Real Hedges in False Wars——Hormuz Strait Crisis and Asset Revaluation

In March 2026, when Iran officially announced the “closure of the Strait of Hormuz,” the world did not immediately descend into chaos. Instead, like many crises in history, it experienced a strange period of calm—this is the classic characteristic of a “phony war.” In reality, with a quarter of the world’s daily oil supply being blocked and insurance companies refusing to cover tankers passing through the strait, we had already entered an era of undeclared war. The question was no longer “if it would happen,” but “what is already happening”—and how investors should respond.

From Phoney War to Real Risks: How the Energy Crisis Sparks a Global Crisis

The concept of a phoney war is not unfamiliar. Between 1939 and 1940, the confrontation between Nazi Germany and Western powers appeared imminent but remained in a prolonged state of “war without actual fighting.” People felt tension and uncertainty, but the destructive conflict had not fully erupted. Today, the crisis in the Strait of Hormuz, to some extent, is playing out this script.

After the U.S. struck Iran’s nuclear facilities in June 2025, Iran’s parliament reached a consensus—closing the strait. On March 2, a senior advisor to the Islamic Revolutionary Guard Corps publicly announced this decision, warning that any ships attempting to pass would be attacked. The reality that followed was even more damaging than the declaration: although the UK Maritime Authority did not confirm a formal legal blockade, practically, the strait was nearly paralyzed.

The real strangulation came from three levels. First, insurance costs soared—war risk premiums reached unacceptable levels, with many insurers ceasing to issue policies. Without insurance, serious shipowners dared not risk passage. Second, electronic interference—mass GPS spoofing and signal jamming—caused ships’ navigation systems to show they were “on land” or severely off course. Lastly, major shipping companies withdrew—Maersk, Hapag-Lloyd, and other global giants announced suspensions of relevant routes.

By March 1 and 2, real-time vessel tracking data (AIS) showed nearly zero oil tankers passing through the strait—an unprecedented situation in recent years. Normally, about 50 large oil tankers traverse this busiest energy corridor daily; now, almost no one dares to.

New Challenges for Traditional Safe-Haven Assets

Under the shadow of the phoney war, the definition of traditional safe-haven assets is being reshaped.

Gold: The True Hedge with Low Correlation

Ray Dalio’s insights are especially relevant now. Gold’s importance isn’t because it always rises, but because of its low correlation with most financial assets. During recessions, credit crunches, and market panics, gold often shows resilience; in periods of economic prosperity and rising risk appetite, it may be neutral. This “inverse characteristic” makes it a genuine diversification tool. Recently, gold prices have risen about 65% compared to the same period last year and have pulled back roughly 16% from recent highs—this volatility reflects market hesitation between the phoney war and real conflict.

Silver: The False Face of Risk Assets

Compared to gold, silver is more complex. It is both a precious metal and an industrial metal. When war expectations rise, silver initially follows gold upward, but then experiences sharp fluctuations due to declining industrial demand. Silver acts as an amplifier—magnifying panic rather than confidence. During the phoney war phase, silver may behave more aggressively than gold, but mid-term, its performance will be more unstable. This is a trap for investors seeking “stable safe-havens.”

Oil: Absolute Value of Physical Constraints

If gold is a psychological hedge, oil is a physical one. The Strait of Hormuz transports one-fifth of global oil daily. If transportation is interrupted, oil prices don’t need emotional drivers—they are driven purely by physical facts. With a daily supply shortfall of about 20 million barrels, analysts forecast Brent crude could quickly surpass $100 per barrel. In fact, by March 3, Brent had surged to $82, and Goldman Sachs predicts prices could exceed $100 if the blockade persists.

Rising energy costs will trigger chain reactions in transportation, production, and food prices worldwide, potentially reigniting global inflation. Once inflation expectations rise again, central banks will be forced to tighten policies, worsening liquidity conditions—never a good sign for risk assets.

Crypto Assets in the Phoney War: A Dilemma

Unlike traditional safe assets, Bitcoin initially behaves during conflicts more like volatile tech stocks than gold. When global risk appetite plummets, investors tend to sell off the most volatile assets first. Leverage unwinding, stablecoin outflows, exchange liquidity drying up—these factors can cause Bitcoin to plunge sharply in the short term.

Oxford Economics predicts that if the conflict lasts more than two months, global equities could see a 15-20% deep correction. Bitcoin faces a high probability of declining in tandem with global markets.

However, if the conflict escalates into a full-scale world war and parts of the traditional financial system become paralyzed, the role of crypto assets will fundamentally change. In an environment of increased capital controls and restricted international settlements, cross-chain value transfer capabilities will be reassessed. Mining pools, electricity supply, and hash power will become geopolitical variables. Stablecoin reserves will come under scrutiny, and jurisdictional issues of exchanges will become focal points of risk. At that point, the question will no longer be “bullish or bearish,” but “who can still settle and exchange freely.”

Layers of Geopolitical Spillover

The retaliatory consequences of the phoney war for the U.S. and Israel are multi-dimensional.

First, although the U.S. has achieved energy independence in recent years, global oil prices are interconnected, and the U.S. cannot remain unaffected. Rising oil prices will directly push up gasoline prices, undoing the Fed’s previous efforts to combat inflation and forcing it to maintain high interest rates—potentially triggering a recession. Second, U.S. allies in Asia (Japan, South Korea) and Europe are far more dependent on energy. Iran’s move is effectively pressuring these allies to constrain Israel or halt military actions, using energy blackmail to indirectly isolate the U.S. Meanwhile, 2026 coincides with a sensitive political cycle in the U.S., and inflation driven by the energy crisis becomes the biggest political poison for the ruling party.

For Israel, although its main oil supplies come from countries like Azerbaijan, indirect impacts are equally deadly. The costs of importing electronics, raw materials, and food—crucial for Israel’s trade—are surging, and many insurers have begun refusing coverage for ships heading to Israeli ports. Moreover, economic instability caused by the conflict will weaken Western countries’ ability to sustain long-term military support for Israel.

Investor Strategies

Faced with the blurred boundary between the phoney war and real conflict, different institutions offer varied advice.

JPMorgan’s Defensive Stance: The bank suggests reassessing previous optimism. The probability of a global recession has risen above 35%. Recommendations include increasing cash holdings, shortening bond durations, and preparing defensive investments.

Goldman Sachs’ Resource Focus: Emphasizes the chain reaction in energy prices. Advises hedging inflation risks through commodities futures and inflation-protected securities (TIPS). The core logic isn’t to chase rallies but to prepare for declining monetary purchasing power.

Reordering of Asset Priorities: As the phoney war evolves into full-scale confrontation, the fundamental logic of asset pricing changes. Control over physical assets rapidly gains importance. Land, agricultural products, energy, industrial raw materials (lithium, cobalt, rare earths)—once considered cyclical assets—become strategic resources under extreme conditions. War first consumes resources, then capital. Stocks and derivatives depend on corporate profits and financial system stability, while resources have the most primitive certainty. When supply chains break, control over physical assets surpasses book yields.

Second, the role of technology shifts during wartime. AI and semiconductors, which are growth stories in peacetime, become productivity essentials in war. Computing power determines management efficiency, chips influence weapon production, satellite communications define information sovereignty. Data centers, energy infrastructure, and low-earth orbit satellite networks will be swiftly integrated into national strategic frameworks.

Conclusion: When Will the Phoney War End?

The surface of the Strait of Hormuz remains turbulent, but everything is now irreversible. The calm of the phoney war often masks the brewing of real risks. Investors must recognize that what’s at stake isn’t just price volatility but a structural reassessment of assets. Those who control physical resources, master key technologies, and maintain liquidity flexibility will have an advantage in this invisible capital war. Preparing for the possible evolution from a phoney war to genuine conflict is not overcaution but necessary rationality.