Investors are underestimating the consequences of the war against Iran. We can all agree that it’s very bad news, but why do investors carry on as if nothing is happening?

The result will be a sudden shock, and it is clearly round the corner and it will come from bond yields. In this article I link the mid-seventies oil shock outcome of high inflation and high bond yields with low government debt-to-GDPs. This time the average G7 debt-to-GDP is 124%, 4.6 times that of 1975.

Do we really think this doesn’t matter? If so, how is the fallout going to be funded by socialising governments? The only outcome is the destruction of government credibility which is why gold is the only safe haven!