Core Viewpoint - The article emphasizes the importance of including commodities, particularly gold, in investment portfolios to mitigate risks during geopolitical shocks, as evidenced by historical data showing commodities consistently perform well during such events [4][20][36]. Group 1: Geopolitical Events and Market Reactions - A study by J.P. Morgan analyzed 36 major geopolitical events from 1940 to 2022, revealing that stock market performance typically rebounds after initial declines following such shocks [8][12]. - The only significant exception was the 1973 oil embargo, which led to a 37% drop in the S&P 500 over 12 months due to the U.S.'s heavy reliance on imported oil [16][19]. - In contrast, the oil price shock from the 2022 Russia-Ukraine conflict saw prices spike but return to lower levels relatively quickly, highlighting the U.S.'s improved energy independence due to the shale revolution [19][20]. Group 2: Asset Performance During Geopolitical Shocks - During geopolitical shocks, commodities like gold and oil tend to show positive returns, while stocks and bonds often decline [24][25]. - Historical data indicates that gold averages a 1.8% increase during such events, while stocks and bonds average a -1.6% decline [24][25]. - The article notes that central banks have significantly increased gold purchases as a hedge against geopolitical risks, with U.S. central bank purchases quadrupling post-2022 conflict [27]. Group 3: Portfolio Composition and Strategy - The article advocates for a three-legged investment strategy: stocks for growth, bonds for interest, and commodities for stability during crises [29][30]. - It suggests that many investors currently lack adequate commodity exposure, particularly gold, which is essential for a balanced portfolio [30][36]. - The timing of commodity purchases is crucial; the article advises against buying during high volatility and suggests establishing commodity positions during stable periods [32][33].