Silver Beats Gold, Defense Stocks 4 Years into Russia's War on Ukraine

GOLD FELL but silver prices held firm on Tuesday, trading close to yesterday's multi-week highs as the return of bullion trading in No.1 precious metals consumer China from the Lunar New Year holidays coincided with the 4th anniversary of Russia's ongoing war against Ukraine, now threatening to become a nuclear conflict according to the Kremlin.

"We have defended our independence...Putin has not achieved his goals...and we will do everything to achieve peace and justice," says Ukraine's President Volodymyr Zelenskyy.

"I've thought of just ordering lots of pizza on random nights just to throw everybody off," says US Defense Secretary Pete Hegseth meantime, responding to media speculation that a surge in fast-food deliveries for staff at the Pentagon could signal Washington is about to attack Iran over its nuclear research program.

Gold in London's spot market last night peaked at $5249 per Troy ounce as today's Asian trading began, its highest since end-January's dramatic gold spike towards $5600.

But the precious metal then lost 2.9% in Dollar terms, dipping through $5100, after gold prices in Shanghai ended the first day back from Chinese New Year at a discount of nearly $10 per ounce compared to London quotes, signalling weak wholesale demand.

Like gold, silver prices on the Shanghai Gold Exchange today rose sharply from the eve of the New Year of the Fire Horse celebrations, trading 14.6% higher in Yuan terms as gold showed a 3.8% rise.

That put Shanghai silver − which carries VAT sales tax for speculative and smaller industrial participants − around $8.40 per ounce above London spot, rallying from the pre-Chinese New Year average of $6.30, the smallest such gap in 2026 so far.

Silver in London today fixed above $88 per Troy ounce at the City's 12 noon auction, its highest such benchmark in almost 3 weeks.

China's absence for the Lunar New Year last week saw gold-backed ETFs worldwide record their smallest change in size since early July, with growth of 3.1 tonnes in North America-listed trust funds offset by 0.5 tonnes of selling across Europe and elsewhere according to data compiled and published by the mining sector's World Gold Council.

"We are tightening the net around Russia’s shadow fleet [of oil tankers, and we just] sanctioned more people for massive human rights abuses," says the European Union's chief foreign policy representative Kaja Kallas.

"There cannot be a shred of doubt that Russia would have to use all weapons, including nuclear, to strike targets in Ukraine and if necessary in the supplying countries as well," says former Russian President and now Kremlin Security Council deputy chairman Dmitry Medvedev after Russia's Foreign Intelligence Service (SVR) accused France and the UK of planning to give Kyiv a "wonder weapon".

Spiking to $1970 per Troy ounce on Thursday 24 February that year, the price of gold rose another $100 over the following 2 weeks to match its then-record peak from the depths of the 2020 Covid pandemic.

Gold bullion has since risen 168.1% in US Dollar terms, 164.1% in UK Pounds and 153.1% in Euros.

Silver has meantime gained 262.8% in US Dollars, with use in AI, solar energy and weapons driving silver demand higher.

With a third of a million Russian soldiers killed and reconstruction costs estimated at $588bn over the next decade, advanced-economy stock markets have risen by 55.3% on the MSCI World Index since the eve of Putin's invasion of Ukraine, while crude oil has fallen by 19.2% per barrel of European benchmark Brent and sunk by 38.0% for Russia's Urals Blend.

Europe's Stoxx Aerospace & Defense index has gained 244% in Euro terms (and 258.9% in Dollars), while the S&P Global index of US-listed aerospace and defense stocks has returned 164.1% including dividends.

Crashing as Putin's forces massed along Russia's western border in February 2022, the MOEX index of Russian equities sank by 3/5ths in price from the previous October's all-time high.

Moscow equities then rallied by 65% over the following 15 months, moving sideways since then as the Ruble has also steadied from its Ukraine-invasion crash and rally amid heavy Western sanctions against Kremlin figures and Russian businesses.