April_Virtual Money Feature｜Breaking and Reinventing the Hazard Myth: The Bitcoin Revolution from the US-Iraq War
Ji-Pu Industrial Trend Research Institute：Yu Shi Bo
Follow Ji-Pu from Bitcoin and gold trends to observe the future evolution of hedging instruments in the international situation of the changing ends. 2026, the end of February, the United States and Israel launched a joint air attack on Iran, code-named "Epic Fury" (Epic Fury), Iran's supreme leader Hamini was killed, and the Middle East completely ignited the fire of war. Subsequently, the Hormuz Strait, which controls the global 20% oil transportation, was blocked, and the price of Brent crude oil once soared past $126 per barrel. The International Energy Agency (IEA) has called this "the biggest global energy and food security challenge in history".
In traditional investment thinking, war and oil crises are supposed to be a time for gold to "rejoice". However, this year's market has given investors a rude awakening. Whether the underlying logic of gold investing has changed, or whether there are new outlets for asset allocation tools, we'll start by exploring the myth of gold as a safe-haven.
The Unexpected Gold Plunge
At the end of January, gold just hit a record price of US$5,595 per ounce. With the outbreak of the war, the price of gold, which is regarded as the best hedging tool, not only did not soar; on the contrary, it plunged 14.5% to US$4,785, setting the record for the longest consecutive decline in a hundred years.
Why do hedging tools fail? Wall Street calls it the "Oil-Shock Paradox". Because the war caused oil prices to soar, triggered the global fear of stagnant inflation; and in order to suppress inflation, the Federal Reserve Board in the poor employment data under the bad news, the pressure refused to release the message of interest rate cuts. Creating the market's expectation of high interest rates, which in turn led to the attraction of gold, which has recently been at a high level and is stored without generating interest, is no longer attractive. As a result, when institutions and investors are faced with the prospect of margin calls from the stock market downturn, gold, which has excellent liquidity, naturally becomes the first choice to be sold for cash.
Extended Reading
April_AI Optical Communication｜Optical Circuit Switching OCS (Optical Circuit Switching) Opportunities and Physical Limits in Scale-across
April_AI Optical Newsletter｜OFC Three Optical Interconnection Protocols MSA on the Same Day: Landscape Reshaping Analysis
