Mark Thornton argues that war-driven supply shocks and weakening confidence in the dollar are pushing precious metals higher, despite a sharp correction in silver and near-term headwinds from higher rates and oil. He remains bullish on silver making new highs in 2026 and sees the U.S. moving closer to a hyperinflationary dollar regime as fiat credibility erodes.
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This Commodity Culture interview with Jesse Day features Dr. Mark Thornton, who frames the market around two dominant forces: the business cycle and war. Thornton says the Middle East conflict acts as a supply shock by removing labor and materials, disrupting transport, and lifting energy prices, which then feed into CPI and make Fed rate cuts harder to justify. He argues that this has helped explain the recent selloff and volatility in gold and silver, as traders and hedge funds de-risk, seek liquidity in the dollar, and respond to shifting expectations around the war and monetary policy. On silver, Thornton says the move from below to above $100 created a setup for a large correction, and he views the recent decline as consistent with historical volatility and average drawdown patterns. …
Near term, gold and silver remain vulnerable to war-driven whipsaws, dollar strength, and shifts in Fed-cut expectations. The actionable setup is still tactical: watch Middle East headlines and any change in liquidity/rate expectations for the next move.
Over the coming weeks and months, the base case is for precious metals to recover once the market refocuses on fiscal stress and monetary accommodation rather than transient geopolitical shocks. Confirmation would come from softer real rates, renewed easing/liquidity measures, and a weakening dollar; failure would be a continued risk-off liquidation phase.
Structurally, Thornton sees the dollar system as drifting toward regime loss of confidence, with fiat debasement and petrodollar erosion making hard assets more valuable over time. The lasting implication is a durable bid for gold and silver as alternative monetary stores of value.
The Middle East war acts as a supply shock that disrupts labor, transport, and energy inputs, pushing CPI and complicating Fed rate cuts.
Thornton says the war removes people from the labor force, shuts down transportation, lifts oil and gas prices, and feeds CPI, which makes Fed cuts harder to justify.
Silver's violent drop after breaking above $100 is a normal large correction rather than a trend change.
He says silver often corrects around 40% after major moves and that the recent move from 121 lower fits historical volatility.
Silver can make new all-time highs, potentially triple digits, in 2026.
He directly answers yes to triple-digit silver in 2026 and says new highs are likely if the Persian Gulf situation clears and monetary debasement reasserts itself.
Why have gold and silver been selling off during the Middle East war, contrary to expectations that war would boost precious metals, and how do you expect them to react if the war drags on?
Thornton explains there are two big factors: the business cycle and the war (a supply shock). The war drives up oil prices, which spikes CPI, making it harder for the Fed to justify rate cuts. Fewer expected rate cuts are negative for gold and silver. Also, Persian Gulf residents and speculators are selling gold for liquidity and safety, creating short-term downward pressure despite war being bullish long-term.
What do you make of silver's wild price action from surging close to $120 to falling to around $73, and do you think we get back to new all-time highs this year?
Thornton says silver is more volatile than gold and he expected a big correction of up to 40% once it passed $100. The correction has been driven by speculators, hedge funds, and war-related uncertainty. He predicts triple-digit silver and a new all-time high in 2026 if the Persian Gulf situation clears and long-term trends of monetary expansion resume.
Are the headwinds of the Fed holding rates steady, potential rate hikes, and higher oil prices all negatives for gold, and would you view any gold corrections as buying opportunities?
Thornton acknowledges these are headwinds that matter in the short term but less so in the long term. He notes the Fed already started a semi-secret QE program in December at $40B/month and expects it to expand. Once the Persian Gulf situation resolves, the market will reset onto the structural problems of the U.S. economy (malinvestments, overextended credit), and metals should firm and head higher along long-run policy trends.
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