Gold and silver in an oil crisis: lessons from 1973

0:00If you own gold or silver or even just a 401k with stocks, what's happening right now in the Middle East could be the single biggest wealth event of your lifetime. Iran's Revolutionary Guard just declared that, and I quote, "Not a litre of oil will pass through the Strait of Hormuz." That is 20% of the world's oil supply gone.

0:24The last time something like this happened, 1973, before I was born, certainly before Winston was born, the stock market lost 45% of its value. Gold went up over 2,000% and most regular investors got absolutely destroyed because nobody told them what was coming.

0:45So by the end of this video, you'll understand exactly what happened in 1973, why it's happening again, and the specific playbook that Wall Street insiders are using right now to protect and grow their wealth while everybody else is panicking. My name is Felix Prehn. I'm an ex-investment banker. That's Winston back there, the head of our research division, which is sleepy.

1:09I've seen crisis play out since. And I always see again and again how retail investors get just slaughtered while the Wall Street guys make a heck of a lot of money. And I'm going to do something even better for you than this video, which will get you up to scratch with what the heck's going on there and how to protect yourself and everything else.

1:33But if you really want to learn how to pick stocks in moments like these, and these are the greatest opportunities in my humble opinion than ever, remember last year we had that tariff crash. The people who knew how to pick stocks in that moment, they just carried that rally back out and they just got wealthier, right? So Wall Street has got 3 really simple rules for that, but I'm not going to explain them to you in this video because that will take an hour or two.

2:01So I'm going to run a live session for you guys this weekend at felixprehn.org/training and teach you Wall Street's secret 3 rules for buying stocks. It's free. Just get yourself a free seat and show up on time. Felixprehn.org/training and I'll walk you through all of that because the guys on the big banks, they've seen this movie before. 1973, 1979, 1990, 2003. And every single time the investors who understood history, they made fortunes. The ones who didn't, well, they're still trying to recover.

2:35So let me briefly take you back to the early 70s. America was cruising. Literally the whole nation had become, in the words of one historian, swift and mobile, flowing along over a great network of highways more than 3 million miles long. And Americans felt like there was plenty oil, plenty of coal, and people were finding new ways to use that energy every day. Gas was really cheap. Cars were enormous, ginormous cars. I want one of those.

3:03And nobody really thought twice about filling up the tank. Actually, if you do own one of those big old enormous 60s US cars, put the model in the chat down below. I'd be interested. And the American dream literally ran on petroleum. Supply was endless seemingly.

3:19And by 1969, American domestic oil production had peaked. So the US was becoming more and more reliant on foreign oil. They were importing about 35% of their supply from the Middle East. Nobody cared because oil was cheap and when something is cheap, people just assume it's going to be cheap forever, right?

3:44And here is why I'm telling you this, because that exact complacency, that's what we had before February 28th. Oil was pretty cheap. The Strait of Hormuz was open and most investors assumed it would stay that way forever.

3:57Then October 73, Israel's attacked by Egypt and Syria, the Yom Kippur War, and the US backs Israel and Saudi Arabia along with other Arab OPEC nations decides to use the one weapon America never saw coming. They turned off the tap. The OPEC oil embargo hit the United States very hard, like a freight train.

4:19Oil prices didn't just go up, they quadrupled from $3 a barrel. Inflation is a real thing, by the way. $3 a barrel, it went to $12. Gas stations went out. Fuel signs went up everywhere, literally saying, "Sorry, out of gas, closed." There was a limit. You could only get 10 gallons when you were buying gas.

4:39And Americans were waiting in line for hours just to fill up the car. The cost of living shot up 8%. Food prices went up 19%. They fired 56,000 workers and cities started turning off their street lights to save energy. That's how serious it was.

4:57And the government's response, President Nixon, who was also dealing with a little thing called Watergate at the time, well, he lit the Christmas tree at the White House with only 20% of its normal lights because nothing says we've got things under control than a dimly lit Christmas tree.

5:17But what people don't really talk about is what happened to investors. And that's the real lesson that you can apply to today. The 1973 stock market crash was one of the worst since the Great Depression. He rubs his hands. Yay, opportunity. You know the buying rules. You know what I'm talking about. Come and join me on Saturday. Felixprehn.org/training.

5:37The Dow went down 45%. That's like half of people's retirements gone. And it wasn't just America. London lost 73% of its value. Hong Kong dropped like crazy. Global wealth was being incinerated, literally.

5:55But here's the part that should terrify every 401k and IRA holder watching this. The US stock market didn't recover to its real value until 1993. That's 20 years. Now, those of you who are looking at charts going, "No, no, it's not 20 years." Yeah, if you adjusted for inflation because the market just goes up with inflation, but if you actually take care of that, that was 20 years.

6:19So you were 45 when the crash hit. You're planning to retire at 65 and congratulations, you're back to where you were when you were 45, right? And those 20 years were an economic wasteland.

6:33Now, does any of that sound familiar? This is not a doom and gloom video, right? We're looking at opportunities here. We have a Middle East conflict. We have an oil supply disruption that is actually very hard to control because as long as Iran has a couple of drones lying around and they can strap a hand grenade to it, they can seriously disrupt oil flow.

6:55So we've got inflation going up. We've got the stock market going down. You're getting that déjà vu right now. And if you're getting that déjà vu right now, put 1973 in the comments and I'll see that this is landing for you.

7:06Now while the stockholders were getting slaughtered in the 70s, gold did something extraordinary. Just during the OPEC embargo in 73, gold rose 65% but that was just the amuse-bouche as they say in fancy restaurants.

7:20In 71 Nixon had taken the US off the gold standard. Gold was no longer pegged at a fixed price of $35 an ounce. It was free to find its real price while they were printing money like it was fun. And gold went from $35 to $120 by mid 73 and then kept climbing. By 1980, it had hit $850 an ounce. That's a 2,300% increase from its 71 price. So say you put 10K into that, you would have ended up with $243,000.

8:02Silver, well, it went way up to $50 in 1980. So what's the key insight here? Well, what I learned from my Wall Street mentors, guys who worked in banking for decades, the 70s proved something that most financial advisors still might not tell you or might not know about.

8:17When governments print a lot of money, when inflation runs hot, when you get wars, chaos that disrupts our energy supply, paper assets get destroyed. Hard assets like gold and silver become the safe haven. At least that's my interpretation of it.

8:33Now, lots of people will tell you, "Oh, 1973, it's ancient history. Forget about it." No, it's actually a user manual for right now. Because think of it like this. Gold and silver are financial fire extinguishers. You don't need them when everything is fine. But when the building's on fire, and right now the building is very much on fire, at least in the Middle East, they're the only thing standing between you and potential ruin.

8:55Now, if you're still thinking, well, what do I buy? How do I protect myself? How do I benefit from this dip? And at the moment it's a dip. It could get a lot worse. Then join me on Saturday. It will be a free live training where I teach you Wall Street's very own rules for picking stocks. The same rules my mentors taught me. The same rules that helped investors navigate the 70s, 2008, and every crisis in between.

9:18And if you want to learn how to protect your portfolio and actually potentially profit when markets go haywire, join me live. The link is in the description. Felixprehn.org/training. You might see it on the screen as well that you can just click on it down there. And if you're planning to show up for that, write "learn" in the comments because that's really what it's all about. It's about learning skills for situations just like this.

9:43Now, we need to talk about the elephant in the room, the Strait of Hormuz. Most of us will remember that last June, US and Israel conducted strikes on Iran's nuclear facilities and they said the Department of Defense estimated they set back Iran's nuclear programme by 2 years. Iran's response, well, they claim they rebuilt everything. Their foreign minister says they're prepared for defence. Iran's Revolutionary Guard has shut down the Strait of Hormuz where one in 5 barrels of oil that the

10:13The world digs up and passes every single day. Now, we actually keep track of this. We have a tool that I built. You can get access to that. It's like six bucks a week. You can cancel at any time and we do that because we want you guys to be really well informed. And it tells you literally what's going on, where it's happening.

10:35It shows also the oil infrastructure. So if you want to see where the pipelines are, for example, not just that one, but all the major pipelines around the world, it tells you all of that and it tells you which one's important or which one isn't. It gives you important military flights, you can see those. If you're into oil, gold and silver, seismic activity as in earthquakes is actually pretty important.

10:59For example, as we come into hurricane season, hurricanes and everything else, shipping lanes, all that good stuff is there. And the news will feed into this minute by minute. You can also see live the actual, not just the Strait of Hormuz because that's important right now, but say you want to see the Red Sea and if that's going all right or the Suez Canal or the Panama Canal or any of them, Black Sea and so on, you can see exactly what's going on there together with our trackers for gold and silver and everything else that's really important, intelligence digest and so on.

11:30That's all available for you guys if you want to check that out. There's a part of our community. It's, as I say, six bucks a week, $6.23 I think, and you can just cancel it if you don't like it. So check it out down below.

11:42Now, oil prices have gone pretty haywire. They went to like $120. At the moment they're a little bit lower, but still increased 2%. Yeah. Brent crude oil prices at over $100, which is pretty bonkers, and is definitely therefore feeding significantly into inflation, right? There are about 1,000 ships stranded in the Persian Gulf. Iran is warning of $200 oil.

12:09And literally, if you look up the Strait of Hormuz here and you see this massive pile up here of tankers. Look how busy that is. These are all tankers who don't know what the heck to do because they want to go in, they want to pick up oil and gas and fertiliser and everything else and they can't. So this is like one of the most crowded places in the world for oil tankers because everyone's terrified to cross this. See how empty that is? That is not normal. That is not what this normally looks like.

12:34Now, the International Energy Agency has responded by proposing the largest release of emergency oil reserves in history. 400 million barrels. The US is tapping its own strategic petroleum reserve or what's left of it, 172 million barrels. So officially everything is under control, right? The strategic petroleum reserve will stabilise markets, which basically means we're dumping our emergency savings account into the market and we're praying it works and this will be over soon.

13:04Now Iranian economy is obviously in freefall, inflation is up and everything else. Nuclear negotiations, well they're completely failed and over, that'll never happen again. And both sides are basically dug in.

13:18Now let me show you why this matters for your money. Now let's put 1973 and right now side by side. The first parallel is the trigger. In 1973 there was an OPEC embargo by Arab nations for punishing the US for supporting Israel. Now Iran is blocking the Strait of Hormuz in response to the US-Israeli strikes. Both times a Middle East conflict directly targeting oil supply as a weapon against the West.

13:47The second parallel is that oil went from $3 to $12, 4x in 73, surged past $100 with warnings of $200. So the percentage movements are different and that's because the US is a much larger oil producer now than it was, but the price shock is still there.

14:07And then the inflation. It went to 8 to 14% in the 70s. Food went up 19% for example. Why? Because fertiliser is an oil derived product. And right now we're looking at 2.4% inflation, right? We're looking forward to a year of interest rate cuts. Well, now economists are projecting it could hit 3.5% or higher. And that means interest rates will not go down and that will impact your tech stocks, your fintech stocks, your biotech stocks, your AI stocks.

14:36And most people are still unaware. So if you see the parallels between 73 and right now, maybe write "rhymes" in the comments because I think history always does. It's a Mark Twain quote, isn't it? History doesn't repeat itself, but it sure does rhyme. Is that a Mark Twain quote? Also, if you know that, put a "Twain" in the comments right there.

14:57Now, gold. Gold surged past $5,300 straight after the strikes. One of the most dramatic safe haven rallies we've seen. Central banks have been buying gold like their lives depend on it. And silver, well, it broke $100 for the first time ever. COMEX silver inventories are draining hard.

15:18That's also something we track. By the way, in the same community that you can get access to by the link down below, you can track in here how much silver there's left in COMEX, for example, how much gold there's left in COMEX. And the trend is pretty punishing, right? Pretty punishing stuff.

15:35So central banks are holding silver. China is restricting silver exports. COMEX vaults are draining and the official advice is stay in 60/40 portfolios, stocks and bonds. Woohoo. Keep doing what you've always done, right? Yeah. The world's changed a little bit. JP Morgan says gold could hit $6,000 this year. It could hit a lot more than that this year if this continues. Silver forecasts are up to $150 an ounce by the more respectable people. I'm not talking about the lunatics who say it's going to be $500.

16:06So we've established the parallels, right? Now let's get to the actual part. There are 5 investor lessons from 73 that could save or maybe even make you a fortune. I'm not promising that. Not a financial adviser. I'm not registered for anything that I'm aware of.

16:22Now, the first lesson is energy disruptions create inflation. Inflation destroys paper wealth. It's not just your gas that gets more expensive. Everything gets expensive. Transportation costs go up, food prices go up, manufacturing costs go up. So the cost of living in the 70s rose 8% almost immediately and then it peaked at like 14% by 1980. Crazy period of inflation.

16:42So what does it mean? Well, it means if you have $100,000 in your savings account in 73, by 1980 only $50,000 is left in terms of its ability to actually buy stuff. So you lose half your money. Now US inflation is already running at 2%. Now we're looking at 3.5% or more if oil is at $100, which is where it is as I'm recording this.

17:05So cash is definitely not king. The people sitting on the sidelines going, "I'm going to wait this thing out," yeah, they're taking the most risk. But the investors who held hard assets, that's the lesson from the 70s, gold, silver, commodities, they preserved and they grew their wealth. The ones in cash and bonds got destroyed, salaries got destroyed.

17:22Now lesson number 2 is governments are always late. Always. In 1973, the US had no strategic petroleum reserve. There was no energy department. There was no contingency plan. So the most powerful nation on Earth was caught flatfooted by an oil embargo. What did Nixon do? Dimmed the Christmas lights. And Ford literally created a bumper sticker. I'm not making this up. That said, "Don't be fuelish." F-U-L-I-S-H.

17:49So Carter then actually tried to do something structural. He created the Department of Energy, invested in solar. He put solar panels on the White House. Reagan ripped them back off and went back to drill baby drill. But actually the Carter investments led to fracking which eventually made the US an oil exporter. So the guy who wanted to save the planet actually did the opposite, which is ironic. The world is full of irony.

18:13So my lesson here is don't wait for the government to protect your portfolio. This dumping of oil from emergency reserves, it doesn't do much. Why? Because the market knows emergency reserves are a band-aid. They're not a solution. Doesn't fix anything. So by the time politicians react, the damage is done. The smart money moved months ago and the government shows up with a mop after the flood.

18:35But institutional investors, and this is what I learned from my Wall Street mentors, they don't wait for government policy. They position themselves ahead of that and follow Wall Street's rules. Again, same rules I'm going to teach you if you join me live on Saturday.

18:49And then lesson number 3 is there is an oil gold relationship. And most of you have never heard of this. It's one of the most powerful early warning systems in finance and it's called the gold oil ratio. It measures just how many barrels of oil one ounce of gold can buy and it tells you something crucial about where the money is flowing.

19:10Now in 73 before the embargo the ratio spiked to 34. Gold was surging while oil was cheap. The market was screaming that something was wrong. Gold was pricing in the crisis before it even happened because somebody always knows. Then oil quadrupled and the ratio dropped back into the mid-teens.

19:27But think of it this way. Gold is the thermometer. Oil is the patient. When gold starts running a fever, rising fast while everything else stays flat, it's telling you the patient is about to get very, very sick. And that's why I've been watching this gold and silver rally last year with, well, I enjoy it because it makes me money, but I also think, well, it does mean there is something seriously wrong here and it's

19:49Going to hit a lot of people flatfooted, which is why we've been covering this. So listen, when gold is running a fever, watch that ratio. Now lesson 4 is that if gold is a safe haven, silver is the safe haven but it's taking steroids. So in the 70s, silver didn't just follow gold, it outperformed massively. Silver rose, say in 2008 to 2011, silver rose 10-fold. Gold tripled.

20:19Silver's always been more volatile, but that volatility does cut both ways. So in bull markets, it cuts in your favour, but when it ends, it also goes the other way. So risk management is really, really key here. Why? Because it's a monetary metal like gold, safe haven, and it's an industrial metal. It's used in solar panels, electric vehicles, AI infrastructure, electronic medical devices, all of that. So 60% of all the silver demand comes from industrial applications, not from stackers.

20:48Now, silver's been in a supply deficit for 6 years running. And the gold to silver ratio, which we track again here in our little community, at the moment it's at 60, which isn't actually that unusual. When it goes extreme, silver tends to massively outperform. So silver gives you essentially more bang for your buck in a bull market, but it's also a heck of a lot more volatile. So gold stability, silver for potential upside as long as you know what you're doing with the downside protection.

21:13Lesson number 5, and that's probably the most important one. Complacency kills portfolios. After the 70s oil crisis, the US eventually developed fracking. Oil became abundant again. And what happened in the wake of energy experts? Fracking simply was a pressure relief valve. People were no longer worrying about it.

21:35And there's a guy who served in the Carter administration and he said, "The problem is as we got further away from the oil embargoes, we got complacent." And that complacency is exactly what we had before February 28th, cheap oil, open shipping lanes, the general assumption of the Middle East was fine and someone else's problem. So the biggest risk in your portfolio isn't a market crash. It's the assumption that a crash can't happen. The investors who got destroyed in the 70s, they were not stupid. They were complacent. So don't be those.

22:07And if this video has made you rethink what you're doing, even just a little bit, then come and join me on Saturday at fenix.org/training and I will teach you how Wall Street picks stocks in this scenario and in any scenario. And if I can summarise what we covered today, yes, understand the macro. Don't watch CNBC and news endlessly. It doesn't really help you. But do understand the macro, which is also why we've built our tool here because it tells you what the heck's going on there.

22:36Having some hard assets is a good idea in my humble opinion. Not everything, but some. And then watch the signals, watch the ratios, watch the COMEX inventory levels, watch what the bankers are doing. And definitely don't panic. Definitely don't panic. There's an opportunity in this. But the 70s changed the world overnight. Those who understood it made a fortune. Those who didn't are probably still trying to recover from it.

23:03So don't be the person who says, "Oh, I wish I would have paid attention, but the video was a bit too long. I couldn't be asked." Be the one who said, "I could see it coming. I was prepared. I learned the rules. It was the thing that jolted me to become a better investor." And that's really our ambition and mission here.

23:20So come and show up for yourself on Saturday. Felix Prehn's org training, Winston and I will be there. He might even be awake. Winston. Winston. Hey. So little Winston. He's pretty sleepy today. I thank you for watching. If you got some value out of this, share the video with somebody so other people are also better informed. All the best.

23:41Right now, there is a crisis brewing in one of the world's most important markets, and almost no one's talking about it. And I wasn't going to make this video because I'm on holiday. I was working.