Gold, copper, and dividend low volatility, a full analysis of anti-drop assets in 2026

“The core of the Suez Canal moment is the loss of hegemonic influence, not energy dependence.”

“Ordinary people find it difficult to participate directly in the AI revolution, but they can catch the AI express through asset allocation. In the future, the cost-effectiveness for investors will be higher than that for workers—this is the trend of the times.”

This article is organized based on the 【Advancing Shen Shuaibo】 podcast. If you’re interested, search for “Advancing Shen Shuaibo” on Xiaoyuzhou to listen to the full podcast.

The situation in the Middle East has evolved from a short-term conflict into a prolonged war. The Strait of Hormuz being blocked has had a comprehensive impact on the global economy and financial markets. In this episode, we invite two hosts from the podcast 【Ivy League Investment】: Xiao Dong and Xiao Teng, to focus on the long-term effects of the war—explaining how it will affect global finance and inflation, and discussing the investment opportunities and risks for assets such as commodities, the stock market, and gold in 2026.

** Gold: pressured in the short term, long-term logic intact**

Shen Shuaibo: It’s been two or three months since our last exchange. Back then, we discussed gold and AI narratives. Now, the logic behind these assets has changed drastically because of the Middle East conflict. What we’re seeing in the market today—are these short-term disturbances, or is it a reassessment of long-term logic?

Xiao Teng: The duration of the war has exceeded market expectations. The most obvious impact on assets is that it pushes up crude oil prices and lifts the US dollar index. US Treasuries, US stocks, and gold all fall in sync. Gold has two core buyers: central banks and ETF investors. ETF investor behavior can be judged by the real yields on US Treasuries: when yields rise, they sell gold; when yields fall, they buy gold.

In recent days, the surge in oil prices has driven US Treasury yields sharply higher. The two-year US Treasury yield rose from 3.35% at the beginning of March to 4%. In one month, it was up by nearly 70 basis points. The market began to price in expectations of Fed rate hikes. Combined with worries about inflation, a tighter liquidity environment is unfavorable for gold in the short term. The market logic from three months ago has completely changed. Previously, the market believed the conflict would end quickly, and that a blockade of the Strait of Hormuz was a historically rare event—so the market’s pricing of this event would not be resolved in the short term.

Xiao Dong: I’m a bit cautious on gold in the short term, but firmly bullish in the long term. In traditional frameworks, gold and real yields on US Treasuries move inversely. But in 2024–2025, the two have shown a rare same-direction relationship. In the short term, gold is disturbed by geopolitical conflicts. In the medium term, it depends on the purchasing power of central banks and ETFs. In the long term, the core determining factor is US dollar credit. By 2025, US interest spending on government debt will exceed military spending. Continued rate hikes will further weaken the long-term creditworthiness of US Treasuries, which is long-term positive for gold. Currently, gold has fallen to $4,100 per ounce. At this level, going further bearish has limited meaning. Marginal central bank buying has not weakened significantly. There are no signs of large-scale selling or stopping purchases.

The US hasn’t been able to quickly open the Strait of Hormuz, and the US military and dollar hegemony continue to weaken. Gold, as the ultimate hedge for fiat currencies and as a non-sovereign currency asset, will keep standing out. Ray Dalio, founder of Bridgewater, suggests that ordinary people allocate 5%-10% of their assets to gold as a core “bottom holding.” Don’t view it from a speculative mindset. Gold is a core asset for hedging fiat currency depreciation and policy uncertainty. The short-term decline in gold is partly because Middle Eastern oil-exporting countries, facing disrupted oil transportation, have been selling US stocks and gold to obtain liquidity. This is an emergency selling, which does not change the long-term allocation logic. Ordinary investors can allocate through gold ETFs and physical gold bars. Holding at low levels still provides a safety cushion. Gold has low—indeed even negative—correlation with stocks and bonds, making it an important stabilizer for an asset portfolio.

Shen Shuaibo: Historically, gold has experienced deep crashes and multi-year bear markets, with the maximum decline exceeding 60%. Will this happen again this time?

Xiao Teng: The 1980s gold bear market lasted nearly 20 years. Back then, Volcker raised the Fed rate to 20%, successfully suppressing inflation. Also, with the Cold War easing and the US becoming the only superpower, global order was relatively stable—gold had a long bear-market foundation. Today, the inflation level is far lower than in the 1980s, and the global geopolitical landscape is more complex, so it’s not comparable.

Xiao Dong: Since 2008, the dollar system has kept weakening, and global de-dollarization has accelerated. The US has faced mounting pressure in international affairs. Iran is a strong military power in the Middle East. If the US can’t quickly resolve the Strait of Hormuz problem, its relatively weaker military capability will further hit dollar hegemony. Gold rose nearly 60% over the past year; in January 2026, the increase exceeds 40%. Short-term oscillations that digest profit-taking are consistent with technical patterns. A bear market lasting as long as ten years won’t occur—this is only a mid-term consolidation and rebalancing. Ray Dalio has said that the US is going through a “Suez Canal moment,” meaning the rapid decline of hegemonic influence. Against this backdrop, gold’s value for safe-haven and hedging will continue to receive buying support.

** US and the Strait of Hormuz:**

Hegemonic fissures and hidden inflation risks

Xiao Dong: A surge in oil prices impacts the US beyond just domestic energy security. The US is a shale oil producer. The domestic energy industry can profit from higher oil prices, but that’s not the Trump administration’s core demand. Trump’s current core goal is to win the midterm elections, accumulate political capital, and avoid long-term inflation so the Fed can cut rates—stimulating the stock market, winning over voters, and ensuring that before the November midterm elections, the stock market remains stable and inflation stays controllable. Crude oil is a globally priced commodity. A long-term blockade of the Strait of Hormuz would push up domestic US oil prices. Oil price increases are like an invisible tax on the American public—wealth shifts from ordinary consumers to oil giants. This is redistribution of existing wealth, not a core interest demand of the US.

Shen Shuaibo: Ray Dalio believes the US is experiencing the UK’s “Suez Canal moment” in the Strait of Hormuz—rapid hegemonic decline. But there are also views that the US has energy self-sufficiency, unlike the UK’s situation. How do you see it?

Xiao Dong: Even if the US is energy self-sufficient, a rise in global oil prices will still affect the US economy through inflation and increased cost of living. The core of the Suez Canal moment is the loss of hegemonic influence, not energy dependence. The US can’t quickly control the Strait of Hormuz, which has exposed fissures in its military hegemony. This impact is long-term and irreversible.

** US stocks and AI:**

Bubble differentiation and investment choices

Shen Shuaibo: Recently, the MAG7 stocks have fallen sharply. Microsoft is down more than 30%, and META is down nearly 20%. Market views suggest that the tens of trillions of dollars invested in AI have only flowed into computing power and chips, not into the real economy. They have created few jobs and have only produced a few billionaires. In 2028, the AI bubble may burst, and disagreements between bulls and bears in the US stock market may intensify. How do you view this?

Xiao Teng: Valuations are clearly differentiated across US stock sectors. Tech stocks are undervalued, while consumer stocks are overvalued. Coca-Cola’s price-earnings ratio is higher than Microsoft’s, so there’s no need to be overly pessimistic about tech stocks. The MAG7’s capital expenditures are huge, and future profitability still has uncertainty. In 2026, storage and other AI upstream sectors that have performed well may still be in the “selling shovels” stage. Microsoft’s decline was driven by pressure from Google’s Gemini. Google’s financial results have been solid, and its decline is smaller than other big tech companies. Based on current valuations, US tech stocks still have some cost-effectiveness.

Xiao Dong: Within the AI sector, differentiation is extremely large. Looking back at the 2000 internet bubble, at that time, only Google and Amazon emerged from thousands of “internet concept stocks.” The AI revolution may repeat a similar K-shaped differentiation. The large model industry shows “winner-takes-all” characteristics. Ordinary people can’t precisely predict which large model will dominate 10 years from now, because technological routes and market structure change rapidly. The AI industry will differentiate drastically—from the application layer, to the hardware layer, network layer, platform layer, and even the energy layer. The biggest tech firms are likely to see their market share shrink over the next 10–20 years, similar to Cisco and IBM in the early 21st century. The best way for ordinary people to participate in AI investment is to buy index funds when valuations are reasonable, without over-focusing on differences in individual stock technologies or specific details in financial reports, and avoid overestimating one’s own judgment ability. The “HALO trading” concept proposed by the market—allocating to assets that AI can’t easily replace, including upstream resources, high-dividend utilities, AI computing chips, and so on—is a more stable choice right now.

Dividend strategies:

Core choice for stable core holdings

Xiao Teng: For ordinary investors consulting dividend indices to select, the current recommendation is to choose dividend indices with a higher proportion of tangible assets such as coal, oil, and shipping, while avoiding those with high weights in financials and real estate or banks. Coal is an alternative energy to oil, directly benefiting from the Middle East energy security crisis. Banks rely on net interest margins. Those margins are currently low and future profit expectations are weaker, so banks are not suitable as the core for a dividend strategy allocation. Dividend indices are among the most friendly options for ordinary investors and are suitable as long-term core holdings.

Xiao Dong: Since November 2025, we have continued to recommend low-volatility dividend strategies. Whether it’s the Hang Seng Low Volatility Dividend in Hong Kong or the CSI Low Volatility Dividend, as long as you don’t buy at extremely high valuation levels, the probability of losing money in the long run is very low. They show a “three-up, one-down” oscillating upward pattern. Low-volatility dividend indices will periodically rotate constituent stocks based on dividend ratios and asset quality, with an ability to self-update. When stock prices fall, dividend yields rise, forming a natural downside-cover mechanism, and the holding experience is excellent. In the current low-interest-rate environment, the CSI Low Volatility Dividend dividend yield is above 4%, offering a clear return advantage.

On March 23, 2026, A-shares experienced a sharp pullback. The Shanghai Composite, the ChiNext board, and Hang Seng Tech all fell by more than 3.5%. However, the Hang Seng Low Volatility Dividend index has still maintained positive returns from the beginning of the year, showing outstanding drawdown resistance. Low-volatility dividend strategies are suitable for investors with low risk tolerance, those seeking steady returns, and those with longer fund duration. You can enter in batches when valuations are reasonable.

Shen Shuaibo: How should we choose between a dividend strategy and a free cash flow strategy?

Xiao Teng: The free cash flow index focuses more on earnings quality and dividend quality. Its constituent stocks include non-ferrous metals and household appliances, among others. Personally, I still prefer dividend indices with a higher proportion of tangible assets, because they have stronger resilience to risk.

Xiao Dong: The two are based on completely different index construction logic:

1. Free cash flow strategy: It screens companies with sufficient distributable profits. These profits can be used to expand reproduction and increase R&D investment. It implicitly reflects a company’s growth attributes. It suits up-and-coming sectors, such as chips, new energy vehicles, household appliances, non-ferrous metals, and so on. Investors value the ability of management to reinvest profits. They expect stock price increases to generate capital gains.

2. Dividend strategy: It screens mature industries and companies with no room to expand reproduction, such as coal, hydropower, and some banks. These companies distribute most of their profits to shareholders, and investors seek stable dividends, deciding on their own where to reinvest. The core selection logic is to judge whether company management’s efficiency in using profits is higher than the rate of return you would achieve by reinvesting personally. The free cash flow strategy has growth attributes and greater volatility. The dividend strategy has lower volatility, better holding experience, and is more suitable for conservative investors.

Shen Shuaibo: Goldman Sachs defines coal, hydropower, and other traditional industries as Halo-quality assets. Are these assets sunset industries or core allocations?

Xiao Dong: Non-ferrous metals are a strong-cyclicality industry with extremely high volatility, so they are not low-volatility assets. What truly fits low-volatility and stable characteristics are companies like hydropower and some banks—businesses with predictable cash flows. Traditional tangible assets are core assets that AI can’t replace. They have long-term allocation value, not because they’re sunset industries, but because they are high-quality “counter-cyclical” bottom holdings that are resilient to risk.

Xiao Teng: Copper is a core non-ferrous metal product. Previously, it was supported by Chinese buying demand, and Shanghai copper was oscillating around the 100,000 yuan per ton level. After the Strait of Hormuz conflict, copper prices dropped quickly. The core trading logic for foreign institutions is that sustained high oil prices will squeeze global GDP growth. They predict that the squeeze effect of oil prices on GDP will exceed 0.5%. Copper’s sensitivity to GDP is about 1.2 times. If GDP declines, copper demand will be directly suppressed. In an environment where copper supply doesn’t contract sharply, foreign institutions prioritize trading the logic of demand deterioration. If the Middle East situation persists and oil prices remain high, copper prices still face downside risks in the short term.

Xiao Dong: Non-ferrous metals are long-term tied to the AI industrial chain. Copper is a core raw material for data center construction and power grid development, so it has moved away from the traditional cyclical stock positioning. But in the short term, it’s still subject to disruption from geopolitical conflicts and a slowdown in demand—so we need to “walk while looking,” adapting as conditions change.

Global inflation:

Rigid transmission from energy to fertilizer to food

Shen Shuaibo: During the key spring planting season in the Northern Hemisphere, a shortage of crude oil causes fertilizer production to stall. Energy facilities have been damaged and need several years to repair. Global inflation has already shown a rigid upward trend. Will it trigger a major stagflation scenario?

Xiao Dong: Conflicts can trigger an inflation transmission chain of “natural gas → fertilizer → food”:

1. The blockade of the Strait of Hormuz restricts natural gas exports, causing prices to surge;

2. Natural gas is the core raw material for nitrogen fertilizers, and fertilizer prices rise accordingly;

3. Farmers either reduce production or push up grain prices, forming cost-push inflation. At the same time, shipping disruptions in the Red Sea and the Persian Gulf increase food transportation costs and insurance premiums, further raising grain prices. Food has a high weight in the CPI and demand is rigid. Grain price increases can trigger broad inflation, forcing central banks to raise rates. Global assets face pressure for widespread declines. If the US-Iran conflict quickly de-escalates and energy facilities are preserved, inflation pressure will be controllable. If the conflict drags on, fertilizer costs for the next season’s spring planting will fully transmit through the system, and the world will fall into a substantial stagflation. The best strategy would shift to tangible assets such as commodities, agricultural products, and energy. Currently, the intensity of the conflict is very high. It is likely to ease in 3-4 months and will not drag on for a long time.

Ordinary people’s allocation strategy:

Four principles for a chaotic market

Shen Shuaibo: How should ordinary investors respond to an unpredictable market?

Xiao Dong: Based on Ray Dalio’s recommendations, here are four actionable allocation principles for ordinary investors:

1. Diversify by region: Avoid concentrating assets in a single geopolitical segment. Don’t allocate everything to US stocks, A-shares, or Middle East assets. Instead, allocate to non-US dollar assets such as Asia-Pacific, Europe, and China A-shares/Hong Kong stocks, to hedge the risk of a single market.

2. Security-first perspective: Choose core industries by focusing on supply chains, energy, food, and digital network security. Build positions in industries with defensible barriers. The Middle East conflict has made the world realize that energy supply cannot be controlled by others. New energy (wind, solar, and hydropower), traditional energy (coal), network security, and food security sectors have long-term value.

3. Allocate to tangible assets: Gold’s long-term logic is unchanged. It’s a core tool for hedging gaps in fiat currency credit. Core city real estate (such as Shanghai) shows signs of stabilizing and has value as a backstop. Industrial metals such as copper are core raw materials for AI; they can’t be replaced by AI, and they have long-term allocation value.

4. Maintain liquidity: Hold cashflow-positive, large blue-chip stocks with low valuations. Keep a cash position so you can add more when the market falls. In a crisis, “there are opportunities within danger.” Liquidity is the key to seizing opportunities. When selecting stocks, prioritize a margin of safety and avoid stocks with overly high valuations.

Xiao Teng: No matter how the Middle East conflict evolves, countries around the world will prioritize energy supply security. The substitution by new energy is a long-term, irreversible trend. China’s layout across the new energy industry chain is a core advantage for dealing with oil price shocks. In the future, clean energy and independent energy will become the global mainstream.

** 2026 market outlook:**

Cautious in the short term, bullish on AI and quality assets in the long term

Shen Shuaibo: Should we be optimistic or pessimistic about the remaining time in 2026?

Xiao Teng: The short-term trend depends entirely on the Middle East situation. Pollymarket shows that the probability of the conflict ending by late March and late April is both low. In the short term, the market is relatively cautious. Israel asks Iran to stop its nuclear program, and Iran asks the US to withdraw from Middle East military bases. Their core demands are hard to achieve. The US wants to extricate itself but is already tied down, so the conflict is likely to drag on and be difficult to resolve quickly.

Xiao Dong: Market judgment varies from person to person. The key is the duration of the capital:

If you don’t need to use the money within 10 years, you can stick to an end-state mindset. Hold fundamental leaders with low valuations. Short-term dips become opportunities to add;

The Middle East situation is a second-order chaotic system—nobody can predict it precisely. You don’t need to be disturbed by noise from self-media;

As long as the target companies’ business models do not worsen and ROE stays stable, there’s no need to panic in the long run. The core of investing is “understand first, invest later.” The逆-globalization trend is irreversible. Countries prioritize safety over efficiency. The dividend from free trade has disappeared, and economic growth is under pressure. But the AI revolution is the only possible new engine that can break through stagflation, and it will intensify global wealth’s K-shaped differentiation. The US and China are core players in AI, while other countries can only participate at the application layer. Ordinary people can’t directly participate in the AI revolution, but they can take the AI express through asset allocation. In the future, investors’ cost-effectiveness will be higher than that of laborers—this is the trend of the times.

The ultimate investment question:

Hold long term or cut losses when the timing is right?

Shen Shuaibo: In investing, is a long-term hold-and-do-nothing approach better, or a short-term stop-loss and de-risk approach? Can the two be balanced?

Xiao Teng: By operating less over the long term and allocating to quality broad-based indices (such as broad US stock indices), you can achieve stable annualized returns. In the US stock market, long-term annualized returns are about 10%. Frequent trading causes fee erosion; losing 1% of returns each year has a huge impact on long-term outcomes. The best strategy is: don’t use leverage, diversify into assets with low correlation (US Treasuries, small-cap stocks, and gold), and hold long term. You don’t need to stare at the screen. The holding experience and returns are better.

Xiao Dong: I recommend 《Investment Knowledge I Learned from Darwin》. The core view is: when you can’t tell whether an opportunity is real or a trap, it’s better to miss than to make a mistake. Reduce the frequency of trading and wait for the core buying opportunity. Quant fund trading volume on the A-share market is at the margin above 50%. For retail investors, frequent trading can easily turn you into a counterparty to quant funds, resulting in negative long-term returns. Truly high-quality buying points happen only 1-2 times per year. For example, April 7, 2025, the day of the tariff-war crash—only around 20% of the year has trading value, and the rest is noise. Retail investors’ core advantage is that their capital has no performance assessment period and they have small size, so they can trade quickly. You should leverage that advantage: select high-quality targets, buy in batches at low valuations, hold long term, diversify your allocations, and pair “all-purpose” assets such as gold, low-volatility dividend strategies, and US stocks. With this, long-term returns may exceed those of most investors.

Quantitative trading and retail investors:

Should we hand it to professional institutions?

Shen Shuaibo: With quantitative trading dominating the market, should medium-sized retail investors delegate to institutions?

Xiao Teng: Quant institutions are overly mythologized. More than 60% of quant products are index-enhanced. For stock index futures, the long-term basis has been negative (backwardation) by 8%-15%. Retail investors can obtain similar returns directly through stock index futures. Quant excess returns have already fallen to single digits. The stock index futures account opening threshold is 500,000. Some retail investors can’t participate, but quant trading is not the only choice for retail investors. Independent allocation to indices and dividend assets is also feasible.

Xiao Dong: The market is chaotic right now. There’s no need to stay entirely in cash, but it’s also not advisable to be overly aggressive. Under the逆-globalization trend, global economic growth faces pressure. Only an AI technological breakthrough can boost productivity. Quality assets are always basically three categories: Nasdaq, gold, and low-volatility dividend strategies. Simplicity is the way.

Knowledge is king, long-termism

Xiao Dong: Most people overestimate the short-term impact of events and underestimate long-term effects. A short-term crash is an opportunity rather than a risk. The key is to truly understand the assets you hold, and to build an independent information filtering and decision-making system—not to follow the crowd, and not to chase rallies or sell in panic. Earn money from knowledge, and treat investing as a long-term game, not a short-term contest.

Xiao Teng: In 2026, asset volatility will be extremely high and the holding experience will be poor. You can reduce your position to a level that doesn’t require you to stare at the market every day, exercise more, and read history. I hope everyone can achieve steady returns, and that the world restores peace as soon as possible.

Shen Shuaibo: What you earn in investing is money from knowledge. Stay firmly committed to long-term knowledge, and strip away short-term noise—this is the core of how to catch the main line in the short-video era. Reject leverage, resist volatility, and stick to long-term value judgments. In the end, you will surely reap returns.

Xiao Dong: I hope March 23, 2026 becomes the market bottom for the whole year. I wish all investors’ accounts rebound quickly and that you can get through a period of many troubles in a calm, steady manner. Thank you for listening!**