Gold To $5,400, Silver To $90 As World Enters ‘Wartime Economy’ | Nicky Shiels

Key Concepts

• Commodity Race/Arms Race: A shift away from traditional warfare towards competition for essential resources, particularly critical metals and energy.
• Weaponization of Commodities: Using control over vital resources as a strategic tool in geopolitical conflicts.
• Strategic Stockpiling: Nations accumulating reserves of critical metals and resources for national security and economic resilience.
• Debasement & Reflation: Macroeconomic conditions favoring commodities as inflation hedges and investments during periods of currency devaluation and economic recovery.
• Geopolitical Risk Premium: The increased price of commodities due to heightened global tensions and uncertainty.
• Section 232 Tariffs: US trade policy allowing tariffs on imports deemed a threat to national security, impacting commodity flows.
• Central Bank Buying: Increased gold purchases by central banks as a diversification strategy and hedge against geopolitical risks.
• Index Rebalancing: Periodic adjustments to market indices that can trigger selling pressure on overweighted commodities like silver.

The Emerging Commodity Landscape & Geopolitical Impacts

The interview with Nikki Shield, Head of Research and Metal Strategy at MKS PAMP, centers on the evolving global landscape characterized by a shift from traditional warfare to a “commodity race” or “arms race.” This race involves securing access to critical metals, minerals, and energy resources, driven by the strategic ambitions of the US, China, and Russia. Shield argues that these powers are actively “carving up the world,” leading to increased panic, fear, and ultimately, accelerated central bank buying of gold.

Venezuela & the Weaponization of Commodities

The recent developments in Venezuela, specifically Donald Trump’s intention to exploit the country’s oil resources, exemplify the “weaponization of commodities.” Shield believes this action will embolden other nations to seize resources, accelerating a trend of strategic asset control. While potentially leading to lower energy prices due to increased supply, this situation is expected to support a higher metal regime, particularly gold, as nations seek safe-haven assets. The unlocking of Venezuelan resources will take approximately 6-12 months to fully impact the market due to logistical challenges.

Gold as a Geopolitical Indicator & Price Forecast

Gold is currently trading around $4,500 an ounce, and while it hasn’t surged dramatically following recent geopolitical events, Shield maintains that it generally serves as a good indicator of geopolitical tensions. She highlights that gold is universally considered a bullish call amongst equities and fixed income, which she finds “pretty worrying” due to potential overcrowding risk. Her forecast predicts gold reaching $5,000 in the first half of the year, potentially peaking at $5,400, representing a 30% year-on-year gain. However, she cautions that the price is heavily reliant on continued central bank support. Chinese central bank purchases are accelerating this trend, with the full extent of their holdings potentially exceeding reported figures.

The White Metals: Silver & Platinum – Surprises & Drivers

The strong performance of silver and platinum, particularly towards the end of 2025, surprised many, including Shield herself. She attributes this surge to a macro investment-driven market, where inflows from retail, institutional, and speculative investors outweigh fundamental industrial demand. India’s recent policy changes, allowing government pension schemes to invest in gold and silver ETFs (up to 1% for gold/silver and 5% for private funds), are significantly boosting demand.

Regarding platinum, a shift back towards hybrid vehicles (which utilize PGMs) due to a slowdown in the EV narrative (Ford’s struggles and the EU’s revised 2035 ICE ban) is contributing to a higher price floor.

Copper: Dr. Copper & Tariff Uncertainty

Copper, often referred to as “Dr. Copper” for its perceived ability to predict economic growth, is currently at all-time highs. Shield explains this is driven by both supply constraints (lack of capex in the sector) and geopolitical factors, particularly Section 232 tariffs in the US. These tariffs effectively lock up copper supply within the US, tightening the market. Copper’s importance in AI buildout and data centers further supports its demand.

China’s Dominance & Export Restrictions

China’s control over critical minerals is a major theme. The country restricts exports of antimony (for defense), silver (impacting industrial processes), rare earth minerals, lithium, uranium, and molybdenum. China refines 60-70% of the world’s lithium chemicals and imports 60% of global copper ore, producing over 45% of refined copper. This dominance gives China significant leverage over the West. Elon Musk publicly criticized China’s silver export restrictions.

Inflationary Concerns & Macroeconomic Outlook

Shield acknowledges that higher commodity prices generally contribute to inflation. However, she suggests that lower energy prices could offset this effect. She anticipates a “high for longer” metals regime and a “low for longer” energy regime. The key to managing inflation will be a “Goldilocks” slowdown – enough to ease pressure but not enough to trigger a recession.

Investment Strategy & Risk Management

Shield advises investors to have “some skin in the game” with precious metals, allocating 1-5% of their portfolio. She suggests diversifying exposure through physical holdings, leveraged instruments, and equities. She cautions against chasing rallies and recommends “peacemealing” into the market, taking advantage of dips. She views silver as having more short-term headwinds due to index rebalancing, with approximately 15% of aggregate open interest needing to be sold across futures contracts.

Conclusion

The interview paints a picture of a world increasingly defined by resource competition and geopolitical risk. The traditional concept of warfare is evolving into a “commodity race,” driving demand for critical metals and safe-haven assets like gold. China’s dominance in key mineral supply chains presents a significant challenge for the West. Investors should consider diversifying into commodities, particularly precious metals, but with a cautious approach, recognizing the potential for volatility and overcrowding. The macroeconomic environment, particularly the actions of central banks and the trajectory of global growth, will be crucial in determining the future direction of commodity prices.