasing consumer prices are one symptom of inflation, defined as an increase in the supply of money and credit. Rising consumer prices are a symptom of this monetary inflation.

And if we look at the money supply, we find that inflation is heating up, with or without an oil shock.

In fact, if we use the economic definition of inflation as an increase in the money supply, the inflation rate is much higher – double the CPI.

Based on the Fed’s M2 data, the money supply has increased from $21.61 trillion in February 2025 to $22.67 trillion in February 2026.

https://www.moneymetals.com/uploads/content/money-supply-feb-26-2.png"; width="700" height="373" class="mx-auto p-3" alt="" />

That represents a 4.9 percent increase.

In other words, we have an actual inflation rate of nearly 5 percent.

After peaking in April 2022, the money supply began to decline as the Fed hiked rates that year. The money supply bottomed in October 2023 and began increasing again. The money supply is now well above the pandemic peak.

And money creation has accelerated over the last several months.

We also know inflationary pressures are increasing because the Federal Reserve is once again expanding its balance sheet.

https://www.moneymetals.com/uploads/content/fed-balance-sheet-Aprl-26.png"; width="700" height="564" class="mx-auto p-3" alt="" />

While you’ll never hear anybody at the Fed utter the term, https://www.moneymetals.com/news/2025/12/18/the-fed-restarted-qe-without-saying-it-004555";>the central bank relaunched quantitative easing in December. That means they are once again buying U.S. Treasuries using money created out of thin air.

Ultimately, this monetary inflation will work its way through the economy. It will either manifest in rising asset prices or rising consumer prices. Ultimately, it is devaluing your money (by design).

If the U.S. and Iran can negotiate a permanent end to hostilities, this oil shock will quickly pass. The pundits and prognosticators will claim the inflation problem is gone. It won’t be. As long as the government keeps creating money, the inflation problem will persist.

Plan accordingly.

Gold, Geopolitics, and Volatility: Insights from Joe Cavatoni

Sat, 11 Apr 2026 00:00:00 EST

In a rapidly shifting geopolitical environment, gold continues to demonstrate both its resilience and its complexity as a financial asset.

In a recent episode of the Money Metals Podcast, host Mike Maharrey spoke with Joe Cavatoni, https://www.gold.org/goldhub/gold-focus/author/joseph-cavatoni"; target="_blank" rel="noopener">Market Strategist for North America at the World Gold Council, to unpack gold’s behavior amid the Iran–U.S.–Israel conflict and broader macroeconomic uncertainty.

Recorded against the backdrop of a potential ceasefire and volatile global headlines, the discussion explored gold’s recent price movements, investor behavior, and the evolving role of the metal in modern portfolios.

(Interview Starts Around 6:35 Mark)

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Gold’s “Unexpected” Behavior Was Actually Expected

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Despite widespread confusion among investors, Cavatoni emphasized that gold has behaved largely as expected during the conflict. While many questioned why gold appeared to “tank” during a geopolitical crisis, he explained that the real anomaly occurred earlier in the year.

Gold surged roughly 30% in January to near-record levels around $5,500, driven largely by momentum and speculative activity. This was followed by a logical correction of about 20%, setting the stage for subsequent volatility.

When the Iran conflict escalated, gold initially reacted as a classic safe-haven asset, spiking https://www.moneymetals.com/news/2026/04/04/war-headlines-shook-prices-but-the-bigger-silver-story-is-still-intact-004813";>approximately 3–5% in a single day. However, as markets began assessing the broader implications, particularly the impact of oil shocks on global economies, gold retreated. Investors shifted into a “get-to-cash” mindset, selling assets, including gold, to meet liquidity needs and margin calls.

Cavatoni noted that gold’s decline to around $4,100–$4,200 reflected both earlier profit-taking and this liquidity-driven selling. As geopolitical tensions eased with ceasefire discussions, gold began climbing again, resuming its longer-term upward trajectory.

Safe Haven Doesn’t Mean “Never Sold”

A key takeaway from the discussion is that gold’s role as a safe haven includes being a source of liquidity. Investors often misunderstand this dynamic, expecting gold to rise continuously during crises.

Cavatoni explained that during periods of stress, investors frequently sell gold precisely because it is a reliable store of value. This behavior was evident not only among private investors but also at the institutional level.

Countries like Turkey reportedly liquidated portions of their gold reserves to manage economic shocks, while Poland explored using profits from its expanding gold holdings to support government spending. These actions highlight gold’s dual function as both a defensive asset and a financial resource in times of need.

The Era of “Regime Uncertainty” and Rising Volatility

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The conversation also addressed what Maharrey described as “regime uncertainty,” referring to unpredictable policy shifts and https://www.moneymetals.com/news/2026/04/09/gold-jobs-and-the-story-behind-frances-move-004823";>geopolitical developments. Cavatoni agreed that unpredictability is now a defining feature of the market landscape.

He emphasized that investors should expect sustained volatility across all asset classes, including gold. Contrary to its historical reputation as a “boring” asset, gold now trades within wider price ranges and is increasingly central to both institutional and retail portfolios.

Despite short-term fluctuations, Cavatoni maintains a bullish long-term outlook. He suggested that gold could deliver annual gains in the range of 10% to 20%, with potential upside as high as 30% under current macroeconomic conditions. As of early April, gold was already up approximately 8–9% for the year.

ETF Flows Reveal Diverging Global Strategies

Gold-backed ETFs provided another lens into investor behavior. While North American funds experienced notable outflows following the January peak, Asian markets showed continued inflows through much of the first quarter.

Cavatoni attributed this divergence to differing investment approaches. In North America, ETFs such as GLD and IAU are often used as tactical trading instruments, leading to more pronounced inflows and outflows.

In contrast, Asian investors are https://www.moneymetals.com/news/2026/04/09/etfs-dumped-gold-in-march-except-in-asia-004825";>increasingly adopting ETFs as long-term portfolio holdings, reflecting a structural shift away from physical gold and jewelry toward financial instruments.

He also noted that ETFs represent less than 10% of the overall gold investment market, underscoring their importance as a transparent but limited indicator of broader trends.

The Rising Influence of Eastern Markets

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A major theme in the episode was the growing influence of Eastern investors on gold demand. Cavatoni highlighted a “decoupling” between gold prices and traditional drivers like U.S. interest rates and the dollar, largely due to increased demand from Asia.

He explained that cultural and economic factors shape this demand. In many Asian markets, gold is viewed as a generational store of wealth and a hedge against currency instability. This contrasts with the U.S., where investors often rely more heavily on financial instruments like Treasuries and equities.

At the same time, European investors have remained relatively quiet, though Cavatoni expects this to change as fiscal pressures, rising deficits, and currency concerns intensify across the region.

Modeling Markets in an Unpredictable World

From a professional standpoint, Cavatoni acknowledged that the current environment poses significant challenges for market modeling. Traditional frameworks struggle to fully capture the momentum-driven and globally interconnected nature of today’s gold market.

He stressed the importance of continuously recalibrating models and maintaining humility in analysis. Drawing on past crises such as the 1997 Asian financial crisis, he noted that excluding key historical events can lead to flawed assumptions and missed risks.

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The World Gold Council, he said, is actively refining its approach to better account for political uncertainty and momentum-driven price movements.

Gold’s Expanding Role in a Complex Global Economy

Ultimately, the episode underscores that gold is no longer a passive asset sitting on the sidelines of the financial system. It is deeply integrated into global markets, influenced by everything from geopolitical conflicts and oil prices to logistics, https://www.moneymetals.com/news/2026/04/09/central-bank-gold-buying-has-slowed-but-the-bullish-case-remains-004827";>central bank policies, and technological shifts.

https://www.linkedin.com/in/josephcavatoni"; target="_blank" rel="noopener">Joe Cavatoni’s outlook remains clear. While short-term volatility is inevitable, the long-term fundamentals supporting gold remain strong. In an era defined by uncertainty, gold’s role as both a store of value and a source of liquidity ensures its continued relevance.

For investors, the message is straightforward. Understanding gold requires a global perspective, an appreciation for its multiple roles, and a willingness to look beyond short-term price movements.

What Causes Gold Prices to Drop? Key Factors Investors Should Know

Fri, 10 Apr 2026 00:00:00 EST

Gold is supposed to rise in uncertain times. So why does it sometimes fall right when investors need it most? What causes gold prices to drop?

Dropping gold prices do not mean that gold is a bad investment. Instead, it indicates that gold can have a volatile market in the short term. Several factors cause gold prices to drop in the short term, including central bank policies, dollar value trends, and speculation.

Sometimes, gold may also perform differently in a financial crisis. This performance often depends on the economic circumstances surrounding the crisis.

Investors benefit from understanding the market. Discover why gold prices fall in this guide!

Quick Answer: What Makes Gold Prices Go Down

Gold prices drop primarily due to rising interest rates, a stronger U.S. dollar, falling inflation expectations, and reduced investor demand. These factors increase the opportunity cost of holding gold and shift capital toward yield-producing assets.

The Drivers Behind Falling Gold Prices

Gold is influenced by several factors, including macro, monetary, and psychological forces. It's important to understand that prices rarely move for just one reason.

We'll look at macroeconomic considerations first, starting with rising interest rates and bond yields.

Rising Interest Rates and Bond Yields When Gold Prices Drop

Gold does not compete primarily with inflation: instead, it competes with real interest rates. It does so through the opportunity cost.

The opportunity cost of holding gold is the interest income or investment returns (like dividends or bond yields) an investor sacrifices by holding gold instead of income-generating assets. Gold produces no yield, so its opportunity cost is high.

Gold has an inverse relationship with high interest rates. During times of high real rates, stocks and bonds offer much higher yields and dividends to investors.

Real interest rates are crucial, as they measure the real purchasing power of their returns. This separates an investor's actual accrued wealth from their nominal gains.

As you might expect, many investors run to these high-yield investments in the hope of building more wealth.

What happens to gold in the meantime? The short answer is the price drops due to a lack of demand. When investor interest in gold declines, so too does the price.

Rising interest rates have historically put serious pressure on gold prices, especially during Federal Reserve tightening cycles. For example, in the early 1980s, Paul Volcker led the Fed's aggressive rate hikes. These caused gold prices to fall sharply after peaking, as investors shifted capital into high-yield Treasury securities.

A similar pattern emerged between 2015 and 2018, when gradual rate increases coincided with periods of gold price weakness. These episodes highlight a consistent dynamic when the cost of holding non-yielding assets rises, gold often struggles in the short term.

US Dollar Strength and Currency Dynamics

US dollar strength plays an important role in the price of the dollar. Gold and the dollar have an inverse correlation: the stronger the dollar becomes, the more the gold price drops.

The reason behind this is straightforward: when the dollar becomes strong, it gains more purchasing power. A dollar with more purchasing power brings prices down, as the dollar is capable of buying more.

The next step is that there is less international demand for gold, which actually makes gold more expensive for foreign buyers. The reduced demand lowers prices domestically.

Conversely, a weak US dollar usually makes gold cheaper for international investors, which drives up demand and prices.

So, how can you keep track of the US dollar and its strength? That's where the https://finance.yahoo.com/quote/DX-Y.NYB/?guccounter=1&;amp;guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAFoWxRgQIIeYIaLBJ_cB4NELJl9uut85vzZR_ADwNJ2sTPJTZ2sh-mj2ajnahQnNl2RtGMdEnwBn2lXogRDaai8c_Zj95GQtYasTQMJJL7FCvASnVCvM0jgRvhGp-xQPuD-Q07huUgDpnqspglAQRjwJ2Yabi5jkElC5FTYFmfqu">US Dollar Index (DXY) comes in.

The DXY is a benchmark that measures the value of the US dollar against a basket of six major foreign currencies:

The Euro
Japanese Yen
British Pound
Canadian Dollar
Swedish Krona
Swiss Franc

Monitoring the US Dollar Index can give you a strong idea of where the dollar's value is. That's an excellent tool for investors, as it can help you track price and “buy low, sell high.”

Inflation Expectations vs Reality

There is a real distinction between inflation expectations and reality. This is where many investors get gold wrong. Gold doesn't react to inflation itself: it reacts to where inflation is headed next.

If inflation cools, the demand for gold often weakens. The market looks forward to the imminent future far more than it accounts for the current conditions.

In short, gold often falls when inflation is high but expected to decline. The market has shown this particular dynamic play out a few times, most recently in 2022 and early 2023.

During this time, inflation remained elevated but began to show signs of peaking. Even though consumer prices were still high, markets anticipated that inflation would cool when the Federal Reserve raised interest rates.

As a result, real interest rates moved higher and expectations shifted toward tighter monetary policy. Gold prices, which had surged earlier on inflation fears, began to pull back during several periods as investors priced in declining future inflation rather than reacting to current data.

This response emphasizes our point: gold responds to expectations. When investors believe inflation has peaked and will fall, demand for gold often weakens, even before inflation itself meaningfully declines.

Central Bank Policies and Monetary Tightening

We have alluded to the role of the Federal Reserve, but have not addressed it directly yet. While the Federal Reserve does not set the gold price, its policies play a role in investor demand.

The Federal Reserve has two main actions that often cause gold prices to drop:

Rate hikes
Quantitative tightening

When the Federal Reserve raises interest rates or engages in quantitative tightening, it essentially pulls liquidity out of the financial system. Less liquidity means less cash flowing into alternative assets like gold.

Simultaneously, higher rates increase yields on bonds and savings instruments. That gives investors a compelling reason to move money out of non-yielding assets.

This dynamic has played out repeatedly in modern markets. During tightening cycles, gold often struggles; investors prefer to invest in income-earning assets through interest-bearing assets. Just as important, central bank messaging shapes expectations.

When policymakers signal a commitment to fighting inflation through higher rates, markets anticipate stronger real yields and adjust accordingly. These trends place pressure on gold prices before policy changes fully take effect.

The contrast is straightforward. Loose monetary policy includes low rates and stimulus, which tends to support gold by weakening currencies and boosting liquidity. Tight policy does the opposite.

For investors, understanding this relationship is essential. Gold's price is often less about current conditions and more about where central bank policy is headed next.

Investor Sentiment and Market Psychology

Gold is partly driven by fear cycles. This is because gold is primarily a safe haven asset meant to protect your assets. People naturally run to safe haven assets during fear cycles.

“Risk-on” and “risk-off” environments have different effects on gold prices as a result. In risk-on environments, stock markets rise and economic confidence rises high. As a result, investors tend to move capital into equities and other growth assets.

In short, people do not feel the need for a safe-haven asset. That causes gold to decline as demand weakens.

Conversely, during “risk-off” periods marked by uncertainty or market stress, gold typically benefits from increased demand. However, this relationship is not always linear. Speculative activity in futures markets and flows into or out of gold-back ETFs can amplify price swings. Those swings can go in either direction.

Large institutional movements can push prices lower, even without major changes in fundamentals. All of this demonstrates that gold is driven partially by fear cycles. When fears subside, gold can lose momentum. Gold prices are not just a reflection of economic data, but also of investor sentiment, expectations, and crowd behavior.

Gold Supply and Mining Production

Supply and demand are major drivers of economic markets. That includes the gold market.

That's why gold mining production plays a role in determining gold price. Increased gold production leads to a heightened supply of gold. When there's more gold to go around, it leads to downward pressure on the gold market.

The result is that gold can deflate. However, there are some other factors to consider.

First, gold's supply is often secondary. One reason for that is gold recycling.

Gold and other precious metals like silver can sometimes be recycled. This is particularly true for their uses in the industrial sphere.

When gold can be recycled, it can slow down the need for a heightened gold supply. Similarly, when gold production does increase, it can continue to inflate the gold available. All of that drives demand down, and prices with it.

Geopolitical Stability (Or Lack of Fear)

As a safe haven asset, gold prices tend to rise during times of geopolitical uncertainty. When the geopolitical situation stabilizes, or else reaches a point where investors are not economically concerned, gold prices tend to fall.

Specifically, prices generally fall when:

Geopolitical conflicts ease or end
Markets stabilize

However, it is worth noting that not all crises boost gold equally. A recent example of a crisis that did not have a huge impact on gold price was the 2022 invasion of Ukraine by Russia.

Initially, gold spiked at the outbreak of war due to the geopolitical uncertainty it brought. However, the conflict dragged on far longer than anticipated. As time went on, the markets adjusted to the risk and found a “new normal.”

That change brought with it a renewed emphasis for central banks on aggressive tightening and rising interest rates. Despite ongoing geopolitical tensions, gold prices struggled to maintain upward momentum. In fact, they even declined at various points throughout 2022. You can track that fluctuation with this table:

Period (2022)	Gold Price Trend	Key Event	Market Reaction
Jan–Feb (Pre-Invasion)	Rising	Escalating tensions between Russia and Ukraine	Safe-haven demand increases as uncertainty builds
Late Feb–March	Sharp Spike (Peaked near $2,050)	Russia invades Ukraine (Feb 24, 2022)	Gold surges on geopolitical shock and panic buying
April–June	Declining	Federal Reserve begins aggressive rate hikes	Rising yields and strong dollar pressure gold prices
July–September	Continued Weakness	Ongoing war, tightening monetary policy	Markets shift focus from war to inflation and interest rates
October–November	Stabilizing / Rebound	Slowing rate hike expectations	Gold recovers as dollar strength eases
December	Uptrend	Cooling inflation signals	Gold gains momentum despite ongoing conflict

Once again, this demonstrates that not all crises affect the gold price in the same ways. When a crisis becomes prolonged or becomes overshadowed by stronger economic forces, gold can weaken.

Short-Term Drops vs Long-Term Trends

There is a crucial distinction investors must understand when it comes to the gold market: short-term volatility does not reflect long-term trends. The table below shows this relationship:

Factor	Why Gold Falls	Short-Term or Long-Term Impact
Rising Interest Rates	Increases opportunity cost	Short-Term
Strong U.S. Dollar	Reduces global demand	Short-Term
Falling Inflation Expectations	Reduces safe-haven demand	Medium-Term

The precious metals market can be a volatile one. Although gold has more stability than other assets, such as silver, it remains unstable in the short-term. Gold constantly undergoes price corrections as the market adjusts to accommodate current investment realities.

However, short-term price corrections are not enough to cause structural declines in gold. Over time, gold has seen a largely positive growth. It continues to serve as a powerful hedge against inflation and currency devaluation, even if it has short-term negative spikes.

The point investors must understand is that gold is not a get rich quick asset. There is an opportunity cost with gold. However, even that cost is an investment in your future financial security.

Understanding gold's role in a portfolio can help investors figure out allocations and financial strategies. Part of that understanding does involve monitoring short-term drops. We'll explore that further in the next section.

What Falling Gold Prices Mean for Investors

Falling gold prices generally signal something called a “liquidity flush.” Times like these prompt investors to sell their gold holdings to raise their cash holdings. This usually happens because of the following factors:

Increased dollar strength
Higher interest rates
Reduced safe-haven demand

The liquidity flush can benefit sellers by increasing their cash revenue. However, it also presents opportunities for investors who want to increase their gold holdings.

When prices fall, it gives investors a chance to buy gold at its reduced price. This way, their gold holdings can benefit from the eventual gold price rally.

Falling gold prices reflect the short-term volatility common to much of the precious metals market. However, the key takeaway for investors is that gold is not a short-term asset. Instead, it is a long-term investment meant to secure your wealth from inflation down the road.

Investors do not need to panic and sell their gold when they see the price drop. Long-term investors do better to wait out temporary trends to gain future benefits.

Frequently Asked Questions About Why Gold Prices Fall

Q: What causes gold prices to drop when interest rates rise?

Rising interest rates increase the opportunity cost of holding gold, since investors can earn yields from bonds or savings accounts instead. As capital shifts toward these income-producing assets, demand for gold weakens and prices tend to fall.

Q: Does a strong US dollar always make gold prices go down?

A stronger US dollar typically puts downward pressure on gold because it makes gold more expensive for foreign buyers. However, other factors like geopolitical risk or inflation expectations can offset this effect in certain market conditions.

Q: Why does gold sometimes fall during a financial crisis?

Gold can decline during a crisis when investors sell assets to raise cash, a phenomenon often called a liquidity crunch. In these moments, short-term selling pressure can outweigh gold's long-term safe-haven appeal.

Q: Is falling gold a good buying opportunity?

Falling gold prices can present buying opportunities for long-term investors who believe in gold's role as a store of value. However, timing matters, and investors should consider broader economic trends before increasing their holdings.

Final Reflection on What Causes Gold Prices to Drop

Investors have several reasons for asking what causes gold prices to drop. Sometimes, they're worried about current market conditions and what they mean for their investments. Others simply want to know when they can expect a better buying cost.

It is always wise to pay attention to market trends for your investments. Understanding what causes prices to drop can help you discern good times to buy increased gold holdings. However, it does not necessarily signal a time to sell your holdings. Instead, it is better to trust in gold's long-term value.

If gold declines are driven by temporary forces like rising rates or a strong dollar, they often create entry points, not warning signs. https://www.moneymetals.com/buy/gold/coins";>Gold coins often offer higher liquidity for one ounce of gold, but charge higher manufacturing premiums.

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