Why You Should Own Gold Miners AND Oil

Isn’t war supposed to be good for precious metals?

It usually is. Historically, war drives up government debt and deficit, causing more money to be printed.

And of course, gold and silver are the world’s best safe haven assets. So investors flock to them during chaotic times.

So why are precious metals treading water today?

To start with, we’ve already seen strong moves in metals over the past 18 months.

This excellent performance caused thousands of hedge funds to jump into gold and silver over the last 6 months.

Many of these temporary gold bugs are now exiting the building. That’s ok. They were never here to stay anyway.

Gold and silver will be just fine. And should the war escalate, bullion prices should accelerate.

I’m holding and sleeping just fine at night. And even with miners, which have fallen more than bullion, there’s an easy way to offset our risk with an oil “pair trade”.

Let’s get into it.

What About Miners?

Despite a recent fall, the GDX gold miner ETF is still up 9% on the year. And the SILJ silver miner ETF is up 14% so far in 2026.

But GDX is now down 19% from its peak on Feb 27. And SILJ is down almost 25% from its peak.

Note that gold and silver miners peaked exactly one day before the Iran War began.

That’s no coincidence. The spike in oil prices means miners pay more to dig metal out of the ground.

Energy is a big part of gold and silver miners’ overall costs. Diesel, gasoline, electricity. All of these things are spiking.

Oil has risen from around $57/barrel at the beginning of the year to $95 today.

Fortunately, the oil jump won’t last forever. Don’t get me wrong, we may go substantially higher in the short run. As we have said a few times, this war could escalate in dangerous and unpredictable ways.

It may even take a year to play out, and if the Strait of Hormuz is blocked that whole time, things could get gnarly for a while. That’s a worst-case scenario, though, and I expect it to end much sooner than that.

But with current precious metal prices, miners will still be making good money even if oil hits $150.

In the $150/barrel scenario, gold and silver miners would likely fall further, though. Any substantial move down would be a nice buying opportunity.

However, this type of scenario is one reason to own both miners and physical bullion. Bullion will likely hold steady or rise, while miners could fall.

The physical can either be actual coins and bars, or quality physical ETFs like PHYS and PSLV. Personally, my split is about 50/50 between miners and physical ETFs.

You may prefer to own actual bullion in your hand, and that’s fine too. Just don’t post pictures of it on social media.

If you’re more conservative, tilt toward metals rather than miners.

The 2022 (Russia vs. Ukraine) Example

When Russia invaded Ukraine in 2022, the U.S. and allies quickly sanctioned Russian oil.

Putin’s home country is a giant exporter of oil, so this quickly caused prices to spike.

Here’s a chart showing the price of oil in 2022 (light blue) and 2023 (dark blue).

Source: EIA

As you can see, in 2022 oil rose and stayed elevated for about 5 months. Then it got back to normal (until now).

In 2022, when oil spiked to almost $140/barrel, gold miners got hit pretty hard.

The spike from $80 per barrel to almost $140 rocketed the cost to mine gold and silver. Barrick, one of the largest gold miners, reported an 18% spike in all-in sustaining cost (AISC) to mine gold in 2022.

In 2022, the GDX gold miner ETF fell about 31% from peak to the low. Part of that was an overall market crash, but higher oil prices didn’t help. Still, throughout 2022, GDX only fell 9%.

Here’s a chart of GDX during 2022:

Source: Yahoo Finance

That 2022 dip turned out to be an amazing buying opportunity.

Own Some Oil, Too (The Pair Trade)

I love gold and silver miners. Owning great mining stocks is the safest way to get leveraged upside to bullion. If you’re a member of Strategic Intelligence or Jim Rickards’ other services, I’d pay close attention to their research. Jim, Dan Amoss, and the rest of the team are putting out incredible research and timing their trades well.

I’m more of a long-term buy and hold guy, for the most part. And when oil spikes, miners often take a hit.

So I like to own some oil stocks as a “pair trade” with my miners. A pair trade is simply two assets which compliment each other well.

If oil flies higher, it’ll offset the temporary hit you take from miners. And both assets act as inflation hedges.

As regular readers know, my favorite oil stock today is Petrobras. They are absolutely printing money right now.

But it is a higher risk, higher reward stock.

The primary risk for Petrobras is that it’s partially owned by the Brazilian government, which means if prices go too high, the government may say “gasoline needs to be cheaper for the people”.

However, the Brazilian government did this back in 2011 and it took a long time for their stock market to recover from the fallout. Investors don’t like government interference, and I don’t believe Brazil will make the same mistake twice.

See The Perfect Oil Chaos Stock for a more detailed writeup on Petrobras. I also like Exxon Mobil (XOM), and will be on the lookout for other ways to gain exposure to oil. However, I really only want to buy oil stocks that can make lots of money at lower prices (like Petrobras).

Anyway, this war will end. Oil will flow freely again. It’s just a question of when.

The debt bubble, however, isn’t going to end anytime soon. And that’s the primary reason we own gold, silver, and miners.