The 'S' word

February was a grisly month for investors, especially those in the US. Instead of a gain of some 55,000 jobs, 92,000 were lost and - worse - the healthcare and social assistance sector, which was a consistent bright spot in 2025, lost 34,000 jobs, a modest decline but a decline nonetheless and the first such in four years. Unemployment crept up slightly, from 4.3% in January to 4.4%. Meanwhile inflation stayed put at an annualized 2.4%.

It's too early to be certain. But a weakening economy and stable or rising inflation could be signs of a stagflationary slap.

The biggest stimulus for the slap is of course the war over Iran and the neighboring countries, and the latest curtailment of crude oil and gas exports. The US is a net exporter of petroleum products - more than 350 million barrels - but no matter where it comes from, crude oil is priced internationally. On Tuesday this week petroleum went past $3.50/gallon at US retail outlets. Crude oil prices have swung wildly since the start of the war, rising to almost $120/barrel on Monday, dropping to $87.50/barrel next day, its biggest one-day fall since March 2022. By the end of this week the price was back around $100/barrel.

The International Energy Agency (IEA) - whose 32 member countries represent 75% of global energy demand - has now said it would release into the market 400 million barrels of crude oil from its stockpile. But those 400 million barrels will be enough to supply less than a week of global demand. The world consumes about 100 million barrels a day. And of course when that oil leaves the IEA's stocks, it's gone.

So we are currently in the uncomfortable position of wondering when the bombs may cease, and when Iran will be either forced to lift or freely lifts its blockade in the Strait of Hormuz. A month from now and the crisis may end without too much pain; more than a month and the inflation consequences become very serious. Either way, more pain seems certain.

The great unknown

There are several great unknowns about this war but for investors and bill-payers the biggest concern is what it will do to inflation. In Britain, the Office of Budget Responsibility (OBR) has said it will add another 1% to the inflation level, making it 3% by the end of the year. Independent analysts are forecasting that household energy bills might rise by 10%.

The spurt of inflation will deter central banks from interest rate cuts which had been widely expected this year. In the UK , whose economy is expected to grow by around 1% this year, this is disappointing. UK unemployment is likely to reach 5.5% this year, almost the highest in five years - youth unemployment is more than 16%.

And with the huge expenses of the war - one day of the war costs the US around $1 billion - America may have less appetite for the conflict than imagined.

The UK's economy is already in stagnation. America may be just a few short steps away from stagnation, especially if Tehran can withstand the pressure. Iran doesn't need to defeat the US militarily; it just needs to disrupt the US economy.

You can protect yourself against the greatest unknown however, when and how the war might end, by holding gold. A resurgence in inflation will mean the purchasing power of your fiat money declines even faster.

The conventional rules of investing - of money itself - are broken by stagflation. Cash loses value, bonds cannot be a refuge when inflation is destroying real returns. Against that, gold has a fixed supply, zero counterparty risk and thrives precisely because stagflation exposes the fragility of paper assets. Gold's hero moments come when inflation is excessive and when policymakers can't or won't raise interest rates high enough to restore positive real yields. The risks of stagflation are now higher than for years.

And with Glint, which enables you to use gold as money, you have allocated gold, securely held in its Zurich vault.

For UK clients: At Glint, we make every effort to demonstrate a balanced conversation between gold, silver, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.

For US clients: Graphic representations of value are for illustrative purposes only. The Glint debt card is issued by Sutton Bank, member FDIC. The sale, purchase and storage of precious metals are offered by Glint and not Sutton Bank. Your investment in precious metals through Glint is

·        Not insured by the FDIC.

·        Not a deposit or other obligation of, or guaranteed by, Sutton Bank.

·        Subject to investment risks, including the possible risk of loss of the principal amount invested.

All investments involve risk, including possible loss of principal. The value of precious metals is affected by many economic factors, including but not limited to the current market price, demand, perceived scarcity, and quality of the precious metal. Precious metals can increase or decrease in value. Past performance is not a guarantee of future results. As such, investing in precious metals may not be suitable for everyone.