Since the Iran conflict kicked off, I've had more questions from clients about oil prices than almost anything else. The confusion is understandable. Rising oil means rising inflation. War creates uncertainty. Both of those things are supposed to be good for gold and silver. So why have precious metals dipped?

I want to clear that up, because once you understand the mechanics, the short-term noise stops being unsettling and starts looking like exactly what it is: an opportunity.

The Short-Term Mechanic: Oil, Inflation, and the Fed

Oil is not just fuel. It is the backbone of the global economy. It moves goods across oceans, powers the energy grid, makes the plastics in your devices, and gets you to work in the morning. When the oil price rises, nearly everything in the economy rises with it. 

That kind of broad-based price pressure puts the Federal Reserve in a difficult position. The Fed's job is to control inflation, and its main tool for doing that is interest rates. When inflation runs hot, the expectation is that rates go up, or at a minimum, that planned rate cuts get pushed back.

Here is where precious metals come in. Gold and silver perform best in environments of low interest rates and high inflation. When rates rise, fiat savings accounts and bonds become more attractive by comparison, and money flows out of precious metals and into yield-bearing assets. It is not that gold has become less valuable. It is that the opportunity cost of holding it has increased.

See below a short-term chart for the relationship between gold and oil during the 2026 conflict in Iran.

Why Interest Rate Expectations Move Precious Metals

The important word in all of this is expectations. Markets do not wait for the Fed to actually raise rates before reacting. They price in what they think is coming next.

Earlier this year, with oil prices relatively contained and inflation trending down, the expectation was clear: rate cuts were coming. Trump was publicly pressuring Jerome Powell to move faster. The market believed him. And with rate cuts on the horizon, precious metals were well supported.

Then the oil price spiked. Suddenly, the inflation picture changed, the Fed's room to cut narrowed, and those rate cut expectations evaporated. That shift in expectations is what drove the short-term dip in precious metals.

Market expectations are volatile. They can reverse quickly. Any resolution in the Iran conflict that brings oil prices down could flip this picture almost overnight. But I am not in the business of predicting what happens next week. That is trading. What I do is invest for the long-term picture.

The Long-Term Picture: All Four Pillars Just Got Stronger

Every reason I own precious metals has been reinforced by what has happened since this conflict began. Not weakened. Reinforced.

Money printing.

The US M2 money supply was already trending upward. Since the start of the Iran war, it has accelerated. More currency in circulation means each unit is worth less. That is the Cantillon Effect in real time and it flows directly into the case for gold and silver as stores of value.

Government debt.

War is expensive. The US is spending heavily and putting it on the national tab. Debt that was already at unsustainable levels is climbing faster. At some point, that debt has to be inflated away, and precious metals are one of the clearest hedges against that outcome.

Inflation.

We have just covered how oil drives inflation across the whole economy. Combined with the money printing, inflation is not going away anytime soon. That is structurally bullish for precious metals over any meaningful time horizon.

Dedollarisation.

This is the one I want to spend a moment on. Every time the US uses the dollar as a geopolitical weapon, it sends a message to the rest of the world: if you do not play by US rules, your dollar assets are not safe. That message has been received. Freezing Russian Treasury holdings is the clearest recent example.

China is the most visible example. They have been systematically reducing their US Treasury holdings and increasing their gold reserves. This is not a small move - it is a structural reallocation driven by a strategic decision to reduce exposure to US dollar risk.

What This Means Right Now

The short-term dip in precious metals is real. I am not going to pretend otherwise. But it is entirely explained by interest rate expectations shifting on the back of rising oil, and those expectations can reverse just as quickly as they moved.

What has not changed is any of the underlying reasons I hold gold, silver, and platinum. If anything, this conflict has made those reasons more relevant, not less. More debt. More money printing. More inflation. More geopolitical fracture accelerating the move away from the US dollar.

I see what is happening right now as a buying opportunity. Not a warning sign.

What a time to be alive.

Sam from Liberty Bullion