“The Middle East war is a nightmare for the global economy. Do you see any impact on demand for physical silver or platinum?”
Over the last near two weeks I’ve been thinking long and hard about this exact same question, not least because it directly impacts our own substantial family holdings, and how it fits into my longstanding multi-decade macro market blueprint that I formulated in the mid-2000s (constantly refining), navigating asset-class performances into the early 2030s (particularly into 2032).
The question itself has far wider implications. It sits right in the middle of a broader macro-economic crisis that is complex, interconnected, and unfortunately cannot be avoided or ignored.
Let’s call it what it is. The equity, property and debt rally we have all been living through began from the 2009 lows and was later supercharged on steroids from the post-Covid lows of 2022 into 2026. That rally was not some organic economic renaissance. It was an asset-bubble reflation machine, powered by unprecedented interventionist government policy, monetary expansion and a global debt binge that makes a “drunken sailor on shore leave” look fiscally conservative.
That’s how we have ended up with:
- An equity bubble
- An AI/tech valuation and debt bubble
- A private credit bubble
- A property bubble
- And now the unavoidable reality of a global debt and leverage crisis sitting underneath it all like a rotten floorboard
The serviceability of that debt is the mathematical magic trick policymakers now need to perform. Lowering interest rates, creating delirious narratives, or whatever growth projections political leadership can scribble on a paper napkin after three bottles of red wine — the maths simply does not negotiate. Increasingly, the macro data is pointing down.
So what do I think?
A core tenet of my macro blueprint has always been that the “bust” would ultimately emanate from the debt markets. It could be private credit cracking. It could be sovereign debt auctions failing. Wherever the breakdown occurs, the final straw breaking the camel’s back will be when the ability to roll over existing debt and service that debt begins to break down.
When that happens — when confidence slips and liquidity tightens — the demand for real assets does not disappear. It changes character.
For the past two weeks, warning signs have been flashing. Private credit globally is starting to fracture, with liquidations, downgrades and write-offs spreading. Even BlackRock, the world’s largest asset manager, has reportedly restricted client redemptions in a $26 billion private credit fund amid investor withdrawal requests.
This has much broader and negative repercussions for pension funds, but that’s a discussion for another day.
The Answer in Plain English
War risk in the Middle East is a two-headed beast:
- It is inflationary — oil prices rise, shipping risk rises, supply chain costs rise.
- It is growth-negative — confidence falls, consumption weakens and recession risk rises.
Silver, platinum and gold react differently depending on which side of that equation markets focus on.
Silver: The “Highest-Beta” Precious Metal
Silver is half monetary metal and half industrial metal, behaving like a highly caffeinated hybrid.
During a growth shock (fear of recession):
- Funds de-risk
- Leverage is cut
- Silver often falls harder than gold initially
- The Gold–Silver Ratio rises as gold outperforms
This dynamic is complicated by a legitimate global shortage of silver. Governments increasingly view it as a critical material, which matters when countries begin prioritising security of supply.
Silver’s long-term story isn’t broken. It’s simply that silver is often the first asset risk desks sell when they need to reduce exposure quickly.
During an inflationary shock (oil spikes and monetary debasement):
- Silver demand strengthens rapidly
- Prices often catch up violently after the initial liquidation
- When the Gold–Silver Ratio begins to compress, silver can turn into a slingshot
In short, silver may fall during risk-off liquidation, but inflation and monetary debasement are rocket fuel for its longer-term price.
Platinum: The “Supply Choke + Strategic Metal”
Platinum tells a different story. It is less about retail emotion and more about industrial necessity combined with highly concentrated supply.
How does Middle East war risk affect platinum?
Indirectly — but powerfully.
- War risk → oil prices rise → inflation pressure increases
- Inflation pressure → central banks become trapped
- Monetary debasement continues → hard assets re-rate higher
At the same time, platinum supply is already structurally constrained and in deficit.
Like silver, platinum has also become part of the “critical materials” conversation, as governments recognise its strategic importance in supply chains and industry.
In a growth shock
Platinum can wobble because of its industrial demand links. However, when supply remains tight — as it currently is — recoveries can be rapid.
The global platinum deficit exists by design of geology, geopolitics and evolving industrial demand curves.
Physical Demand vs Paper Markets
Here is a crucial point that investors often miss.
Physical demand does not behave the same way as paper trading.
During periods of volatility:
- Paper traders panic-sell
- Physical buyers often step in
Why?
Because war risk, inflation and currency instability increase the desire to hold assets outside the financial system.
So in my view, Middle East escalation is net bullish for physical demand, even if paper prices swing violently in the short term.
Conclusion: A Structural Shift in the Global Financial System
If the conflict intensifies and oil prices remain elevated, markets will increasingly price in:
- Persistent inflation
- Rising recession risk
- Continued monetary debasement as the system’s pressure valve
- Growing demand for hard assets as insurance
Historically, gold leads first, as it is the cleanest monetary hedge.
Silver often lags during liquidation phases but then outperforms once the Gold–Silver Ratio turns downward.
Platinum may become the sleeper trade, because its supply base is fragile, inventories are thin, and when capital finally recognises the opportunity, it does not tiptoe in — it stampedes.
In short, war risk is likely to increase physical demand for both silver and platinum.
Yes, I expect violent price volatility. But ultimately I also expect much higher price resolutions, because the cycle we are currently in is not normal.
It represents the culmination of a roughly 60-year fiat-currency experiment, which is beginning to fracture under the weight of debt, leverage and debasement.
Even if tensions suddenly fade and peace emerges in the region, that would not mean stability. The underlying global imbalances would remain — and may become even more exposed.
The broader backdrop remains unchanged: a global debasement cycle and a major asset-class rotation out of financialised assets — equities, real estate and bonds — and into the real economy, particularly infrastructure, commodities and precious metals.
In my view, that shift is no longer debatable. It is irreversible.
The Strait of Hormuz is, for all practical purposes, closed. Not necessarily officially on paper, but in the real world commercial shipping has effectively stopped.
Reports indicate:
- Saudi Arabia, Qatar and Kuwait have shut down refinery operations
- Abu Dhabi may follow, with current production reportedly reduced
Meanwhile WTI crude oil has surged to as high as US$116, reflecting the rapid deterioration in the situation.
Global equity markets are therefore likely to face intense downside pressure. Energy shocks of this magnitude are historically a textbook trigger for rapid global recession impulses.
A recession in 2026 has long been central to my macro outlook, but the speed at which conditions are tightening has surprised even me — largely due to the Middle East escalation.
Precious metals are volatile at the moment because markets are trying to balance recession risk against rapidly rising inflation driven by energy prices.
That combination produces extremely unstable pricing dynamics and violent cross-currents in the market.
Silver Physical Market vs Paper Market
Monday Price Update – 9th March (SGT 12:01 PM)
The divergence between physical delivery pricing and Western paper pricing remains extremely wide:
- Shanghai Exchange (physical silver): US$95.76 (before local tax)
- *COMEX (paper silver): US$83.13
That represents a US$12.63 premium — approximately 15.2%.
This is not a normal spread.
It is the market shouting in real time that physical scarcity and delivery value are diverging sharply from paper price discovery.