Weekly Buzz: Iran-Israel: The geopolitical shock that wasn't 🌍

Just two weeks ago, the Iran-Israel conflict sent oil prices soaring over 15% to five-month highs above US$74 per barrel and sparked global concern. Now? Markets have not only recovered – they're on track again to hit record highs, with the S&P 500 closing near its February peak.

What’s going on?

After a ceasefire between Iran and Israel was announced, Brent crude oil prices plummeted over 6% in a single session. It’s a dramatic reversal that shows just how quickly markets can shift away from pricing in worst-case scenarios.

When Russia invaded Ukraine in February 2022, oil prices spiked 40% to US$130 per barrel while the S&P 500 dropped 13% – only to recover those losses within six months. The 2003 Iraq invasion followed a similar script: the S&P 500 fell 5.3% over seven trading days, then recovered completely within 16 days, with the Dow actually rising 8.4% in the month following.

It's a reminder that initial fear often exceeds actual economic impact. The market's ability to separate temporary disruption from lasting economic change is remarkably consistent.

What's the takeaway?

Diversification works. With all the volatility we've seen so far in 2025, gold has surged 25%, demonstrating its safe-haven appeal. Different regions performed differently too – while US markets were jittery, international markets gained ground. No single headline could derail a diversified investing strategy.

By the time it became "clear" that tensions were easing, much of the market bounce had already occurred. Staying invested through volatility typically yields better results than reacting to every twist and turn – because you’re always present for the recovery.

(For a diversified investing strategy that’s ready to go, check out General Investing.)

💡 Investors’ Corner: Gold does nothing, spectacularly well

Gold generates no income, pays no dividend, and has no CEO. In moments of global uncertainty, however – like the recent Iran-Israel conflict – it becomes uniquely powerful. Unlike money printed by governments, gold can’t be frozen, inflated, or hacked.

It’s why central banks around the world are hoarding it. Since 2022, they've bought more than 1,000 tons of the metal annually – the highest rates in over 50 years.

This wave of buying isn’t purely about inflation – although gold is a known hedge for that – it’s about safety. For decades, the markets have put their faith in the US dollar and Treasuries as the ultimate safe-haven assets – but that trust has seen some cracks emerge. There’s also the element of scarcity – unlike traditional fiat currencies, the supply of gold grows slowly – at just 1.7% a year on average.

For everyday investors, gold makes a great diversifier. It holds its ground when inflation, political risk, or financial instability start to bite, and it tends to move in the opposite direction of stocks and the US dollar, especially during periods of economic or financial stress.

You don’t need to go all-in on the metal – a 5% to 10% allocation can make a real difference in cushioning against losses in rough markets. No need for a trip to the goldsmith either – modern methods of adding exposure to the precious metal, like gold ETFs, are far easier to manage.

(If you’re looking for an easy, customisable way of investing in gold ETFs, check out Flexible Portfolios.)

This article was written in collaboration with Finimize.

🎓 Simply Finance: Fiat currency

Unlike older forms of money that were backed by gold or silver, today's fiat currencies like the US dollar or the euro derive their worth from their value in global trade and the public trust in the government that issues them. It's a bit like how a concert ticket has value because everyone agrees it grants access to the show, not because of the paper it's printed on.