Why Gold, Silver and Equities are Falling

Gold was supposed to be the safe haven. Silver was the hot trade which everyone wanted to get on on last year. And equities? Well, they had been on a tear. But right now, in March 2026, all three are heading south at the same time — and the reasons are stranger, and more interconnected, than you might think.

Let's start with a number that will make your jaw drop.

Gold just had its worst week since 1983. Silver's single worst day since 1980 happened barely two months ago. The S&P 500 has now fallen four weeks in a row — its longest losing streak in over a year — and has broken below its 200-day moving average for the first time since early 2025. The Dow is on pace for its worst month since 2022.

Something is clearly wrong. Or rather, several things are wrong all at once. And they've decided to show up at the same party.

It Started With a War

On February 28, the US and Israel carried out joint military strikes on Iran. The operation killed Iran's Supreme Leader and several senior officials. In response, Iran launched retaliatory missile attacks across the Gulf region — hitting US bases in Jordan, Qatar, the UAE, Bahrain, and Kuwait — and, crucially, shut the Strait of Hormuz.

This narrow waterway between Oman and Iran is roughly 39 kilometres (21 nautical miles) wide at its narrowest point. In normal times, about 20% of the world's crude oil passes through it every single day. When Iran blocked it in early March, it triggered the largest oil supply disruption in the history of global energy markets. The IEA called it "the greatest global energy security challenge in history."

Within days, Brent crude oil had surged past $100 a barrel. By mid-March, it was testing $125–126. Oil production from Kuwait, Iraq, Saudi Arabia, and the UAE collectively dropped by at least 10 million barrels per day. QatarEnergy declared force majeure on specific long-term LNG contracts — with buyers in Italy, Belgium, South Korea, and China — after Iranian strikes damaged two of its LNG export trains. West Texas Intermediate crude finished one week with a 35% gain — its biggest single-week jump since oil futures trading began in 1983.

And that's where the trouble for everything else began.

Why Oil Kills Equities?

Oil is not just petrol at the pump. It is embedded in the price of almost everything — fertiliser, shipping, plastics, food, chemicals, airline tickets. When oil surges this violently and this quickly, the word that Wall Street starts whispering is one that central bankers truly hate: stagflation.

Stagflation is the toxic combination of rising inflation and slowing growth. It's brutal for markets because there's no good policy response. If you raise interest rates to fight inflation, you slow down an already-weak economy. If you cut rates to boost growth, you pour fuel on an inflation fire. The Fed is stuck.

The parallels to 1973 are real. That year, the OPEC oil crisis coincided with a recession, and the S&P 500 plummeted nearly 50% over 21 months. Moody's chief economist Mark Zandi warned this month that a machine learning model he watches — which has never been above 50% without a recession following — was sitting at 49% before the Iran conflict even began.

Goldman Sachs strategists warned that a severe oil shock could drag the S&P 500 down to 5,400 — a 22% decline from its January peak of 6,979, which would qualify as a bear market. The index last peaked at 6,979 in January. It is now approximately 6% below that level and has broken through its 200-day moving average — a signal that, historically, has preceded an average further decline of 17% in the following year.

Jobs data has also started to crack. US nonfarm payrolls fell by 92,000 in February — far below the expected gain of around 59,000 and a sharp reversal from January. The unemployment rate ticked up. Consumer sentiment dropped. The University of Michigan's survey director noted that interviews done before the Iran strikes showed improvement, but every gain was wiped out completely in the nine days that followed.

So Why Are Gold and Silver Also Falling?

This is the part that confuses most people. Gold is supposed to be the safe haven. Wars are supposed to be good for gold. In fact, gold initially spiked when the Hormuz news broke, jumping sharply in a matter of hours. And then it reversed hard. Within two days, it had fallen 6% from that intraday high. By the week ending March 21, gold had shed nearly 10% — its worst weekly performance since 1983.

Silver was even more dramatic. In late January, silver futures suffered their single worst day since March 1980, falling 28–31% in one session.

What's going on? Three things, all working together.

First: paper traders getting squeezed. The gold and silver you see trading on exchanges is not mostly physical metal. It's futures contracts, ETFs, and leveraged positions held by hedge funds, systematic traders, and retail speculators who piled in during 2025's bull run. When the dollar strengthened — which it did sharply during the initial Iran shock — those traders faced margin calls. They needed cash, and fast. Gold and silver are liquid. So they sold gold and silver — not because they thought the metals were bad investments, but because they needed to raise money quickly. When CME Group raised margin requirements on silver futures contracts, traders who couldn't post the extra capital were automatically liquidated. That forced selling was a key driver of the historic January crash in silver.

Second: the Kevin Warsh effect. In late January, Trump officially nominated Kevin Warsh to replace Jerome Powell as Fed Chair when Powell's term ends in May. Markets initially panicked — fears of a political loyalist slashing rates recklessly had been driving some of gold's safe-haven premium. When Warsh turned out to be a relatively orthodox pick, some of that fear-premium deflated. Gold and silver lost a reason to be held. A stronger dollar — which a more credible Fed signals — makes gold more expensive for foreign buyers. A dollar that looks stable is competition for gold's role as a store of value.

Third: tourist money is leaving. The 2025 gold and silver rally attracted what one analyst called "generalists, systematic hedge funds and a lot of retail" — money that was not committed to precious metals for the long term. It rode the momentum. Now, as geopolitical uncertainty whipsaws prices in both directions, that money is heading for the exit. As one analyst put it, the tourists are leaving — and that might actually be what's needed before gold takes its next leg higher.

The Fed Is Caught in a Box

At its March 18 meeting, the Federal Reserve held rates steady at 3.5–3.75%. But what it said afterwards rattled markets further. Fed Chair Powell cited "uncertain" impacts from the Middle East conflict and essentially signalled that rate cuts — which markets had been counting on for 2026 — might not come at all this year.

Markets are now pricing out even a single rate cut in 2026. Before the war began, traders had pencilled in two quarter-point cuts. Now bond futures traders see roughly 39% odds of even one cut, not until September at the earliest.

This is devastating for equity valuations. The Fed's own meeting minutes had already flagged that price-to-earnings ratios for public equities stood at the upper end of their historical distribution. In plain English: stocks were already expensive. The entire bull market of the past three years was built partly on the assumption of falling interest rates. Take that assumption away, and the maths of holding high-priced stocks starts looking much less attractive.

Higher rates for longer also raise the opportunity cost of holding gold — a metal that pays no interest. If US Treasuries are yielding decent returns and looking stable, why hold gold?

When Safe Havens Sell, Everything Sells

There's a phase that happens in severe market stress that most investors never see coming — when even the "safe" assets start falling alongside the risky ones. We saw it briefly in March 2020 when Covid fears hit. We saw it in 2022 when rates spiked. And we're seeing it now.

The mechanism is simple and brutal. Investors who are sitting on losses in equities need to raise cash. They look around their portfolios for whatever has held its value — and in 2025, gold and silver held their value spectacularly well. So those assets get sold to cover losses elsewhere. Gold falls. Silver falls. The falling precious metals spook other investors. More selling happens. The cycle feeds itself.

Nobody is safe when everyone needs cash at the same time.

Is This the End, Or Just a Pause?

The short answer: probably a pause, not an end — but the path back up is unclear and uncomfortable.

On the gold front, the long-term story hasn't changed. Central banks — which now hold around 17% of all mined gold — were still buying last year, and a 2025 survey showed that 95% of central banks expect global gold reserves to rise in 2026. The structural case for gold (US dollar weakness, geopolitical fragmentation, de-dollarisation) remains intact. JP Morgan is forecasting gold at $6,300 per ounce by year-end. Deutsche Bank is at $6,000.

For equities, Morgan Stanley notes that history suggests sudden economic shocks — wars, pandemics, energy crises — are often short-lived, with limited long-term consequences for equity markets. Bank of America's analysts believe the energy shock is unlikely to trigger a full recession, arguing the current environment looks more like 2005–2009 than 1973. The US is also now a net energy exporter — its sensitivity to oil shocks is meaningfully lower than it was in the 1970s.

But as of today, March 23, Trump has posted on social media saying the US had "productive conversations" with Iran and has postponed further military strikes for five days. Oil fell sharply on the news. Gold dropped nearly 4% in immediate reaction. Markets breathed, briefly.

Whether this is a genuine de-escalation or just a pause in a longer conflict, nobody knows. And that uncertainty — more than any single data point — is what's truly driving every market right now.

The bottom line: A US-Iran war has triggered the largest oil supply disruption in history. That oil shock is raising inflation fears, pushing the Fed to freeze rate cuts, squeezing corporate earnings, and making expensive US equities look even less justified. Meanwhile, gold and silver — which had their best year in decades in 2025 — are being sold by leveraged speculators who need cash, spooked by a stronger dollar and a more credible Fed chair. Everything is falling together because everything was being held together by the same fragile assumption: that rates would keep falling, growth would stay strong, and the world would stay relatively calm. None of those things are true right now.

Disclaimer: This is for informational purposes only. It is not investment advice. Talk to a financial advisor before making decisions based on short-term market movements.