(Money Metals News Service) In this Money Metals podcast episode, host Mike Maharrey welcomed silver market specialist Peter Krauth, author of The Great Silver Bull and publisher of Silver Stock Investor, for a wide-ranging discussion on war, inflation, interest rates, debt, industrial demand, physical silver supply, and the long-term outlook for silver.
Krauth’s core argument was straightforward. In the near term, war-related turmoil can create volatility and even knock gold and silver lower. But over the medium to long term, he said war is deeply inflationary and therefore supportive of both metals.
He pointed to rising oil prices, higher transportation costs, the destruction of infrastructure, and the need to replace weapons and damaged assets. Governments, he argued, do not have the cash to absorb those costs cleanly. In his view, they will print money, and that process will feed inflation over the next several quarters and years.
(Interview Starts Around 5:45 Mark)
Why Gold and Silver Can Sell Off During a Crisis
Maharrey noted that many investors were surprised to see an initial safe-haven bump followed by a selloff in both gold and silver after the outbreak of war. Krauth said that the pattern is not unusual. He described precious metals as liquid assets with no counterparty risk, which makes them useful sources of liquidity when institutions or governments need cash fast.
Both men pointed to earlier examples. In 2008, gold and silver sold off sharply during the financial crisis. The same thing happened during the early days of the pandemic. Krauth argued that these moves do not mean the metals have failed. Rather, they are often used exactly as they are meant to be used during periods of stress.
Krauth also highlighted sovereign selling pressure. He cited Turkey as one example, saying it had reduced its gold holdings by roughly 53 tons over the prior month or two in order to help fund its budget. Countries facing higher oil import bills, a stronger U.S. dollar, and rising funding pressure may liquidate precious metals to raise dollars.
Inflation, Interest Rates, and the Fed’s Trap
A major part of the conversation focused on the mainstream view that inflation could force the Federal Reserve to raise rates, making gold and silver less attractive because they do not yield income. Krauth said he believes that fear is overstated and likely temporary.
He contrasted today’s fiscal position with the one Paul Volcker faced in the 1970s. Back then, Volcker pushed rates to 18% to 20% to break inflation. But Krauth noted that U.S. debt-to-GDP was only about 35% then. Today, he said, it is over 120%. That difference matters. With debt levels this high, he argued, meaningful rate hikes would make the debt burden much harder to service.
Krauth said the Fed and Treasury are stuck between a rock and a hard place. In his view, they are more likely to tolerate higher inflation than to impose the kind of rate increases that would seriously crush it. He said perhaps rates could remain higher for longer than previously expected, but he does not see a durable return to aggressive hiking.
The Debt Problem Is Getting Harder to Ignore
The debt discussion became one of the most important parts of the episode. Krauth cited nearly $40 trillion in U.S. debt and stressed how much of it is turning over in a short period. He said that from March 2020 to March 2022, the U.S. issued $6 trillion in new debt. About half of that, he noted, was issued in 2-year to 10-year Treasurys instead of locking in ultra-low 30-year borrowing costs below 2%.
He then pointed to the maturity wall. About $9 trillion came due and rolled over last year, and another $9 trillion to $10 trillion is rolling over this year. That means roughly half of the entire U.S. debt stock is being refinanced across just two years. Krauth argued that this is one more reason the Fed cannot sustain meaningfully higher rates.
Maharrey added a historical perspective. He said the national debt in 1995 was under $5 trillion, around $4.9 trillion, during the era of Newt Gingrich and the “Contract with America.” He also observed that no president since Grover Cleveland has left office with less debt than when he came in, including Bill Clinton, despite Clinton posting a few years of budget surpluses.
Maharrey described the problem using Greg Weldon’s phrase, the “debt black hole,” arguing that its pull now affects everything in the economy. He also noted that even during the post-pandemic tightening cycle, financial conditions never became truly tight by historical standards, citing the Chicago Fed’s National Financial Conditions Index.
Silver’s Industrial Role Keeps Getting Bigger
Krauth emphasized that silver is no longer just a monetary metal story. It is increasingly an industrial metal as well. He said that about five years ago, silver demand was roughly 50% industrial, but last year, industrial demand accounted for about 67% of total silver demand. That shift, he argued, makes silver even more tightly connected to the real economy.
That can cut both ways. If economic growth slows, investors may worry that industrial silver consumption will soften. But Krauth argued that some war-related inflation effects could actually support silver demand in key sectors. He gave the example of energy. Higher oil and gasoline prices can push households and businesses to look more seriously at alternatives such as hybrids, EVs, and solar power.
He cited a BBC report on Octopus Energy, the largest utility energy provider in the U.K., which said demand for solar panels had jumped 50% in recent months. Since solar is the single largest industrial use of silver and accounts for about 20% of all silver demand, Krauth said this kind of shift can offset some cyclical weakness elsewhere.
Military Demand Could Be a Bigger Silver Driver Than Many Realize
Maharrey also raised the issue of rearmament. Beyond the current war itself, he noted that countries such as Germany, England, and France are ramping up defense spending as Europe adjusts to the possibility of less U.S. support. That matters because military hardware uses a lot of silver.
Krauth said one estimate suggests a Tomahawk missile contains about 150 grams of silver. Once that logic is extended across tanks, surveillance systems, radar, computers, laptops, and replacement electronics, the silver requirement begins to add up quickly.
He said some of the more reasonable estimates suggest military demand could account for around 5% of annual silver demand. That is not the dominant demand category, but it is far from trivial. In an era of expanding military budgets, Krauth sees that as another tailwind for silver.
Structural Deficits Still Matter, Even If the Headlines Have Moved On
The conversation then turned to one of the most important long-term silver themes, structural deficits. Maharrey noted that silver mine output plus recycling has failed to keep pace with total demand for multiple years, forcing users to rely on above-ground stocks. Krauth said that the issue has not gone away, even if media attention has shifted elsewhere.
He compared the movement of silver between London, New York, and Shanghai to a shell game. The metal may move from one exchange system to another, but that does not create more silver. It only changes where the available silver is sitting.
Krauth cited the Silver Institute’s view that the market has already gone through five straight years of structural deficits and is expected to remain in deficit for another five years. He said the Institute has also indicated that a new record high deficit could occur at some point during that period.
He also raised an analytical issue with the way silver ETF demand is treated. Krauth noted that the Silver Institute breaks ETF silver out separately because it is not considered “consumed,” even though physical bars and coins are included in the main demand calculation, despite also being resellable. He argued that if ETF demand is included in the broader total, then 2025 could show the largest silver deficit on record.
The next World Silver Survey, he said, is usually released in mid-April, and he suggested that investors watch it closely for updated numbers.
Peter Krauth’s Favorite Silver Coins and Why Recognition Matters
To close the interview, Maharrey asked Krauth a lighter question about his favorite silver coin. Krauth picked the Canadian Maple Leaf, noting both national pride and practical appeal. He said the Maple Leaf is widely recognized around the world and said Canada was the first to produce a four-nines fine silver coin, which he described as 0.9999 purity.
He also praised the American Silver Eagle as another globally recognized standard, and mentioned the Austrian Philharmonic as a regional favorite in Europe. His broader point was that recognizability matters. A well-known bullion coin tends to be more liquid and easier to sell anywhere in the world.
Krauth acknowledged that government-minted coins often carry higher premiums than generic rounds or bars, but said buyers are paying for recognition and should expect to recover much of that premium when selling. He added that bars are usually the cheapest way to get maximum silver for the dollar, though he still thinks it is smart to keep at least a handful of recognizable coins on hand for transaction flexibility.
Final Takeaway
The episode’s central message was that the short-term volatility in silver should not distract investors from the bigger forces at work. Krauth sees war, debt, refinancing pressure, fiscal weakness, industrial demand growth, military consumption, and ongoing structural deficits all reinforcing the long-term case for silver.
Near-term headlines may keep markets jumpy. But in Krauth’s view, the fundamental setup remains increasingly supportive for silver, especially in a world where inflation is politically easier than discipline and where demand keeps expanding faster than supply.
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