Chilliwack (Bill Westmacott, Owner, Fivefold Financial) – If you go back and read my first blog of 2026, it has played out for the most part as I forecasted. Volatility, geopolitical risks and yet the stock markets have remained net positive so far. The two big Black Swan events of the first six months were the acceleration of war with Iran and the rapid rise in inflation (due to the Strait of Hormuz crisis), which caused oil to blow through $100 per barrel and triggered the largest oil crisis in history. The fallout of the war caused the rise of the US dollar, rising interest rates and bond yields, and the precious metals markets to have a major pullback. Secondly, Japan, Australia, Norway, Indonesia, the Philippines, Colombia, and South Africa and 21 nations in the EU began to raise interest rates due to the massive inflation caused by the oil spikes and poor political policies. The US and Canada kept interest rates the same, though clearly inflation continues to be a serious problem in both countries. The Central bank in the US has not been able to reach its 2 percent inflation target for 64 months! Canada has done no better. The secondary cause of inflation is the fiscal policies of both countries, both running massive deficits. The US is running a 7% deficit of its GDP (the fourth highest in US history), and Prime Minister Mark Carney will outpace Mr. Trudeau in his spending spree with no constraint in sight.
So, why did Mr. Trump sign the Deal or No Deal with Iran? 32 countries literally were running out of national oil reserves, and the USA drained its Strategic Petroleum Reserve (SPR) approximately 325.7 million barrels, which is the lowest level since 1983. Country after country was on the verge of serious economic crisis! Lower oil prices and petroleum by-products are essential for stable global economies and the current lifestyles many of us enjoy. Over 30% of the world’s fertilizer has been disrupted by the Strait crisis, ensuring higher food prices in the coming months. When oil and gas prices rise rapidly, politicians know they run the risk of social unrest and overthrow of their power. Over 20% of the world’s exports of oil and oil-by-products flow through the Strait of Hormuz, and essential for countries in Asia and Southeast Asia. Asian and Southeast Asian countries make up almost 68% of the world’s population. I am sure President Trump was getting phone calls daily!
So, why did precious metals take such a big hit since the end of January? There are several factors. First, we had a historic price rise in gold, silver, and platinum from the end of January 2026. Gold was $2624.50 US on January 1, 2025 and peaked to $5414.49 US on January 28, 2026, and as I write, we are sitting at $4057.30 US. Silver was $28.92 US on January 1st, 2025, and peaked to $116.61 US on January 28, 2026, and as of today, $59.70. These were amazing gains of well over 100% in those 13 months, and there will always be a major correction or crash when you have hockey stick chart gains!
So, what has unfolded in 2026 is normal and healthy. Second, due to the oil crisis, countries started selling US treasuries first to raise US dollars to buy oil. Then countries like Turkey and Russia sold large amounts of gold to raise US dollars or capital, which further suppressed precious metal prices in 2026. Third, the demand for US dollars strengthened its price, and over the last 52 weeks it went from 95.55 to 101.80 DXY, which is a huge price spike. Gold and precious metals often work inversely to the US dollar. When the US dollar strengthens, gold price often goes down, as was true in 2026 so far. I have mentioned before that wars are inflationary due to supply disruptions. Fourth, when people, institutions or governments need cash, they often sell gold and silver since they are very liquid. This too has happened over the last few months and contributed to the selloff. I will share my forecast shortly for precious metals for the remainder of 2026.
Last Six of 2026 We need to remember Nations have no friends, only interests and this is particularly true of the USA as the dominant world superpower. The US needed oil prices to come down to rebuild their reserves and lower their inflation. Also, to restock their weapons! Americans are hurting, especially the middle-lower class of the economy, and the Republicans know this will not bode well for the mid-terms. Remember the US has their mid-term election coming up in November of this year. Iran will do everything in their power to ensure President Trump’s Senate is lost to the Democrats and make sure he is a lame duck president for the last two years. Expect a few very bumpy months in the markets. We have a grand chess match of geopolitical will, and in a very short time frame we will see who wins. My assessment is the war with Iran will most likely continue and cause serious problems in the Middle East and for Israel…I hope I am wrong. But, as we have witnessed in the last week, they just cannot help themselves shooting rockets and drones at each other. So much for peace!
Key things to watch and possibly do in the second half of the year
The highest odds right now is we will continue to see an inflationary boom. Why? Massive government fiscal spending on both sides of the border. Second, in the US, the AI center buildout is to inject about 800 billion dollars into the US economy. In this environment, best to diversify between value stocks, metals (gold, silver, copper, uranium, etc.), growth stocks (possibly some chip or AI-related quality companies and other sectors), energy, but avoid bonds. As long as oil remains between $60 US and $90 US per barrel, the global economies can function, but after $ 100 per barrel, then we have a problem. Asian and Emerging Markets are still outperforming the Canadian and US stock markets. Real estate markets will continue to struggle in many regions, and especially in big cities due to affordability. There are still hundreds of thousands of Canadians needing to refinance their homes in the second half of 2026. Many are facing refinancing shock and a monthly payment increase of between 10 to 20%. The AI stocks have made huge gains over the last year, and many analysts are warning of an AI bust. I agree sectors of the stock market are overvalued, but these things can go on a lot longer than one can rationally imagine. Yes, one day we will have another big bust in the markets; however, I think we will muddle through the rest of 2026 with net positive gains in most stock exchanges. The only caveat is, if we have a severe global event (geopolitical or some other black swan event) during the remainder of 2026, then all bets are off. Remember, President Trump likes the stock markets up, especially with the coming midterm election. I encourage those who are carrying BAD debt to continue to pay it off and build up savings. Gold may correct to the $3500 US range over the summer, and silver may bottom in the $50 to $54 US range. If it plays out this way, these will be excellent purchasing points in both metals. I am building capital right now to buy more soon, and I encourage you to do the same. As a reminder, I provide a discount to retail pricing through Border Gold. So please reach out ot me if you are interested. I feel the last 3 to 4 months of 2026 will provide a strong rally in precious metals.
I hope you found the blog informative, and if you have any questions, please reach out to me. Bill Westmacott, Owner, Fivefold Financial, Life Insurance Broker in BC, Precious Metal specialist, Estate Planning and a wide range of Investment Options.
