Odd Lots

Here's Why The Iran War Is Prompting A Safe Haven Rethink

March 21, 2026

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  • The definition of a safe haven asset is one that is not strictly correlated to economic growth or risk assets, expected to hold value even when the economy struggles, but the effectiveness of these assets shifts based on the nature of the crisis (e.g., trade war vs. geopolitical conflict). 
  • During the 2025 trade war turmoil, the US dollar acted like a risk asset, weakening as the US looked less attractive for investment, whereas the current Iran war conflict is causing the dollar to revert to its safe haven status. 
  • Gold's traditional appeal as a timeless, non-sovereign store of value is currently being challenged by the Iran war because its physical nature makes it costly and difficult to move quickly, favoring highly liquid assets like the dollar when immediate survival/liquidity is the primary concern. 

Segments

Introduction and Safe Haven Context
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(00:00:00)
  • Key Takeaway: The episode of Odd Lots shares insights from Here’s Why regarding the Iran war’s impact on safe haven asset selection.
  • Summary: The segment opens with an introduction to the shared episode from the Here’s Why podcast, featuring Joe Weisenthal. The core premise is that geopolitical turmoil, specifically the Iran war, is forcing investors to rethink traditional safe haven strategies. Previous crises saw investors rush into assets like US treasuries, the dollar, or gold.
Defining Safe Haven Assets
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(00:01:25)
  • Key Takeaway: Safe havens are assets uncorrelated to the business cycle, expected to retain value regardless of economic performance.
  • Summary: A good safe haven asset is defined as one not strictly correlated to growth or risk assets, meaning it performs well when the economy is not doing great. Classic examples include gold, due to its historical monetary role, and US Treasuries, whose payments are legally guaranteed by the government irrespective of economic strength. The US dollar also qualifies due to low historical inflation and widespread acceptance.
Tariffs vs. War: Shifting Dynamics
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(00:03:20)
  • Key Takeaway: The US dollar’s performance as a safe haven is contingent on the crisis type; trade wars reduce its attractiveness, while acute conflict boosts it.
  • Summary: During the 2025 tariff turmoil, the US looked like a less attractive place to invest, causing the dollar to weaken as investors avoided putting assets on the ground due to increased costs. The Iran war, however, triggers immediate fear, making the dollar relatively attractive because investors prioritize retaining value over the short term to cover immediate expenses.
Treasury Performance Under Inflation Risk
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(00:05:31)
  • Key Takeaway: US Treasuries offer guaranteed principal repayment but risk losing real value if inflation outpaces the fixed coupon rate during conflict.
  • Summary: Treasuries are safe because the US government is creditworthy and borrows in its own currency, ensuring payments happen. However, if conflict-driven inflation exceeds the bond’s yield, the investment loses real value. Investors may still accept this loss for the security of guaranteed payment and principal return, analogous to paying a negative yield for a safe deposit box.
Gold’s Underperformance in Current Conflict
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(00:08:36)
  • Key Takeaway: Gold’s recent rally was driven by inflation and sovereignty concerns, but immediate acute fear favors liquid, spendable assets like the dollar over physical gold.
  • Summary: Gold has rallied due to sustained high inflation and geopolitical tension since 2022, appealing as a non-nation-state form of money. In the current acute crisis, investors need dollars to pay immediate bills, leading to potential liquidation of gold holdings. Furthermore, gold’s physical nature makes it costly and difficult to move quickly, which is a negative factor when physical movement is stressed.