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An Iran war could have far-reaching consequences for the global economy – potentially raising oil prices and disrupting supply chains around the world.
This is a stark warning from Qatar’s energy minister, Saad al-Kaabi, who told the Financial Times that if the war stalls and disrupts energy exports from the Persian Gulf, it will harm the world economy.
According to al-Kaabi, one of the biggest risks lies in the Strait of Hormuz, a vital waterway that is the main export route for the Gulf’s oil and gas, handling nearly a fifth of the world’s supplies. If tankers and commercial ships cannot safely pass through the strait, oil prices could rise dramatically.
He predicted that oil prices would rise to around $150 per barrel in two to three weeks if shipments were unable to move through the peak. The minister also warned that natural gas prices could rise to around $40 per million British thermal units, four times the level seen before the Iran war broke out.
The warning comes after an Iranian drone strike targeted Qatar’s Ras Laffan LNG facility, prompting the country – the world’s second largest LNG exporter – to announce a power cut on some shipments.
If the war continues, al-Kaabi suggested other Gulf exporters may have little choice but to follow suit. And even if hostilities ended immediately, he warned, it could take “weeks to months” to restore normal deliveries due to casualties, security concerns and disrupted logistics.
And energy markets are just the beginning.
“It will hurt the world economy,” he warned. “If this war continues for several weeks, global GDP growth will be affected. Energy prices for everyone will increase. There will be shortages of some products and there will be a chain reaction of factories not being able to supply.”
The conflict has already roiled global markets. Oil prices rose amid fears that the war could shut down major pipelines, refineries and export terminals in the Middle East.
Oil prices can rise sharply, while higher energy costs can also raise the prices of food, shipping and manufactured goods. In the United States, the average price of regular gas rose by 21% last month to $3.539 per gallon (2).
Economists often warn that prolonged energy shocks can contribute to high inflation and slow economic growth (3). For families already facing high living costs, this combination can make the budget even tighter.
That said, history shows that savvy investors have often found ways to protect their wealth from the ravages of inflation—even in the midst of global geopolitical uncertainty and war.
When it comes to preserving wealth and fighting inflation, few assets have stood the test of time like gold.
Its appeal is simple: unlike fiat currency, the yellow metal cannot be printed at will by central banks.
Gold is also considered the ultimate safe haven. It is not tied to any one country, currency or economy, and in times of economic turmoil or geopolitical uncertainty, investors often flock to it – driving up prices.
Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, has repeatedly highlighted the role of gold in a flexible portfolio.
“People typically don’t have enough gold in their portfolios,” Dalio told CNBC last year. “When times are bad, gold is a very effective diversifier.”
Over the past 12 months, the price of gold has increased by more than 70%.
Even before the final battle, other important voices saw more potential. JPMorgan CEO Jamie Dimon recently said that in this environment, gold could “easily” rise to $10,000 an ounce.
One way to invest in gold that also provides significant tax benefits is to open a gold IRA backed by the precious metal.
Gold IRAs allow investors to hold physical gold or gold-related assets in a retirement account, which combines the tax benefits of an IRA with the protective benefits of gold investments, making them an attractive option for those potentially hedging their retirement funds against economic uncertainty.
For more information, you can get a free information guide that includes details on how to get up to $20,000 in free metals on eligible purchases.
Read more: I’m almost 50 and have no retirement savings. Is it too late to catch up?
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Gold is not the only asset that investors face in times of inflation. Real estate has also proven to be a powerful hedge.
When inflation rises, property values also rise, reflecting higher costs of materials, labor and land. At the same time, rental income rises, providing landlords with an income stream that keeps pace with inflation.
Over the past five years, the S&P Totality Case-Shiller US National Home Price NSA Index has risen nearly 40%, reflecting strong demand and limited housing supply (4).
Of course, higher home prices can make buying a home more difficult, especially with mortgage rates still rising. And being a landlord isn’t exactly hands-on – managing tenants, maintenance and repairs can quickly eat up your time (and back).
good news You don’t have to buy real estate—or deal with leaky faucets—to invest in real estate today. Crowdfunding platforms like Arrival offer an easy way to get into this income-producing asset class.
Backed by world-class investors like Jeff Bezos, Ariad allows you to invest in rental housing shares with as little as $100 – all without the hassle of mowing lawns, fixing plumbing or managing difficult tenants.
The process is simple: search a curated selection of homes that have been evaluated for their appreciation and income potential. Once you find a property you like, select the number of shares you want to buy and then sit back when you start receiving positive rental income distributions from your investment.
For a limited time, when you open an account and add $1,000 or more, Arrival will credit your account with a 1% match.
Another option is Lightstone DIRECT, which offers qualified investors access to prime quality multifamily and industrial real estate – with a minimum investment of $100,000.
Founded in 1986 by David Lichtenstein, Lightstone Group is one of the largest private equity investment firms in the United States, with more than $12 billion in assets under management.
Over nearly four decades, their team has delivered strong, risk-adjusted performance across multiple market cycles – including a 27.6% historical net IRR and a 2.54x historical net equity multiple on investments since 2004.
With Lightstone DIRECT, you get access to the same multi-family and industrial transactions that Lightstone pursues with its capital.
Here’s the kicker: Lightstone invests at least 20% of its capital in each deal — about four times the industry average. With skin in the game, the company ensures that its profits are directly aligned with its investors.
Famous investors like Dalio often emphasize the importance of diversification—and for good reason. Many traditional assets move regularly, especially during times of market stress.
This message feels especially relevant today. The S&P 500’s weighting is nearly 40% concentrated in the top ten stocks, and the index’s CAPE ratio has not been this high since the dot-com boom.
This is where, for many investors, alternative assets come into play. This can include anything from real estate and precious metals to private equity and collectibles.
But there’s one store of value that regularly flies under the radar: It’s understated by design, has worldwide interest and is frequently blocked by agencies.
We’re talking about postwar and contemporary art—a category that has fallen out of the S&P 500 since 1995 with a low correlation.
It’s easy to see why pieces of art often fetch new highs at auctions: the supply of great works of art is limited and many of the most sought-after pieces are already snapped up by museums and collectors. This decline can also make art an attractive option for investors looking for asset diversification and preservation during periods of high inflation.
Until recently, buying art was a domain reserved for the very rich – as in 2022 when the art collection owned by the late Microsoft co-founder Paul Allen sold at Christie’s New York for $1.5 billion, making it the most valuable collection in auction history (5).
Now, Masterworks — a platform for investing in shares of blue-chip artworks by renowned artists, including Pablo Picasso, Jean-Michel Basquiat and Banksy — can help you get started in this wealth class. It’s easy to use and with 25 successful withdrawals to date, Masterworks has distributed over $65 million in total revenue (including principal).
Simply browse their impressive portfolio of designs and choose how many shares you wish to purchase. Masterworks can handle all the details, making high-end art investments both accessible and effortless.
New offers sell out in minutes, but you can leave their waiting list here.
Remember that past performance is not indicative of future returns. Investments are risky. See the Reg A disclosure at masterworks.com/cd.
At the end of the day, everyone’s financial situation is different – from income levels and investment goals to debt obligations and risk tolerance. And when the economic outlook is uncertain, these differences are even more important. If you’re not sure where to start, now might be a good time to contact a financial advisor.
With Vanguard, you can connect with a personal advisor who can help assess how you’re doing so far and make sure you’ve got the right portfolio to meet your goals on time.
The Vanguard Hybrid Advisory System combines the advice of professional advisors and automated portfolio management to ensure that your investments work to achieve your financial goals.
All you need to do is fill out a short questionnaire about your financial goals and Vanguard advisors will help you set up a suitable plan and stick to it.
Once you’re set up, you can sit back as Vanguard Advisors manage your portfolio. Because they are trusted, they do not receive commissions, so you can trust that the advice you receive is unbiased.
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Financial Times (1); AAA (2); Bank for International Settlements (3); S&P Global (4); Christy (5)
This article provides information only and should not be used as advice. It is provided without warranty of any kind.
