Something Isn’t Adding up in Oil Markets Right Now

Since hostilities began in the Middle East three weeks ago, I’ve urged investors to stay calm and resist the temptation to panic-sell.

While I still stand by that advice, it’s important to point out that this conflict isn’t resolving as quickly as initially expected.

The situation has escalated since last week, and the economic consequences are becoming clearer. We’re witnessing what I’d call a two-speed oil crisis, and understanding that split might be helpful in positioning your portfolio in the coming weeks and potentially months.

The “Real” Oil Price Could Be Much Higher

West Texas Intermediate (WTI) crude, the U.S. benchmark, topped $100 per barrel on Thursday of this week. To be sure, that’s elevated, but the spike was much worse in 2022 after Russia invaded Ukraine.

The real story is what’s happening in markets that fly under many investors’ radars. In Oman, for instance, crude reportedly hit a record $173 per barrel this week, surpassing even the 2008 financial crisis spike. The gap between Oman and U.S. prices now stands at more than $70 per barrel, according to the Kobeissi Letter.

That’s one of the largest divergences on record, and it’s a reminder that the commonly quoted benchmarks—WTI and Brent—reflect U.S. and North Sea supply conditions, not the crisis that’s unfolding in the Middle East.

What this tells me is that Western oil prices are underestimating the severity of the global shortage. If the Strait of Hormuz does not reopen soon, prices here in the U.S. will inevitably catch up as inventories are drawn down.

Why the U.S. Is Better Positioned Than You Might Think

Having said that, the good news for American investors is that the U.S. has never been better insulated from a Middle Eastern energy shock.

Domestic production is strong, with output nearing 14 million barrels every day, and the International Energy Agency (IEA) has already begun releasing 400 million barrels from member countries’ emergency reserves.

BBVA’s latest analysis projects the U.S. can maintain growth of around 2.5% this year, cushioned by high domestic production and strong internal demand.

Meanwhile, a Morgan Stanley study of the past 75 years found that the S&P 500 has risen an average of 8.4% in the 12 months following sudden external shocks like wars and energy crises.

The Pain Americans May Feel

Gas prices have already climbed nearly $1 per gallon in a single month. According to an analysis by a group of economists, including a former member of the White House Council of Economic Advisors, the typical household will pay an extra $740 in gas costs this year. This would effectively wipe out the tax refunds under the One Big Beautiful Bill Act.

Meanwhile, the conflict’s price tag keeps growing. The Pentagon is seeking more than $200 billion from Congress to fund the war, layered on top of the nearly $39 trillion in national debt I flagged in my last post. Every dollar spent is a dollar borrowed, and the fiscal pressure is building.

Europe Is the Canary in the Coal Mine

European natural gas storage is currently below 30%, a five-year low, heading into the critical refill season before winter.

After severing dependence on Russian pipeline gas in 2022, Europe became heavily reliant on LNG imports. Much of it is made in Qatar and transits through the Strait of Hormuz. There’s no viable alternative route.

The damage may be lasting. Iran’s retaliatory strikes on Qatari infrastructure have knocked out 17% of Qatar’s LNG export capacity, and QatarEnergy’s CEO told Reuters this week that repairs could take three to five years. As I see it, that’s a structural loss for the global LNG market.

The consequences are severe. Capital Economics estimates that oil at $125 or higher could be enough to tip Europe into recession. Markets are now pricing in two interest rate hikes in the eurozone this year, a dramatic reversal from the rate cuts everyone expected just weeks ago.

Where I See the Opportunities

Right now, two themes stand out to me.

One, U.S. energy producers are the clear beneficiaries. The sector hit a new all-time high on Friday, and at $130 oil, domestic producers capture roughly $400 billion in additional revenue, according to a recent Carlyle report. Goldman Sachs has identified five top oil pricks with favorable risk-reward profiles, including ConocoPhillips, Chevron, Cenovus Energy, Suncor Energy and Canadian Natural Resources.

And two, gold’s sell-off looks like an opportunity to me. The metal dropped nearly 5% on Thursday, falling below $4,600 per ounce, as rising yields and a stronger dollar continued to create short-term headwinds. That’s the exact dynamic I explained last week.

But the long-term case is only getting stronger. A $200 billion war spending request on top of record national debt, growing stagflation risks and a global energy crisis that could persist for years. These are precisely the conditions that have historically supported gold.

Again, the U.S. appears to be better positioned for this crisis than almost any other major economy on earth. Domestic energy production, strategic reserves and lower import dependence provide genuine protection. The investors who maintain discipline—who own energy, hold gold and resist the urge to flee to cash—are the ones I believe will be best positioned when this chapter closes.

Airlines and Shipping

Strengths

• The best-performing airline stock for the week was Delta Air Lines, up 7.9%, on the back of strong demand and passing along higher jet fuel prices. Glassdoor ratings for Boeing have improved across a range of categories, notably in CEO approval and business outlook, which saw the largest positive rate of change in UBS’s coverage. This supports the results of Boeing’s latest employee satisfaction survey, which showed improvement in multiple areas and reflects Kelly Ortberg’s push to transform the company’s culture.

• On a global basis, freight rates are up 37% since the start of the conflict and higher by 229% on routes to the Persian Gulf. The conflict is absorbing excess capacity, a short-term benefit to structural oversupply, according to Morgan Stanley.
• China Eastern Airlines’ ASK rose 12.8% year-over-year (YoY), RPK rose by 14.7% YoY, and passenger load factor reached 86.5%. The average airfare for domestic routes increased by 24.5% YoY in February, according to UBS.

Weaknesses

• The worst-performing airline stock for the week was Sabre, down 17.2%. According to TD, Federal Aviation Administration initially reported via Reuters that departures in Chicago would be capped at 2,800 per day, but noted the number is in flux and is now targeting 2,550 per day. Elevated growth has been fueled by a gate allocation formula that creates a use-it-or-lose-it dynamic. Cuts are expected to focus on regional capacity to optimize gate usage.
• According to Bank of America, long-haul container shipping valuations at an average of 0.85x, at just a 10% discount to Red Sea peaks, appear to have run too hard relative to 2026 ROEs averaging 6%. Valuations appear to have overestimated the boost from the Middle East conflict, with a higher by 1.25% tightening of annual demand/supply versus the higher by 7% tightening from the Red Sea closure and 13% from COVID-19.
• Air New Zealand faced sharply higher jet fuel prices due to the Iran conflict and could see deeper PBT losses in the second half of fiscal year 2026 until UBS has greater confidence that the conflict will not result in extended oil supply disruption.

Opportunities

• RBC cardholder data showed Canadian travel spending surged 13.9% year-over-year (YoY) in February, with month-over-month growth of 3.6%, demonstrating sustained consumer appetite for experiences despite broader discretionary goods contraction, which they view as a key positive for Air Canada. The double-digit YoY expansion is noteworthy given current macro headwinds, suggesting demand reflects genuine consumer travel conviction rather than transient spending patterns.
• According to Morgan Stanley, following the escalation of Middle East tensions, Japan’s Big 3 shippers have outperformed TOPIX by 18% and, on an individual basis, have been the three best performers within their transport coverage. They judge that the principal driver is expectations that the jump in short-term shipping market rates, stemming from disruption to transport networks, will present upside risk for near-term earnings.
• The Middle East’s parked fleet has more than doubled, reaching 30% of the total fleet. Outside the region, the parked competitive fleet has remained largely stable, rising just 10 basis points since the start of the year to 11.1% of the total fleet, according to Bank of America, presenting an opportunity for these airlines.

Threats

• UBS believes investors need to be mindful that the conflict could drive jet fuel even higher from current levels. There is also potential for inflation to rise materially the longer the conflict persists, leading consumers to pull back from travel and other spending. UBS does not believe this demand destruction scenario is fully priced into stocks at current levels.
• Bank of America’s base case is for the reopening of the Strait of Hormuz in the coming weeks. However, they are not convinced this would be positive for container shipping, as the benefits of ships being stuck (1.3% of the fleet) and re-routing (higher by 1% demand) may be offset by the likely trade and GDP shock from spiking oil prices.
• UBS highlights several risks around jet fuel: (1) Not all fuel hedges are equal—some airlines hedge the crack spread while others hedge the underlying, exposing them to crack spread risk; (2) potential industry counterparty risk on fuel hedges, raising questions about whether commodity houses can deliver if supply becomes more constrained; (3) the ability to continue flying from Europe, given that over 25% of European jet fuel supply comes from the Middle East.

Luxury Goods and International Markets

Strengths

• HSBC reiterated Buy ratings on major luxury names including LVMH, Hermès, Richemont, Prada, and Moncler, citing improving store traffic, stabilizing pricing, and a recovery in U.S. demand. That said, global equities remain under pressure due to heightened geopolitical risks stemming from the Middle East conflict.
• Ermenegildo Zegna reported strong full-year results, highlighting solid profit growth and improved margins, which supported a positive market reaction. Shares rose following the earnings release, outperforming the broader luxury sector.
• Paradise Co. was the best-performing name in the S&P Global Luxury Index over the past five days.

Weaknesses

• Equity markets across Asia, Europe, and the United States moved lower as rising oil prices pushed investors away from risk assets. DAX fell 3.3%, and China’s market dropped 3.4%. The S&P 500 slipped 2.2% and fell below its 200-day moving average, a technical signal that could point to further weakness ahead.
• Gold, often viewed as a luxury asset, sold off sharply this week, falling from about $5,061 last Friday to roughly $4,510 per ounce. The decline reflects short-term profit-taking and pressure from higher interest rates, even as geopolitical risks remain elevated.
• Ananti, focused on high-end residential resorts and premium leisure experiences, was the worst-performing name in the S&P Global Luxury Index over the past five days.

Opportunities

• Since the Middle East war began, luxury stocks—as measured by the S&P Global Luxury Index—have declined about 15%, pushing the index into oversold territory and setting the stage for a potential rebound. The conflict is widely expected to ease by the end of the second quarter, which should allow consumers to resume travel and discretionary spending during the upcoming summer travel season.

• HSBC recently reiterated Buy ratings on most major global luxury houses, including LVMH, Hermès, Richemont, Prada, and Moncler. LVMH and Hermès benefit from brand strength and consistent demand in core leather goods and accessories. Richemont is supported by jewelry demand and exposure to high-end consumers. Prada and Moncler are gaining from improved product execution and store traffic trends following weaker periods in 2024–25.
• At the beginning of this year, Ferrari continued advancing its electrification strategy, with its first fully electric model expected to debut in the near term. The company has also been expanding its lineup across both hybrid and high-performance segments. Looking ahead, Ferrari is expected to introduce several new models, including potential additions to its hypercar and limited-edition Icona series, underscoring a strong product pipeline and sustained demand at the very top end of the luxury automotive market.

Threats

• On March 18, 2026, the Federal Reserve kept interest rates unchanged at a 3.5%–3.75% target range. Officials warned that higher oil prices could keep inflation elevated, leading markets to price in fewer rate cuts ahead—adding pressure on stocks and weighing on consumer confidence.
• European NATO members have refused President Donald Trump’s request to help secure safe passage for ships through the Strait of Hormuz, arguing that the conflict is not Europe’s war and should not become a NATO mission. This refusal risks creating tensions within the transatlantic alliance and could lead to deeper intra-continental disputes.
• Rising U.S. Treasury yields are pushing borrowing costs higher, while a strengthening dollar and rising oil prices are increasing everyday expenses. This combination puts pressure on household budgets and can reduce discretionary consumer spending. The key question remains: how long will the conflict in the Middle East last?

Energy and Natural Resources

Strengths

• The best performing commodity for the week was sugar, up 9.26%. White sugar surged to its highest level since October this week, as the effective closure of the Strait of Hormuz stranded vessels carrying raw sugar to Middle Eastern refineries, crimping roughly 6% of global sugar trade. A simultaneous rally in oil prices added further fuel, with raw sugar tracking crude higher while markets watched whether Brazil’s mills would divert more cane into ethanol, tightening global supply further.

• Rio Tinto secured control of the 2,400-acre Resolution Copper site in Arizona through a federal land swap after a U.S. appeals court again rejected challenges from the San Carlos Apache, clearing the way for a $500 million drilling campaign on a deposit holding over 40 billion pounds of copper. The project, backed by Rio (55%) and BHP (45%) after more than $2 billion in combined spending, is positioned to become one of the largest domestic copper sources and aligns with the Trump administration’s push for American mineral independence amid growing energy transition demand.
• Woodside Energy extended its rally on Friday as the Australia-based LNG giant benefits from the Iran conflict’s disruption to global gas supply, with the stock hitting fresh multi-year highs as investors position for sustained tightness in the market. The surge comes as Iranian strikes caused “extensive damage” to Qatar’s Ras Laffan LNG complex, tightening an already constrained market with Asian spot prices above $20/MMBtu and positioning Woodside as a key beneficiary of the supply shortfall given its Pluto, North West Shelf, and Wheatstone LNG operations.

Weaknesses

• Copper was the weakest performing commodity of the week, declining approximately 7.96 %. Copper slipped this week as LME stockpiles surged by roughly 19,000 tons to 330,375 tons, their highest level since September 2019, reflecting weakening physical demand in China and fading urgency to ship metal to the U.S. ahead of potential tariffs. The rapid inventory buildup since the start of the year signals a growing bearish tilt in the physical market, with prices still up 30% year-over-year giving many buyers reason to hold back.
• Mizuho downgraded CF Industries to underperform, arguing the stock’s rally on Strait of Hormuz disruption fears is overdone since most U.S. farmers have already prepaid for spring nitrogen needs, limiting near-term volume exposure to elevated prices. The analyst notes no Middle East nitrogen plants have suffered permanent damage, suggesting any earnings uplift will be confined to Q2–Q3 2026 before normalizing—a view reinforced by Nutrien and Mosaic shares already retreating from their war-driven highs.
• Zinc slipped lower this week, dragged down by the same wave of risk-off sentiment that swept across the base metals complex as rising energy prices and Middle East war fears darkened the global economic outlook. With stagflation concerns mounting and central banks potentially forced back into tightening mode, zinc found few friends among investors eager to reduce exposure to industrial metals.

Opportunities

• U.S. soybean meal futures hit a four-month high after the USDA announced a 120,000-ton flash sale—the first since January—plus a 50,000-ton Colombian purchase, with analysts expecting Thursday’s export report to show weekly sales of 269,000 tons versus 166,000 tons prior. Elevated crude prices from the Iran conflict are also lifting palm oil on biofuel demand, while corn reached its highest level since May 2025 as traders hedge inflation risk across the ag complex.
• Europe’s expanding renewable capacity is proving a meaningful buffer against the current energy shock, with German and French power prices declining last week even as oil surged — and Rabobank estimating electricity prices would already be roughly a third higher without renewables and seasonal demand softening. However, the insulation is incomplete: evening prices, when solar output fades, have spiked to around three times normal levels in countries like the Netherlands and Germany, while the EU warns inflation could exceed 3% this year if the conflict drags on, prompting leaders to discuss emergency measures including a possible gas price cap.
• The Iran conflict has already boosted the Newcastle coal price by as much as 20% as higher LNG prices accelerate fuel switching by Asian power utilities. Bloomberg Intelligence projects that if spot Newcastle prices hold at about $134/t, New Hope and Yancoal’s 12-month forward consensus earnings have about 60% upside. For Glencore, spot commodity prices could lift earnings by 21%, with almost half coming from thermal coal.

Threats

• Iran struck energy assets across Saudi Arabia, Kuwait, Qatar and the UAE on Thursday—including “extensive damage” to Qatar’s Ras Laffan LNG complex, the world’s largest—pushing Brent crude above $119/bbl (+67% since the war began) and European natural gas to more than double pre-war levels. U.S. gasoline is at a two-year high of $3.88/gallon and no ceasefire in sight despite Trump’s threat to destroy Iran’s South Pars gas field if attacks continue.
• The Australian government is considering a windfall tax on the gas and coal industries amid soaring LNG prices, with the Department of Prime Minister and Cabinet drafting a document for modelling “new levy options” to prevent energy producers from benefiting from high international prices at the expense of domestic customers. The industry opposes the move, warning it would “leave Australia more exposed to future energy shocks” and reduce investment in production — echoing the UK’s experience where a 25% windfall tax introduced in 2022 led to lower production and ultimately lower tax revenues.
• Chinese aluminum smelters are seeing margins climb to record levels as the Strait of Hormuz closure diverts alumina cargoes away from Middle Eastern producers — who account for 9% of global aluminum output — flooding China’s market and pushing benchmark Australian alumina prices down to $298 a ton, their lowest since July 2021. The supply rerouting could lift China’s net alumina imports to a two-year high of 90,000 tons in April, while European and U.S. buyers are already increasing inquiries for Chinese semi-finished aluminum products to fill the growing Middle Eastern shortfall.

Bitcoin and Digital Assets

Strengths

• Coinbase’s launch of stock perpetual futures for non-U.S. investors strengthens its role as a global, multi-asset trading platform. The product taps into the fast-growing derivatives market, which accounts for over 70% of global crypto trading volume, while offering up to 20x leverage and 24/7 access to equities like the S&P 500 and Nasdaq 100. By integrating USDC settlement and cross-margining, Coinbase is improving liquidity and capital efficiency, supporting higher activity and reinforcing the shift toward always-on, borderless markets.
• Stablecoins are becoming a key tool in corporate finance, with 74% of global finance leaders saying they improve cash flow efficiency and unlock working capital, according to a Ripple survey of over 1,000 executives. Additionally, 70% believe offering digital asset solutions is essential to remain competitive, signaling a shift in how institutions manage liquidity and payments. Adoption is already underway, with 31% of fintechs using stablecoins for collections and 29% accepting them directly, highlighting growing real-world utility.
• Morgan Stanley’s plan to launch a Bitcoin ETF reflects continued expansion by major banks into crypto. It would give investors easier access to Bitcoin without direct ownership. The trend is already strong, with existing Bitcoin ETFs attracting over $56 billion in inflows since 2024, supporting demand and broader mainstream adoption.

Weaknesses

• Bitcoin’s price is moving in a pattern similar to the one seen before its last decline to around $60,000. Although it has been trending slightly higher, the move lacks strong buying pressure, suggesting limited investor confidence and an unsustainable rally. A drop below key levels near $65,800 could trigger further downside.

• Gauntlet, a key DeFi risk management platform, saw its total value locked fall 22.8% in one week, erasing around $380 million after an incentive campaign ended. This highlights how DeFi capital is highly sensitive to rewards like airdrops and promotional yields, with liquidity quickly exiting or rotating when incentives fade, underscoring unstable and less predictable capital flows.
• Bitcoin has been in a 14-month downtrend versus gold, with the BTC/gold ratio falling as much as 81%, signaling weaker performance relative to traditional safe-haven assets. While technical indicators suggest a potential bottom, the market needs to hold key levels around $70,000 to avoid further downside, reinforcing concerns about its consistency as a store of value.

Opportunities

• FalconX, valued at $8 billion, is exploring an IPO with backing from banks like Cantor Fitzgerald, signaling continued institutional interest. Despite a challenging market—where some crypto IPOs have struggled—companies are still preparing to go public, suggesting a strong pipeline that could unlock new capital and support growth.
• The use of AI agents in trading is creating opportunities to improve efficiency and scale across financial markets. Nasdaq already uses AI in compliance, surveillance, and trading, including an AI-powered order system. In crypto, adoption is expected to accelerate, improving execution, reducing costs, and boosting productivity.
• Kalshi has raised over $1 billion at a $22 billion valuation, doubling in value in months. The platform generates about $1.5 billion in annualized revenue, driven by institutional participation, highlighting strong demand for new financial markets and potential growth in digital assets.

Threats

• A U.S. appeals court cleared the way for Nevada to potentially ban prediction market platform Kalshi, highlighting rising regulatory pressure. The platform is already facing challenges in more than a dozen U.S. states, increasing the risk of fragmented rules across the country. A temporary ban in Nevada alone could force the company to halt operations for weeks while legal battles continue. This growing regulatory uncertainty can limit market expansion, increase compliance costs, and slow innovation across crypto-related platforms.
• A Bitcoin wallet holding 2,100 BTC (around $147 million) became active after more than 13 years, raising concerns about potential selling pressure. Originally purchased for about $13,800, the position has gained over 10,000x, creating strong incentives to take profits. Large holders moving funds often signal possible future selling, which can impact market sentiment. If more early investors follow, it could trigger increased volatility and downside risk.
• A stricter regulatory framework is raising compliance requirements, forcing crypto firms to meet higher standards or exit the market. Authorities have already revoked registrations for 47 crypto businesses, showing the direct impact of tighter rules. Increased reporting requirements and regulatory fragmentation could raise costs and limit innovation, especially for smaller players. This environment may slow growth and push activity toward less regulated jurisdictions.

Defense and Cybersecurity

Strengths

• NVIDIA said it now sees roughly $1 trillion in AI chip orders through 2027, reflecting stronger-than-expected demand for data center infrastructure as AI usage scales beyond training into everyday inference. At the same time, NVIDIA is working with Adobe on the next generation of Firefly models, with Adobe running more of its creative AI workloads directly on NVIDIA’s platform.
• Innovative Aerosystems strengthened its flight-control portfolio by completing the acquisition of Moog’s S TEC 3100 autopilot product line, enhancing its integrated avionics capabilities. The strategic move was reinforced by Northland Capital Markets raising its price target to $34 and reiterating an Outperform rating, citing further upside potential.

• Micron Technology reported Q2 FY2026 results showing AI-driven demand continuing to outpace memory supply, tightening DRAM and NAND markets and driving sharp pricing gains. Revenue reached $23.86 billion, up 75% quarter-over-quarter and 196% year-over-year (YoY), with DRAM pricing lifting gross margin to 74% and non-GAAP EPS surging to $12.20. The company also outlined large multi-year capacity expansions in the U.S. and Taiwan, supported by CHIPS Act incentives.

Weaknesses

• U.S. prosecutors charged a co-founder of Super Micro Computer and two associates with illegally diverting NVIDIA-powered AI servers to China in violation of U.S. export controls. Authorities allege the scheme routed roughly $2.5 billion of hardware through Southeast Asian intermediaries using falsified paperwork and decoy servers. Super Micro itself is not charged and says it is cooperating with the investigation.
• The U.S. F-47 and F/A-XX programs have been delayed to the mid-2030s, creating a “fighter gap” that necessitates extending the life of F-22 Raptor and F/A-18 Hornet fleets. This highlights the importance of current-generation platforms where Boeing and its competitors compete.
• There was a 245% increase in cyberattacks tied to the recent Iran conflict. Banks and financial services were identified as the primary targets, indicating heightened risk for the financial sector. The attacks were driven by hacktivist groups using proxy infrastructure linked to Russia and China, with global impact across North America, Europe, and Asia-Pacific.

Opportunities

• U.S. Defense Secretary Pete Hegseth said there is no definitive timeframe for ending the war against Iran, noting that the decision will ultimately be made by President Donald Trump once objectives are met. He also confirmed the Pentagon is seeking additional funding from Congress and outlined ongoing military operations targeting Iranian forces and aligned groups in the region.
• NASA and Lockheed Martin’s X-59 experimental aircraft is scheduled for a second test flight from the Armstrong Flight Research Center in California.
• The Affordable Rapid Missile Demonstrator (ARMD) reached supersonic speed in a recent U.S. flight test using Ursa Major’s Draper liquid rocket engine. Company officials said the flight-ready engine was completed in just eight months, positioning the program as a step toward validating cost-effective, mass-producible missile propulsion technology.

Threats

• NATO said it has withdrawn all personnel from Iraq and relocated them to Europe, evacuating several hundred staff amid rising security risks linked to regional tensions. The alliance said the non-combat advisory mission will now operate from its command center in Naples after Iraq—bordering Iran—came under attack.
• Russia said U.S. and Israeli strikes in Iran are expanding the conflict and risk drawing the Caspian region into the war. Moscow cited the March 18 attack on Iran’s Bandar Anzali as harming Russian and regional economic interests and warned that the Caspian Sea’s status as a zone of peace is under threat.
• The FBI opened a probe into former counterterrorism chief Joseph Kent after he resigned over the Iran war, citing U.S. involvement in fighting Israel’s war. His resignation and the investigation highlight internal divisions over U.S. foreign policy.

Gold Market

This week gold futures closed the week at $4,507.20, down $554.50 per ounce, or 10.95%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week lower by 13.87%. The S&P/TSX Venture Index came in off 10.49%. The U.S. Trade-Weighted Dollar fell 0.80%.

Strengths

• The best-performing precious metal for the week was platinum, though it was still down 5.86%. With platinum near 20-year highs, the lack of greenfield investment is creating a structurally supply-constrained market, which may explain its relative resilience. Analysts noted that platinum bar availability remains tight, unlike gold or silver.
• Swiss gold refiners imported 51 tons of gold from the United States in February, nearly double the previous month, while total exports fell 17% to 106 tons. Exports to the U.S. were less than half a ton, though still higher than in January, according to Swiss trade data.
• On a price-to-net asset value (P/NAV) basis, gold producers are trading at 1.5x, a 3% discount to the historical average. On 2026E EV/EBITDA, the group is trading at 6.4x, a 10% discount. Using spot commodity prices, valuations appear more discounted, with P/NAV and 2026E EV/EBITDA at 44% and 15% discounts, respectively, according to Bank of America.

Weaknesses

• The worst-performing precious metal for the week was silver, down 16.30%, with both gold and palladium lower by 10%. This week’s drop in gold marks its worst weekly decline in four decades, driven by a nearly 10 basis point rise in U.S. Treasury yields across the curve. Yields rose 17 basis points for 1-, 2-, and 3-year notes, making them more attractive and pressuring commodity prices.
• Investors are pricing the broader mining sector lower due to expected margin compression from higher energy and consumable costs. Gold prices are now below pre-war levels, raising questions about its safe-haven status. A stronger U.S. dollar and fading rate cut expectations amid rising inflation pressures from higher energy prices are also contributing, according to JPMorgan Chase.
• In 2022, a similar trend followed Russian invasion of Ukraine, when surging energy prices drove inflation higher. During that period, gold declined for seven consecutive months from April to October.

Opportunities

• Despite this week’s pullback, Silver demand remains strong, with China importing over 790 tons in early 2026, driven partly by solar production. Tight inventories and solid structural demand continue to support the outlook beyond short-term volatility.
• Ray Dalio believes the Iran conflict centers on control of the Strait of Hormuz; if Iran retains influence, it signals a loss for the United States. He warns that failing to keep the strait open could expose U.S. weakness—militarily and financially—potentially driving creditors away and boosting gold. Dalio also highlights U.S. debt, the dollar, and gold as key assets to watch.
• According to Canaccord Genuity, gold mining companies can support investors through aggressive share buybacks. A neutral stance is recommended, as strong free cash flow and clean balance sheets should enable companies to repurchase shares on further weakness.

Threats

• According to Canaccord Genuity, the GDX/GLD ratio has broken below its 100-day moving average, signaling weaker sentiment toward gold miners. While GDX at 94 remains above its 100-day average of 90, a decisive break below could push gold equities into bear-market territory.
• Ghana’s new gold royalty, which can reach 12% when prices exceed $4,500 per ounce, is reducing mining margins and may shift investment to other regions. At the same time, a 20% rise in Ghana’s stock index—driven by banks and oil stocks—suggests foreign capital is rotating away from mining as royalties peak.
• Gold miners are facing pressure from lower gold prices and rising diesel costs, which account for 15–20% of cash expenses. Producers set 2026 cost assumptions around $70 per barrel oil, but prices have moved higher. Open-pit mines are most exposed due to heavy diesel use, particularly in Africa and Latin America, where weaker currencies increase fuel costs. Reports also suggest Australia holds only about one month of diesel reserves, raising additional margin risk if shortages emerge.

Related: Gold Pullback Amid War Signals Bigger Shift in Inflation, Rates, and Markets