Why Peace Is Bullish for Gold Right Now

Ajouté : 2026-05-10

[00:00:00]Ordinarily, when war breaks out in the Middle East, the price of gold goes up.

[00:00:04]That's the familiar war premium. But since the Iran war broke out about 10 weeks ago, we've seen the price of gold go down every time the war escalates.

[00:00:13]Conversely, every time there's talks of peace, the price of gold goes up. So, there's a real peace premium here. In this video, I'm going to explain why that is the case and what it means for investors moving forward.

[00:00:31]So let's take a look at the pattern that has emerged and then we can uncover why that pattern is happening. Looking here at this beautiful colored line, this is the price of gold. And at the time I took this screenshot, gold was about $4,700 per ounce. And the price here goes all the way back to Operation Epic Fury, the last day of February when the war with Iran started. And you can see pretty quickly the price of gold sold off in dramatic fashion. And so then it didn't stop until we had rumors of a potential 5-day pause to the hostilities and the price of gold turned around, started to rebound, and then those peace talks failed, escalation in the war, and the price of gold sold off again. And you can see it goes back and forth pingponging between war and peace with different rumors along the way. And by the way, the price of gold here is an hourly chart. So I tried to find all the different media coverages of peace talks or breakdowns to negotiations and reescalations of the conflict and then map it to the price here. So in a lot of these cases, the actual media coverage that I could find was a couple hours after a peak or a trough, but I just moved it to the peak because sometimes there's a little delay in the reporting and the markets pick up on it before the news does. So hopefully you can forgive me for for moving them just a little bit. And clearly there's a pattern here where every time we have an escalation in war, the price of gold sells off and then when we get rumors of peace, the price of gold rebounds. And sometimes it's very quick, very steep up and down.

[00:02:07]And there's really only one exception here. Um that was April I guess about 17th or 19th, I forget. hard to hard to tell from the chart here, but there there were rumors that the straight of Hormuz would open again and the US would relieve the sanctions on Iran. Um perhaps the markets didn't really find that credible. Uh I'm not sure why there's an exception to the pattern here, but if we zoom out and look look at the pattern here, it's repeated five times in 10 weeks. That's a lot. Five times in 10 weeks. That's quite remarkable. Okay, so why is this pattern emerging? Because it's the opposite of what we would expect to find. Well, I'll answer that in just a second. But first, an announcement about the Insiders program. We are going to be announcing a even better revamped version of the Insiders program called Insiders Plus later this month. So, it has a ton of features that you guys are going to love. They're features that you've been asking for for months. And so, we finally put that together. A lot of people have been very hard at work on it, and we're going to announce it later this month. So, if you want to be among the first to know, make sure you are subscribed to the channel and you have post notifications turned on. Okay. So what's happening with gold and Iran?

[00:03:15]Well, the typical belief is that a war premium exists. And typically this is true. What that looks like is rising uncertainty when a war breaks out. And so that's a riskoff environment. Safety on. Okay. So typically stocks sell off.

[00:03:30]They go down and gold goes up.

[00:03:33]Wonderful. Makes sense. Typically that also means rising inflation for a combination of factors and the price of gold goes up. Very simple. And typically that does happen. But like I said and like I just showed, gold is doing the opposite. So when war breaks out and and tensions escalate, gold sells off. It's so counterintuitive. And that's because we're in a completely different situation now, right? As they say, Cedrus is not always part of us. Okay?

[00:04:00]The rest is not always equal. The current situation we're in is one of fiscal dominance. So this is really the driving factor facing the United States.

[00:04:08]And so by proxy that's facing the entire globe right now everything revolves around interest rates and the ability of the United States to service its debt and keep the debt situation manageable.

[00:04:20]Uh if you believe it currently is manageable. I suppose it is. If interest rates stay high quote unquote because they're really not that high. Um but if they stay at their current level or go higher the US federal debt becomes unmanageable fast. So, let me just show you what that looks like real quick and then we'll come back here. We're going to look at the gross federal debt as a percentage of GDP. Okay, so debt to GDP and you can see where we're at right now, 121%.

[00:04:49]Um, actually, we're missing the 2026 data point. So, we're even higher now, but you can see we're up at a level that's higher than the peak of the World War II era. Okay, so we're basically up at World War levels of debt. Okay, look how fast it rose during the war. Okay, from 44% up to 119 almost 120%. So it rose very quickly and then it came down over three decades. Okay, right now we're already up at World War levels of debt and we're not fighting a world war.

[00:05:21]We've been fighting all kinds of different wars for decades and expanding social programs, but the point is we're already at World War levels of debt and we just entered another war. So if that continues, the US is at an unprecedented level of difficulty and whenever other countries and other empires have gotten to that level, they don't last very long. So this is a real critical inflection point and it's very different than if the US were starting at let's say 44% debt to GDP and then they could raise it to something like 120 and then lower it over the next few decades. The US is not in a in that kind of a position right now. It doesn't have that luxury. Okay, going back to fiscal dominance. So, what is the situation?

[00:06:03]Basically, interest rates need to come down in order for this to remain sustainable for any length of time and in order to to turn things around and basically cut payments or inflate the value of the debt away. So, anyways, for rates to come down and to fall sustainably, the US needs a new Fed chair. And I almost put a clown emoji next to that because it is a joke.

[00:06:25]Anyways, demand for US treasuries, right? It needs investors all over the globe to buy US treasuries. Otherwise, if nobody wants them, they're they're going to have a really hard time borrowing and uh it's not going to be sustainable. And they also need low inflation.

[00:06:41]So, in order to have low inflation, you have to have low oil prices. It's a must because pretty much anything that gets manufactured or transported, basically anything in the economy in some sense relies on oil and energy. So if you want overall prices to be low, you need oil prices to be low. It's just just something you have to have. And if you want oil prices to be low, you have to have peace, right? You can't have a conflict. You can't have the straight of Hormuz blocked off. You can't have oil infrastructure on fire. Okay? You need pretty much maximum supply to be online.

[00:07:15]And when you bring the supply when you bring the supply up, you can bring the overall price down. So peace is necessary for the United States to be able to afford its debt. Very interesting. And so investors see real rates going lower during peace. That's the only way it can happen because of this chain of causality. And that's what causes gold to go up. So we're in this opposite situation where peace is actually better for gold and war means that gold is going to go down. And it's pretty clear to see the inverse relationship between oil and gold when we look at the two commodities on the same chart together. At first glance, you might even think that, oh, this is just the price of gold flipped upside down. That's how strong the mirroring effect is. But it's actually Brent oil.

[00:08:01]That's the white line. And you can see that when one goes up, the other goes down since especially since the war broke out here um last day of February.

[00:08:08]So gold sold off pretty sharply like we talked about and oil rose very quickly.

[00:08:13]Okay. And then as one goes down, the other goes up and vice versa. And you can see that they're converging here lately. And so this is exactly what we just talked about that basically as the price of oil spikes, that causes inflation. That's going to that's going to hurt the real interest rate scenario and that's going to be bad for gold. And conversely, if we get peace, that's going to be good for gold because of the same chain of events in the opposite order. And so what does this mean for investors going forward? Well, it depends very much on your timeline. So, if you're a short or medium-term investor, you have a great pattern that we just identified where you can trade that all day long and try to make a profit that way. And I hesitate to even call that medium-term thinking. That's definitely short-term thinking in my mind, but some people may say that's medium-term thinking. But if you're a long-term investor, the war is probably largely noise because the long-term thesis that has been moving the price of gold for many years now is still intact. Central banks are still buying gold. Debt and deficits are still a problem and they're only becoming more of a problem. Central banks don't trust their own currencies or each other's currencies. And so they're buying gold as a hedge against the fiat currency system. So long-term investors can do the exact same thing. That's what I'm doing. I'm buying gold as a long-term play. So that is why I presented this chart in a recent video early in the Iran war. I I presented this chart like how does the war affect the gold thesis? If your time horizon is in days, this is probably a signal to sell. That's what a lot of big investors are doing and that is why the price of gold is moving the way that it's moving. This is how those macro investors are thinking on a short-term basis. If you think in terms of months, the war is probably noise. It's very hard in my opinion to forecast whether the price of gold will be higher or lower after maybe six months after the war started. It's very hard to forecast that. If you're thinking in terms of years, this is probably a signal to buy gold. This is how I'm thinking about it.

[00:10:17]So, as the price of gold sells off during the war, it's like great, gold is on sale, the long-term thesis is still intact. So, that's how I'm thinking about it and that's how it affects investors. And that leads us to our meme of the day. Small brain thinking, war, that means gold goes up. Yes. Big brain thinking, peace, that means gold goes up. Yes. Galaxy brain thinking. Fiat exists. That means gold goes up. Yes.

[00:10:48]Thank you so much for watching. We'll see you in the next video.