The scenes from Iran have transfixed the world: massive protests sweeping more than 180 cities, security forces clashing with demonstrators, and a death toll that multiple sources estimate between 12,000 and 20,000. For investors, the unfolding crisis presents both risks and opportunities that are already reshaping global markets.

Gold surged past $4,650 per ounce this week, setting a fresh all-time high. Oil prices have climbed to levels not seen since October. And the U.S. dollar, despite pressure from domestic political uncertainty, has found support from safe-haven flows. The question now is how to position for what comes next.

Understanding the Iran Situation

The protests began in late December in Tehran's Grand Bazaar, initially focused on surging prices for basic goods like cooking oil and chicken. Within weeks, economic grievances evolved into political ones, with demonstrators explicitly calling for regime change.

Iran's Supreme Leader Ali Khamenei has accused protesters of acting as "mercenaries" for the United States, while President Trump has repeatedly signaled that military intervention remains on the table. "We will hit them at levels that they've never been hit before," Trump warned earlier this week.

The combination of internal instability and external threats creates extraordinary uncertainty for markets that depend on Middle Eastern stability.

Oil: The Obvious Trade

Iran produces approximately 3.3 million barrels of oil per day—a meaningful but not overwhelming share of global supply. The direct impact of Iranian production disruption would be manageable; the indirect consequences could be severe.

The nightmare scenario involves the Strait of Hormuz, the narrow waterway through which roughly one-third of the world's seaborne crude flows. Iran has periodically threatened to block the strait in response to Western pressure. An actual closure, even temporarily, would send oil prices dramatically higher.

West Texas Intermediate crude rose 2.8% Tuesday to settle at $61.15 per barrel, the highest level in more than two months. Brent crude has followed a similar path. Yet prices remain well below the levels seen during previous Middle Eastern crises, suggesting markets are not yet pricing in severe disruption.

"The oil market is in 'price chaos' mode. Hedging activity has reached record levels as traders try to protect against both upside and downside scenarios. The range of potential outcomes has never been wider."

— Energy market analyst

Gold's Safe-Haven Surge

The clearer beneficiary of Iranian uncertainty has been gold. The yellow metal broke through $4,600 per ounce Monday and continued climbing, reaching approximately $4,650 on Wednesday. Silver has followed, crossing $90 per ounce for the first time.

The gold rally reflects multiple factors beyond Iran. The criminal investigation into Federal Reserve Chair Jerome Powell has unsettled investors concerned about central bank independence. China's export controls on critical minerals have added to resource nationalism fears. And persistent inflation concerns continue to support precious metals demand.

Major banks have turned uniformly bullish. JPMorgan, Goldman Sachs, and UBS all project gold reaching $5,000 per ounce by mid-2026. HSBC sees prices potentially reaching that level even sooner if geopolitical tensions escalate further.

Defense Stocks in Focus

The possibility of U.S. military intervention has boosted defense contractors. L3Harris Technologies rallied 13% Monday after announcing a spinoff of its missile solutions business, backed by a $1 billion investment from the Pentagon. Lockheed Martin, Raytheon, and Northrop Grumman have all outperformed the broader market.

Defense spending appears set to increase regardless of Iran's trajectory. The Trump administration has proposed a $1.5 trillion military budget, and concerns about both Iran and China are building bipartisan support for increased defense investment.

What Investors Should Consider

Positioning for geopolitical risk requires balance. The range of outcomes in Iran spans from regime collapse and Western-aligned government to brutal crackdown and regional war. No one can predict which scenario materializes.

For investors seeking protection:

  • Gold and silver provide traditional safe-haven exposure with momentum on their side
  • Energy stocks offer leveraged exposure to oil price increases, though with company-specific risks
  • Defense contractors benefit from increased military spending regardless of near-term events
  • Treasury bonds provide safety, though yields remain historically low

Those seeking to avoid overreaction should remember that geopolitical crises often resolve without the worst outcomes materializing. The Gulf War, various Middle Eastern conflicts, and regional tensions over the past decades created volatility but rarely derailed global economic expansion.

The Broader Market Impact

Iranian uncertainty comes at a delicate moment for markets. Stocks had rallied to record highs in early January, valuations are stretched by historical standards, and corporate earnings expectations remain elevated. Geopolitical shock could trigger broader selling if investors decide to reduce risk.

Conversely, a resolution—whether through regime change, negotiated settlement, or simply reduced tensions—could provide fuel for further gains. Markets have historically rewarded those who maintained positions through periods of heightened uncertainty.

For now, the situation remains fluid. Investors would be wise to monitor developments closely, maintain diversified portfolios, and resist the urge to make dramatic changes based on headlines. The Iran crisis will eventually resolve; the question is whether it does so smoothly or through further disruption.