Investors Should Consider Buying Gold

According to a recent note from Alpine Macro, investors should consider purchasing gold due to anticipated escalation of geopolitical tensions in the Middle East in the coming months.

The research firm warns that Iran, pressured to reestablish deterrence, may soon launch limited attacks on Israel, either directly or through proxies.

Despite Western, Arab, and Russian influences currently restraining Iran, the situation remains volatile. Alpine Macro suggests that Israel’s threat to retaliate disproportionately, potentially targeting Iran’s nuclear facilities or oil infrastructure, may deter Iran from a full-scale assault. However, some form of retaliation from Iran is likely.

There is also a “tail risk” that Iran might unexpectedly declare itself a nuclear power, dramatically altering the regional balance of power and introducing further risks.

The note emphasizes that the Middle East conflict has a “strong chance of escalating in the next 6-9 months,” likely boosting energy prices and increasing the value of out-of-region energy assets.

Given these uncertainties, Alpine Macro’s Chief Asset Allocation Strategist strongly recommends maintaining exposure to gold. He argues that gold remains the best hedge against geopolitical risks, with historical data showing it typically outperforms other safe-haven assets following major geopolitical events.

In light of increasing geopolitical risks, Alpine Macro advises investors to maintain or increase their gold positions as a protective measure against potential volatility.