Military conflicts and geopolitical crises often rattle global markets and spark investor panic. But amid the chaos, certain assets have historically held their value or even delivered strong returns. From gold and government bonds to energy stocks and safe-haven currencies, this guide explores where smart money tends to go when the world gets unstable.
When military tensions flare, like the recent escalation between Israel and Iran, the financial markets often react swiftly and sharply. On June 13, the Dow Jones Industrial Average plunged nearly 800 points as investors grappled with the uncertainty coming out of the Middle East.
Yet, even in times of war and geopolitical unrest, not all hope is lost for investors. In fact, some assets tend to thrive when the world is on edge.
1. Gold: The Time-Tested Safe Haven
Gold has long been a refuge during crises, whether geopolitical or economic. With a limited supply and independence from any single government, gold often holds or increases its value when inflation rises or global stability falters.
For example, gold entered a strong upward trend in February 2022 following Russia’s invasion of Ukraine. Similarly, renewed conflict in the Middle East recently pushed gold prices to a two-month high. While short-term fluctuations are common due to speculative trading, gold remains a go-to asset in turbulent times.
2. Government Bonds: Stability in a Storm
U.S. Treasury bonds and government debt from other strong economies are another investor favorite during conflict. Unlike stocks, their returns are predictable, a key advantage in uncertain times.
Treasury bonds are widely viewed as the world’s safest investment, thanks to the U.S.'s economic strength and low default risk. When war breaks out, investors typically rush into bonds, driving prices up and yields down.
3. Strong Currencies: The USD, Swiss Franc, and Japanese Yen
When the world enters crisis mode, demand often spikes for strong, stable currencies—especially the U.S. dollar (USD), Swiss franc (CHF), and Japanese yen (JPY).
- USD dominates global trade and finance, making it a natural safe haven. During wartime, demand also increases as investors convert to USD to buy U.S. Treasuries.
- Swiss franc benefits from Switzerland’s long-standing political neutrality and a strong, secure banking system.
- Japanese yen, backed by one of the world’s largest and most stable economies, gains appeal due to Japan’s geographic distance from many global hotspots like Europe and the Middle East.
4. Stocks That Defy the Downturn
- While equity markets generally suffer during war, some sectors buck the trend and even perform well:
- Defense stocks (weapons, military tech, defense contractors) often rally as governments increase military spending.
- Energy stocks tend to rise if conflict disrupts oil or gas supply chains, driving commodity prices higher.
- Consumer staples, companies producing essential goods like food, beverages, and household products, remain resilient since demand stays steady regardless of global turmoil.
Even legendary investor Warren Buffett encourages buying stocks during wartime. “In World War II, the stock market advanced,” he once said. “The market always goes up over time… You’ll do better own productive assets over the next 50 years than holding cash that will surely lose value.”
War shakes markets, but it doesn’t shake all investments equally. While panic can dominate headlines, savvy investors turn to safe-haven assets, defensive stocks, and time-tested strategies to weather the storm, and sometimes even profit from it.
In times of conflict, knowing where to park your capital isn’t just smart, it’s essential.