Author: admin heyokha

What’s heavier? A kilogram of $100 bills, or a kilogram of gold?

They’re the same. Both a kilogram. Obviously.

Or are they? What about in terms of value?

There is a financial origin story we all learned in grade school: humanity abandoned gold coins and switched to paper bills because paper was lighter, sleeker, and infinitely more convenient. Lugging around metal was primitive. Fiat cash was the elegant, high-velocity upgrade for a modern economy. A win for our spines, our wallets, and our pockets.

But if you run the math today, that fundamental grade-school lesson has completely inverted.

If you want to transport wealth in the modern era, paper money has actually become the heavier, more burdensome liability. As we push through 2026, gold is literally lighter and easier to lug around than a stack of US hundred-dollar bills. What on earth happened?

The 2008 Cash Stacks

There is an iconic scene in the summer of 2008’s The Dark Knight where Heath Ledger’s Joker slides down a literal mountain of the mob’s cash inside a warehouse, then proceeds to set half of it on fire just to make a point. Cinematic. Chaotic. Deeply on-brand.

Visually, the mountain is a stunning representation of illicit wealth. But logistically? The Gotham mob was actually doing the smartest thing possible. In mid-2008, gold traded around $850 an ounce. Because every US bill weighs exactly one gram (yes, even the $100s, because physics doesn’t discriminate by denomination), a kilogram of $100s holds exactly $100,000. That same kilogram of gold? A measly $27,328.

Paper money was nearly four times more valuable by weight. If the mob had hoarded bullion instead, the mountain the Joker slid down would have been nearly four times as heavy, blowing out the warehouse floor, the suspensions on their getaway vans, and probably the backs of every henchman on the payroll. Cash was simply the ultimate high-density asset.

The 2026 Reality: Saving on Goon Overtime

Fast forward to today, with gold punching around the $4,500 mark (and briefly kissing $5,500 in January, as we wrote about in a previous blog “The $5,500 Vertigo: Why Preparation Matters More than FOMO”). The structural debasement of the US Dollar has completely inverted the logistics of physical wealth.

Let’s look at the exact same warehouse today:

1 kg of $100 Bills: $100,000 (still fixed, because physics doesn’t inflate)

1 kg of Gold (at $4,500/oz): $144,678

To store the exact same amount of purchasing power today, the mob would need 45% more physical space and weight if they used $100 bills instead of gold. The paper money that was supposedly invented to be the “light” alternative has become a bloated, heavy liability.

If the mob ran that warehouse in 2026, stacking gold instead of cash would be significantly less back-breaking. Forget gold being just an inflation hedge: switching to bullion would save the syndicate a fortune in chiropractor bills and goon overtime pay.

Yes, the scene would not be as epic… because gold doesn’t burn as easily…

…but Lau would have died a different way if it was gold bricks being thrown at him.

The ECB Just Mailed in the Receipt

And if you thought this was just a fun thought experiment, the European Central Bank decided to mail in the receipt this week. According to its 2026 international role of the euro report, gold has officially overtaken US Treasuries as the world’s top reserve asset.

Let that sink in for a second. Bullion now makes up 27% of all global central bank reserve assets at the end of 2025, up from 20% a year earlier. US Treasuries? Down to 22% from 25%. The metal that the textbooks told us was a relic of the gold-standard past is suddenly the asset central bankers can’t look away from.

Source: Financial Times, ECB

But here is the part most headlines will skip, and it is the most important part. This was not a rotation. Central banks did not just dump Treasuries to pile into gold. Net buying actually slowed last year. The ECB itself is clear that the shift was driven mostly by valuation: gold’s price climbed roughly 60% in 2025, and that alone pushed its share of reserves higher while the dollar pile sat still.

Which sounds like it should deflate the story. It does the opposite. You do not need anyone to defect from the dollar for gold to overtake it. You just need gold to keep being repriced upward against a currency that is quietly losing purchasing power. The flip did not happen because allocators reshuffled their spreadsheets. It happened because the market marked gold to its real worth, and in doing so marked the dollar down. De-fiatization does not arrive as a press release. It arrives as a price.

Collectively, the world’s central banks are now sitting on more than 36,000 tonnes of the stuff, within spitting distance of the 38,000-tonne peak from the Bretton Woods era, back when the dollar was still pegged to gold and your grandfather’s economics professor knew what he was talking about. The pretense that we left gold behind is officially over. The institutions running the monetary system are quietly rebuilding the very foundation we were told was obsolete.

The biggest accumulators since 2022? China, Poland, Turkey, and India. Notice anything they have in common? Three of the four would not exactly describe Washington as their closest friend. The 2022 freezing of Russia’s dollar reserves was the ultimate “oh” moment for any central banker who had quietly assumed reserves meant “yours, no matter what.” Turns out, dollar reserves come with terms and conditions, and not the kind you can scroll past.

Even the slowdown is telling. Central bank gold buying “cooled” to 850 tonnes in 2025 after three straight years above 1,000 tonnes. Which is a bit like saying a wildfire “cooled” because it only burned 850 acres this week instead of 1,000.

Plot Twist: The Single Biggest Buyer in 2025 Wasn’t a Country

The single largest gold buyer of 2025 wasn’t China, India, or any sovereign. It was Tether, the stablecoin company. Over 100 tonnes in a single year. (To be precise: among official-sector buyers, Poland took the crown at around 100 tonnes. But once you let private players into the room, a crypto company out-bought every central bank on the planet.)

Source: World Gold Council, Bloomberg, Katusa Research

We saw this coming. In “The Stablecoin That Bought a Central Bank’s Worth of Gold”, we flagged that Tether had quietly become one of the largest non-sovereign gold holders on the planet, hoarding more bullion than Greece, Hungary, or South Korea. Now it’s outpacing actual sovereigns. A crypto company whose business model is literally backing a dollar-pegged token has decided the best place to park its profits is the asset that signals distrust in fiat. If that doesn’t sum up our current monetary moment, nothing does.

Meanwhile, Turkey, that great gold accumulator, staged “one of the largest reserve drawdowns in recent years,” offloading or loaning out 130 tonnes after the Iran war kicked off in early 2026. It is tempting to read this as a crack in the thesis. It isn’t. It is a demonstration of the one property that makes gold money in the first place: liquidity. When a country suddenly needs to defend its currency, gold is the reserve it can turn into firepower fastest, no counterparty’s permission required. That is gold doing exactly the job it is supposed to do.

There’s an honest footnote, of course. Turkey sold gold for dollars during the Iran war crisis because dollars are still the world’s plumbing. Orthodox playbook. But the receipts have nuance. In March 2026 alone, Turkey deployed roughly $8 billion of gold and roughly $14 billion of US Treasuries to defend the lira, dumping nearly 89% of its remaining Treasury holdings in the process.

What happened next is the more telling part. Within two weeks of the ceasefire, Turkey was buying gold back — 36 tonnes by mid-April, lifting reserves to around 730 tonnes. The Treasuries, so far, have not been replenished. The asset Turkey is rebuilding its balance sheet with is the metal, not the paper. Food for thought on what reserves are really for and which one looks more like a strategic asset versus a transactional one.

The Physics of Financial Debasement

This weight flip isn’t a magical shift in gold’s atomic structure. Gold is still gold. The periodic table hasn’t been edited. There is nothing mystical going on here at all, just plain math.

The exact moment the grade-school lesson broke is a number we can name: roughly $3,110 an ounce. Above that price, a kilogram of gold is worth more than a kilogram of $100 bills. Below it, paper wins. Gold cleared $3,110 in early 2025 and never looked back. The flip is not a metaphor. It is a price we crossed.

What that number represents, though, is financial debasement in plain sight. Over the last several years, trillions of dollars were printed into existence. When you aggressively expand the supply of paper bills without a corresponding explosion in real economic output, each individual note simply captures less economic energy. And the trajectory has, if anything, accelerated.

Because the US hasn’t printed a circulating denomination higher than the $100 bill since 1969, the physics of inflation have hit a wall. As the fiat dollar loses purchasing power, you simply need more physical pieces of paper to buy the same chunk of reality. Picture trying to buy a sandwich with a wheelbarrow of ones. Now picture it in slow motion, over decades, with marketing.

And yes, that’s a real proposal: a commemorative $250 bill featuring Trump, to mark America’s 250th anniversary. Officially, it’s ceremonial, a one-off tribute, not a permanent denomination upgrade. So really, nothing to see here. Except…the US hasn’t floated a denomination higher than $100 since 1969. The fact that we’re even discussing one now, souvenir or otherwise, is its own kind of tell.

Treasury Secretary Scott Bessent holding up a news article with a possible $250 Trump bill being created for the country’s 250^th anniversary

Source: BBC

This exact dynamic is what drives the structural momentum behind dedollarization. When foreign central banks and global capital allocators look at the massive expansion of the US monetary base, they see a game of musical chairs, only the chairs are made of paper, and the music is being printed by the same people running the game.

Whether central banks are actively buying or simply watching their existing gold get repriced upward, the direction is the same: a steady, quiet rebalancing away from paper. They aren’t just making a political statement. They are making a weight, space, and opportunity cost calculation. Why back a financial system with a depreciating asset that requires increasingly larger warehouses to hold the same value, when a compact bar of metal does the job flawlessly?

So, Heavier or Lighter?

Back to our opening question. A kilogram of $100 bills and a kilogram of gold are, technically, the same. Same mass. Same weight on the scale. But ask a Joker, a central banker, a stablecoin treasurer, and they will all tell you the same thing: one of them is doing a lot more work than the other.

The Joker burned his half of the money to send a message that “everything burns.” Cute. But through a relentless cycle of monetary expansion, the unburned half is being incinerated just as effectively, only slower, quieter, and without the matches. As we like to say at Heyokha: in a world of soft money and harder choices, real money has a way of resurfacing.

 

 

Aryo Soerjohadi and Tara Mulia
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Last week’s post on Yellen left us turning over a question. Has central bank independence ever been tested like this before? Are there moments in history we should be reading our own moment against?

It is worth pausing for a sentence on what we mean. Central bank independence is the working assumption that the people who set interest rates can do so without being told what to do by the people who issue debt.

The Fed has had it, in modern form, since Paul Volcker’s 1979 appointment; most of the rest of the developed world adopted some version of it over the following two decades. Whether that assumption survives the next few years is the question hanging over markets right now.

Our reading is that the answer to the question we started with is yes. Central bank independence has been tested before, on at least four separate occasions in the last century, and the pattern is suggestive: they cluster, with surprising consistency, around wars.

The institution looks, on closer inspection, like a peacetime convention. We seem to be entering not one war but three at once.

 

A century of wartime tests of central-bank independence.

Source: Heyokha Research

The pattern: one war tends to be enough

The record is consistent enough to be suggestive. Central banks fold to fiscal needs when the state declares a real emergency. Not always cleanly, not always quickly, but reliably enough to look like a rule.

In late July 1914, with WWI breaking out, U.S. Treasury Secretary William McAdoo asked the New York Stock Exchange to close, to stop foreign liquidations of American assets. It stayed closed, in some form, for four months. The Federal Reserve had been signed into law eight months earlier and would not actually open its doors until November. Independence was an idea. War was the test.

From April 1942 through March 1951, at the Treasury’s request, the Fed pegged short Treasury bills at 0.375% and capped long Treasury yields at 2.5%. CPI peaked at 19.7% YoY in March 1947, making the real long-bond yield that month roughly minus seventeen percent. An investor who held a 30-year Treasury through the peg lost something close to half their purchasing power. The Fed only got its independence back via the 1951 Treasury-Fed Accord, six years after the war had ended. The independence of an institution and the patience of its bondholders, it turns out, are not the same thing.

The hoarding of T-Bills to fund the war debt

Source: Federal Reserve Bank of Chicago, Board of Governors of the Federal Reserve System (1976).

 

In December 1965, William McChesney Martin’s Fed raised the discount rate during Vietnam financing. Two days later, LBJ summoned him to the Texas ranch (where the President was recovering from gallbladder surgery) and, by most accounts, physically pushed him around the room with the line: Martin, my boys are dying in Vietnam, and you won’t print the money I need. Martin held the line on the rate decision in public. Years later, he confessed to a friend: To my everlasting shame, I finally gave in to him.

The institution had no protection. The man’s stubbornness did, briefly.

In September 1979, Arthur Burns gave the Per Jacobsson lecture in Belgrade titled “The Anguish of Central Banking.” It read less as theory than as confession: central bankers who try to defy political pressure during a national emergency tend to lose, because the emergency is real, the public sides with the government, and the central bank has no political constituency of its own. Volcker, the figure who briefly seemed to refute him, was being pressed by Reagan’s Treasury to ease by 1986 and was eased into retirement in 1987. The exception, it turns out, also tends to prove the pattern.

source: Chung-Hua Institution for Economic Research

So the pattern, viewed from sufficient height: one genuine national emergency tends to override the convention. We are currently looking at three.

The dashboard, this spring

The hot war. The U.S. has been in active engagement with Iran since early February. Joint U.S.-Israeli strikes on 28 February formally opened what the press is now calling the 2026 Iran war. Tankers in and around the Strait of Hormuz are being seized; Iranian drones are being shot down over the Gulf. With Iran reportedly negotiating with China for hypersonic anti-ship missiles, the kind designed to neutralise U.S. naval power in the region, the contest looks less like a regional skirmish than a U.S.-China proxy with Iran as the contested ground.

The cold war. No soldiers shooting; every other lever of state power being pulled. Tariff threats on countries arming Iran. Secondary-sanction letters to Chinese banks. Beijing’s recent 18-point regulation giving authorities the power to investigate and bar foreign-company executives from leaving the country. The arc of containment is being drawn in real time, and capital is being trapped on both sides of it.

The one still ongoing. Russia-Ukraine, now in its fifth year. The EU adopted its 20th sanctions package on 23 April. There is no ceasefire. The war has settled into the kind of grinding precedent that quietly redirects European savings into national defence, which is a precedent in its own right.

Each alone might be enough to override the convention. Stacked, they’re harder to argue against. We are also stacking them on top of a fiscal position that didn’t exist in 1942 or 1965. U.S. net interest expense reached $970 billion in FY2025 (3.2% of GDP) and is projected to clear $1 trillion in FY2026, already the second-largest line in the federal budget, ahead of defence and behind only Social Security. The temptation to lean on the Fed is not a personality trait of the current administration. It is the gravitational pull of the math.

U.S. federal net interest expense as share of GDP, with FY2026 projection.

Source: CBO, U.S. Office of Management and Budget.

What Burns was really saying

Burns’s anguish was about the gap between the model an economist studies and the institution an economist actually runs. The model assumes the central bank stands apart. The institution does not. It funds whatever the state needs funded when the state declares an emergency. The freedom, mostly, is in how: in the tone, the framing, the press conference.

Excerpts from Arthur Burns’ lecture (former Fed chair in 1970-1978 who is known to let inflation run rampant). This lecture is essentially his defense on Fed’s independence being difficult to uphold

Source: Federal Reserve Bank of St Louis

In practice, if our reading is right, the playbook will look fairly familiar. Powell will signal it one way. Whoever replaces Powell will signal it more quietly. The substance will be similar: rates capped relative to inflation, captive buyers of U.S. bonds manufactured, the debt stock eroded in real terms over the next decade. The wars get paid for, slowly, by whoever’s savings sit in nominal currency or government debt.

Markets keep treating each new data point (a rate decision, a Treasury auction, a Powell press conference) as a referendum on whether the regime is changing. We understand the appeal: watching the data point is something you can do, and feels like agency. Our suspicion, offered in the spirit it deserves, is that the referendum has been held. What’s left is the speed at which bond, equity and currency markets adjust to the new state.

If that’s roughly right, and we hold it the way one ought to hold any reading of an ongoing event, the implications are the ones we’ve been quietly writing about for years. Gold, owned for the boring decades and not just the loud ones. Real assets with pricing power. Some non-USD exposure, since this is, eventually, a story about the unit of account. A polite skepticism toward any narrative that quietly assumes a developed-world central bank will choose inflation control over fiscal accommodation in this environment.

That choice was probably always going to be made for them. One war, the record suggests, is already tough enough. We repeat again dear readers – we are in three. It will be near impossible to have a choice.

 

Tara Mulia
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Once in a while, a thesis you’ve been quietly writing for years lands on the front page via someone the market cannot ignore. Last week, that was Janet Yellen.

Speaking at the HSBC Global Investment Summit in Hong Kong on April 15, the former U.S. Treasury Secretary, and before that former Fed Chair, was asked about the Trump administration’s campaign to pressure the Federal Reserve into cutting rates to reduce the government’s debt service costs. Her answer was not diplomatic:

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“How often does the president of a developed country express the view that the interest rate should be set to reduce the debt service cost?

This is what you hear in a banana republic.”

– Janet Yellen, Hong Kong, 15 April 2026

Source: South China Morning Post

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She added that she had “never seen a threat of this level to the Fed before,” and called the White House’s floated threats of criminal charges against Chair Jerome Powell “the ultimate step,” an “unprecedented” way of interfering with central bank independence.
We have been writing about this dynamic since 2018. Not this specific headline, but this specificargument. In our quarterly reports, our special report Gold: The Return of Real Money, and as recently as our April 3 blog The 1974 Illusion, we have argued the same thing: when a government carries a structurally unsustainable debt load, the arithmetic leaves only one viable exit. What is new is that it is now being proposed openly, from the White House, with a straight face.

The Playbook Of An Indebted Government

When a government carries a debt load it cannot grow or tax its way out of, it reaches for the same playbook every time. The playbook has a name, financial repression, and the mechanics are simple:

• Cap nominal rates below inflation. Pressure the central bank, directly or via appointments, to keep policy rates low even as prices rise.
• Let inflation run hot. Don’t fight it. Let it erode the real value of the outstanding debt stock.
• Create captive buyers. Force pension funds, banks, and insurers to hold low-yielding sovereign paper by regulation, tax incentive, or outright mandate.
• Wait. Over a decade or two, the real burden of the debt silently melts. The holders of the bonds, usually savers and retirees, pay the bill through lost purchasing power.

Source: Heyokha Research

This is not theoretical. The United States ran this exact playbook from 1946 to 1951 to work off the WWII debt stock. The UK did the same across the post-war decades, Japan has run a variant for thirty years, and every emerging market that has ever been in fiscal trouble has arrived at the same door. There is no clever third option. The arithmetic always wins.

Now it’s higher than WW2!
Source: Bloomberg

The Arithmetic That Forces It

We laid the numbers out in The 1974 Illusion. They are worth repeating, because the gap between what the math says and what markets are pricing is where the opportunity lives.

• U.S. federal debt: ~$39 trillion. Debt-to-GDP now above 120%, higher than the post-WWII peak that triggered the last formal repression episode.
• Interest expense + mandatory outlays: ~92% of federal tax revenue. That leaves almost nothing left over to run the country, never mind rebuilding infrastructure or funding a great-power rivalry.
• The gap Trump wants closed: 250 basis points. Fed funds sits at 3.50–3.75%; the White House wants 1%. Not all of it flows through overnight: long rates don’t follow Fed funds one-for-one, and only maturing debt reprices. But about $7–9 trillion of Treasury paper rolls every year, so even a partial pass-through compounds into hundreds of billions over a few cycles. That is the prize.

 

Paul Volcker could hike to 17% in 1980 because debt-to-GDP was 33% and the sovereign could absorb the medicine. In 2026, with the structural inflation now building on the back of the Iran energy shock, the same medicine kills the patient. The Volcker playbook is dead, and everyone who runs the numbers knows it.

Source: Heyokha Research

So the choice is not between hawkish discipline and dovish indulgence. The choice is between an explicit repression regime, run openly, and a quiet one, run by nods and winks. Yellen’s point is that Trump is picking the former. That is what makes it a banana republic: not the arithmetic, but the willingness to stop pretending.

Three Red Lines in Just Two Working Days

If this were only an American story, one could call it a political aberration that corrects when administrations change. It isn’t. In five working days in April, three supposedly-inviolable lines got walked past in public.

• April 15, Hormuz. The U.S. turned back the Rich Starry, a sanctioned tanker attempting to break the American blockade at the entrance to the Strait. Washington is now actively interdicting the flow of energy to China. The mechanism is explicit.
• April 16, London. The House of Commons passed the first leg of a bill letting a government minister mandate the asset allocation of UK pension funds. This is literal financial repression, legislated, at a moment when most of the market is busy looking at equities making new highs.
• April 16, Bloomberg TV. Former U.S. Treasury Secretary Hank Paulson, the man who effectively nationalised much of the American financial system in 2008, admitted on air that there is a “break the glass” plan for the moment the U.S. government cannot sell Treasuries at a yield it can afford. One man saying that in public at that moment is not an accident. That is a former Treasury Secretary pre-positioning the idea in the discourse.

 

These are not three stories. They are one story: governments reaching, in public, for coercive tools the post-1980 consensus promised would stay on the shelf. Control of commodity flows. Control of where private savings clear. Control of the price a Treasury pays for its own debt. Three levers. One direction of travel. All of it inside two working days.

What To Do When The Playbook Is Public

The uncomfortable truth about financial repression is that it is engineered to punish the people who did exactly what they were told to do: save responsibly in sovereign bonds and hold cash in the local currency. It has to work that way for the arithmetic to resolve. A few things follow:

1. Gold is insurance, not speculation. We argued in Gold: The Return of Real Money that a reversion to historical gold-to-monetary-base ratios implies fair value well north of where we are today. Yellen’s quote didn’t change our view. It shortened the distance between our view and the consensus one.
2. Own real assets with genuine pricing power. Commodity producers outside the repression geography, food-chain businesses whose margins flex with input costs, and equities with monopolistic or near-monopolistic pricing. Bonds are not shelters in this regime.
3. Treat inflation expectations as the variable, not the constant. The entire developed-world pricing complex is currently behaving as if inflation expectations are anchored. Yellen’s warning and the UK pension bill say the same thing: that assumption is on borrowed time.

The Arithmetic Doesn’t Wait

This isn’t a prediction. The playbook is already running, in public, with fingerprints on it. Yellen put a name on it this week. Paulson rehearsed its next move on Bloomberg. Westminster started legislating the machinery on the 16th. The only part still pending is the part where markets stop discounting it.

For our readers, none of this is new. We’ve argued the structure, written about gold as insurance rather than speculation, and laid out the arithmetic in blog after blog. What is new this week is that the argument no longer requires a footnote.

 

 

Tara Mulia
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Admin heyokha

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We sat down to watch the latest sci-fi film “Project Hail Mary” last week expecting something light but got the opposite.

Early in the film, the head of an international task force lays out the stakes to the main character being sent on a desperate space mission: an alien microorganism is slowly consuming the sun’s energy. At current trajectory of colder temperatures, food production will collapses and roughly 25% of the world’s population will die of starvation. Very dire situation for the main character.

Source: MGM

We couldn’t stop thinking about it — not because we’re facing a dying sun, but because a version of a similar downward cascade is playing out right now in the Strait of Hormuz. The oil story has dominated every headline. What isn’t being talked about nearly enough is what’s happening to food.

This Is Not Just an Oil Story

Since late February 2026, the Strait of Hormuz has been effectively disrupted, caught in the crossfire of an escalating Iran conflict. The world knows this. Markets have priced in the oil shock. Analysts have run the Brent scenarios. That conversation is well underway.

Here is the conversation that hasn’t started yet.

The Strait of Hormuz isn’t just the world’s most important oil chokepoint. It is also the jugular vein of global fertilizer trade. And right now, it is being squeezed.

Source: Goldman Sachs

Consider what flows through those 33 kilometers of water:

• Around 34% of global urea shipments
• Around 23% of global ammonia
• Around 20% of global phosphates

 

That means close to 50% of world urea exports originate west of Hormuz and must pass through it. That also means close to 30% of all global fertilizer trade transits the Strait.

Oil gets the headlines because its price moves immediately and visibly. Fertilizer deserves its own headline because its price also moves quite quickly and the damage lands months later in the food supply, long after the Strait has reopened and the world has moved on.

The Price Shock Is Already Here

We said slow motion. But the first act has already been fast. In the roughly six weeks since disruption intensified, fertilizer markets have repriced violently:

• Urea: up around 70% in six weeks, now above $800/ton; up roughly 104% year-to-date on a futures basis
• India import bids: $935–959/ton — roughly double what buyers were paying two months ago

 

To put the immediate jolt in context: in the first weeks post-disruption, fertilizer markets saw a 28–30% spike. That’s not a rounding error. That’s a supply chain cardiac event.

Will we see it test higher prices than the Russian-Ukraine war?

Source: Bloomberg

We Have Seen This Movie Before — In 2022

In our earlier blog “Rising Fertiliser and Food Prices: Who Will Be Spared?”, written in April 2022, we tracked what happened when Russia invaded Ukraine and effectively weaponized the nitrogen supply chain. The mechanism was the same: a geopolitical shock hit the gas supply (ammonia’s key feedstock), fertilizer plants went dark across Europe, and prices detonated.

The 2022 Ukraine shock produced:

• Ammonia prices up ~200% from pre-war levels at peak
• Global urea prices hitting record highs above $900/ton
• Food price index (FAO) reaching its highest level ever recorded — March 2022
• Export bans from India, China, and Russia as countries hoarded supply
• Egypt, Sri Lanka, and Pakistan facing acute fertilizer shortages

In case you need a refresher of how it went down back in 2022

Source: Heyokha research, Bloomberg

In 2022, the shock was upstream energy: gas prices broke fertilizer production. In 2026, the shock is logistics: a physical blockade on the world’s most fertilizer-intensive shipping lane. The mechanism is different. The destination is the same.

The Chain Reaction Nobody Is Pricing In

Here is what makes this crisis different from an oil shock — and more dangerous for long-term inflation. Oil prices move, and within months, the effect is felt at the pump. Consumers adjust. Central banks watch CPI. The feedback loop is fast and visible.

Fertilizer doesn’t work that way. It operates on an agricultural calendar. And right now, we are in the exact wrong moment of that calendar.

The sequence looks like this:

• Fertilizer prices spike (now) → farmers in Asia, Africa, and LatAm face input costs they cannot absorb
• Planting decisions change (within weeks) → farmers reduce application rates, switch to lower-input crops, or skip planting altogether
• Crop yields fall (harvest season, Q3–Q4 2026) → lower output than the market expects
• Food supply tightens (post-harvest) → grain, rice, and staple inventories shrink
• Food prices rise (lagged CPI impact) → the inflation the market didn’t price in arrives on schedule

 

This is not cyclical inflation. This is not a demand shock that the Fed can cool with a rate hike. This is structural inflation driven by a real, physical constraint on one of the most inelastic goods on earth: food. You cannot print more rice. You cannot stimulate your way to a better harvest.

And crucially — the data will look fine right now. Commodity desks will note that food CPI has not moved. Analysts will say the market is calm. That calm is the problem. The harvest hasn’t happened yet.

Who Gets Hit First

Not everyone feels this equally. The geography of vulnerability follows the fertilizer import map, and it skews heavily toward the countries least able to absorb it. India is already bidding urea at $935–959 per ton, roughly double two months ago. Bangladesh, Pakistan, and much of Sub-Saharan Africa run food expenditure ratios above 50% of household income; a 30–50% fertilizer input shock is not an abstraction for the people at the end of this supply chain — it is a decision about whether to plant at all. When farmers in import-dependent economies reduce application rates or skip a crop cycle, the deficit gets quietly written into soil that won’t talk back until harvest season.

Source: Bloomberg

The Inflation That Was Already Coming

We want to be precise about something: this is not a new worry for us. We first wrote about ammonia as a geopolitical weapon in early 2022, in “Rising Fertiliser and Food Prices: Who Will Be Spared?” — before most investors were treating it as anything other than a niche commodity story. The thesis then was that supply chain breakdown, energy crisis, and geopolitical tension had crystallised into a perfect storm for food prices, and that the effects would travel through the system far more slowly and durably than markets expected.

Later that year, when food prices briefly cooled and analysts declared the crisis over, we pushed back in “The End of the Decade of Plenty” blog back in November 2022. The FAO food price index had fallen 14.7% from its March peak,  but the dollar had risen 21.5% over the same period, meaning most countries were actually paying more in local currency terms. Export bans were proliferating. The underlying supply-side pressures had not resolved; they had merely gone quiet. We said then: don’t mistake a pause for a resolution.

That lesson applies with full force today. The latest data from FAO ((Food and Agriculture Organization of the United Nations)) is already seeing Food Price Index rising for a second consecutive month, driven by energy related pressures from the Middle East conflict.

Averaged 128.5 points in March 2026, up 3.0 points from February

Source: FAO

What we are describing is not a cyclical event central banks can hike away. It is structural inflation — driven by real, physical constraints on the most inelastic thing on earth. You cannot print more rice. The Hormuz crisis will eventually ease and shipping lanes will reopen, but the harvest that didn’t happen won’t come back.

You cannot retroactively fertilize a field that went under-dosed in April. The consequences are already baked into the ground.

The question for investors isn’t whether this inflation arrives, it’s whether you’re positioned for a world where food prices reprice structurally and stay there. We’ve long believed the answer lies in owning the things scarcity makes more valuable and the kind of exposure to real assets that actually benefits when the fiction of infinite, frictionless abundance runs into a closed strait. The broader point is the same one we’ve been making since the decade of plenty ended: efficiency was the trade of the last era; resilience is the trade of this one.

In the film, (spoiler alert) humanity gets its Hail Mary — a one-in-a-billion miracle, executed by a lone astronaut and some extra-terrestrial help, arriving in the nick of time. Inspiring. Also not our base case.

What is our Hail Mary?
source: MGM

The real-world version of this story doesn’t end with a miracle. It ends with whoever read the data early enough being fine, and whoever assumed the world would stay frictionless being very surprised by their future grocery bill.

 

 

Tara Mulia
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Trying to gauge the exact status of the Strait of Hormuz from a desk is a bit like trying to review a restaurant by reading the menu through a telescope. You can spend all day squinting at maritime transponder data on a Bloomberg terminal, trying to guess if the shipping lanes are clear.

Citrini Research decided to do something a bit more practical: they sent an analyst directly to the Strait of Hormuz.

Analyst #3 is either the bravest person alive or the most suicidal

source: Citrini Research

What their field agent found completely dismantles the mainstream narrative. The Strait of Hormuz hasn’t been completely barricaded, nor is it freely open. It has morphed into a geopolitical tollbooth. Standard maritime tracking is basically useless right now because as much as 50% of the vessel traffic is running “dark.”

Ships are turning their transponders off and tiptoeing through the Qeshm-Larak channel to dodge drones. It is global trade on incognito mode.

But the real punchline isn’t how the ships are passing. It is who is passing.

By early April, at least 10 major nations, including staunch U.S. allies like France, Japan, and India, had actively negotiated direct transit access with Iran. Think about that for a second. Sovereign nations allied with Washington are making bespoke side-deals with the exact country the U.S. is currently in direct conflict with.

It’s the geopolitical equivalent of finding out your loyal business partners are quietly negotiating a separate supply contract with your biggest rival.

Why are U.S. allies suddenly acting like free agents? Well take a look at Trump’s own tweet:

Last week, Donald Trump lashed out at European allies who refused to join the Middle East conflict. His message to countries sweating over their jet fuel and energy supplies was refreshingly blunt: “Build up some delayed courage, go to the Strait, and just TAKE IT,” adding that they should “go get your own oil.”

This validates the exact macro thesis we mapped out in 2018. De-globalization isn’t a forecast anymore. The United States has officially retired as the guarantor of frictionless global trade.

The Tollbooth Empire

This brings us to an interesting framework recently outlined by Jiang Xueqin, better known online as “Professor Jiang.” If you haven’t seen him on your timeline yet, he is a Beijing-based educator who recently skyrocketed to internet fame after an old YouTube lecture of his predicting the exact contours of the 2026 US-Iran war went incredibly viral.

Jiang points out a stark reality: If the U.S. is facing de-dollarization, how does it maintain its global leverage? By pivoting to a war of attrition.

For the last 50 years, the U.S. leveraged its status as the global reserve currency to encourage free trade. But if nations are going to actively opt out of the dollar system, the American strategy has to shift from guaranteeing the sea lanes to simply controlling the chokepoints. Whether it is the Panama Canal, the Strait of Malacca, or naval blockades in the Caribbean, the new playbook is brutally simple: If you want to access Western resources, you have to pay the toll and ask for permission.

Source: GIS, Visual Capitalist

The global reaction to this new reality is a sudden, very expensive realization that every nation needs to build its own security apparatus. Industrial nations are waking up to the fact that if the energy supply from the GCC or Russia goes offline, like the 40% of Russian oil export capacity that recently got hit by Ukrainian drones, they are completely on their own. That is your fuel, your food, and your savings. The geopolitical anxiety is getting so heavy that rumors are even circulating about European nations drafting travel restrictions for fighting-age males just to prepare for conscription.

Nothing says “transitory geopolitical friction” quite like preparing for a national draft.

Heyokha’s “On the Ground” Research

Here at Heyokha, we also pride ourselves on doing on-the-ground research. Though, admittedly, our latest fieldwork didn’t involve dodging drones in the Middle East. It involved walking through the MRT stations and observing billboards here in Central Jakarta.

The desperate scramble for physical security isn’t just a macroeconomic debate for Davos attendees; it has hit the retail streets.

Right now, Jakarta is plastered with advertisements for the “Tring! Golden Run 2026″—a massive 5K and 10K race sponsored by Pegadaian, the state-owned pawnbroker. The prize? Participants are literally racing to win physical gold vouchers.

And guess what? It is completely sold out.

Fresh off the streets

 

Sounds like a great deal to me

When everyday citizens are voluntarily sprinting 10 kilometers through the Jakarta humidity just to get their hands on a fraction of an ounce of gold, the psychological shift has happened. People are already moving. Literally sprinting. The sea lanes are heavily contested, the fiat system has been weaponized, and public trust in paper promises is evaporating.

Gold is no longer just a hedge. It is the only thing that makes sense.

 

 

Tara Mulia

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Let’s talk about the gold panic.

This past March, gold took a sharp around 15% dive in 4 weeks. Cue the mainstream commentators rushing to their history books, frantically pointing to the mid-1970s. They want you to look at the correction between December 1974 and August 1976, when gold plummeted 44% amid oil shocks and rate hikes.

The narrative they are peddling? An oil shock is happening right now too. The bull run is over. Pack it up.

It’s a great story. But it is built on a massive macro illusion. Comparing the monetary landscape of 1974 to the mathematical reality of 2026 is worse than comparing apples to oranges—it’s like comparing a paper cut to a terminal diagnosis.

If you are selling your physical assets here, you are falling for a massive liquidity trap. Let’s look at the math.

The Death of the Volcker Playbook

To understand why 1974 played out the way it did, you have to look at the sovereign balance sheet.

Back then, the U.S. debt-to-GDP ratio was sitting around 33%. The fiscal house was relatively clean. Because the government wasn’t drowning in leverage, Paul Volcker had the superpower of policy flexibility. He could hike the fed funds rate above 17% to crush inflation. It was brutal medicine, but the system could absorb it. Real rates spiked, inflation died, and gold naturally corrected.

Source: Heyokha Research

Welcome to 2026. Debt-to-GDP is 122%. The federal debt is a staggering $39 trillion.

You cannot run the Volcker playbook on a $39 trillion mountain of debt. Today, even at current interest rates, nearly 92% of all tax revenue is being consumed just to pay back interest expense and mandatory outlays.

Read that again: 92%.

Source: Heyokha Research

There is almost nothing left over to run the country, let alone rebuild infrastructure or fund a global arms race. If the Federal Reserve actually hiked rates high enough to combat today’s structural inflation, they would instantly bankrupt the U.S. Treasury.

The policy flexibility of the 1970s is dead and buried. What cured inflation then would collapse the sovereign now.

The Only Exit: Financial Repression

So, if raising rates triggers a sovereign default, what does the government do?

They do the only thing the math allows: Financial Repression.

They have to artificially cap nominal interest rates below the actual rate of inflation. They fire up the printers, buy their own debt, and force captive audiences (like pension funds and banks) to hold low-yielding government paper.

Source: Heyokha Research

Make no mistake—this isn’t a policy failure. It is the exact design.

By letting inflation run hotter than those capped interest rates, the real value of that $39 trillion debt silently melts away. The government pays off its historical debts with heavily devalued dollars, and regular citizens and investors foot the bill through a relentless loss of purchasing power.

The History of Shake-Outs and Liquidity Squeeze

 When nominal rates are capped and inflation runs hot, real rates turn deeply negative. Returns for low-yielding bonds drops, weakening the dollar and making the case for finite gold even stronger.

Which brings us to the recent anomaly 15% drop.

That wasn’t a structural breakdown. It was a classic liquidity squeeze. We saw the exact same script play out during the 2008 Global Financial Crisis, gold plummeted nearly 30% in a matter of months. Twelve years later, during the COVID panic of March 2020, roughly had a 15% drawdown.

When equity and bond portfolios crash, highly leveraged investors are forced to liquidate their only remaining “winner”—gold—just to cover margin calls. It’s a desperate scramble for cash, not a shift in the fundamental thesis.

And what happens immediately after the forced liquidation ends? The surge.

In 2008, that drop was the springboard for a massive rally that took gold to all-time highs by 2011. In 2020, the March dump preceded a furious run-up later that same year. Every major gold bull market in history has shake-outs, which is normal and healthy.

Source: Heyokha Research

Back to the 1970s, the infamous 44% correction convinced the mainstream that the gold trade was dead. They were wrong. It was the precursor to a 721% surge.

Source: Heyokha Research

The March 2026 drop is playing out exactly according to the historical script. It is the springboard for the next massive leg up.

While retail investors panic-sell the dip, the smart money is doing the exact opposite. Global central banks are aggressively accelerating their physical gold accumulation and structurally abandoning the dollar. Because global mine production has essentially plateaued, fulfilling that massive institutional demand is mathematically impossible without a significant upward revaluation in price.

Source: Metals Focus, World Gold Council

Every major gold bull market in history has shake-outs, which is normal and healthy. That 1970s correction? It was the precursor to a 721% surge. The March 2026 drop is just the springboard for the next massive leg up.

As the fiat system breaks under the weight of its own debt, gold remains the only constant. A reversion to historical gold-to-monetary base ratios puts fair value north of $20,000 (Read more on how high gold can go up to in our Special Report – Gold the Return of Real Money)

In a world of weaponized fiat, hard assets are the ultimate financial sovereignty.

 

Tara Mulia

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Everyone knows the world is fracturing. We cannot read a financial headline today without seeing the impact of tariffs or supply chain realignments. But acknowledging a headline is not the same as pricing in a permanent reality.

The broader market still treats geopolitical friction as a temporary headache, viewing it as a short-term risk premium that will eventually be resolved by the next election cycle or a neat trade deal. They still believe, deep down, that capital’s ultimate loyalty is to the lowest marginal cost. They are wrong. The era of frictionless borders is on life support, and its impending death is a trend we have been tracking for years.

The Red Thread: We Saw the Fractures in 2018

We have been talking about the reality of deglobalization as far back as our Q3 2018 report. When the U.S. and China first started trading tariff blows, the mainstream financial media brushed it off as a temporary political spat that would be resolved with a neat trade deal.

We disagreed. We noted then that this was the first tremor of a massive, structural decoupling.

By our Q2 and Q3 2019 reports, the writing was clearly on the wall. The trade dispute had morphed into a full-blown technology cold war. With entities being blacklisted and supply chains fracturing, we explicitly warned that the era of relying purely on hyper-efficient global trade was coming to an end. We saw that the unipolar world order was breaking apart and that strategic competition was replacing economic integration. We knew that a system built purely on chasing the lowest marginal cost across oceans was fundamentally fragile.

Read our reports here!

 

There is clear external validation of just how permanent that fracture has become, look at the architecture of the East today. The Shanghai Cooperation Organisation (SCO) now counts 10 full members accounting for 40% of the world’s population, 30% of global GDP (PPP), and 60% of the Eurasian landmass. All in all, they are holding 20% of proven global oil reserves and 44% of proven natural gas. This is not some fringe realignment. It is a structured, institutional counter to the Western-led order.

The Present Reality: The “Rupture” is Here

Fast forward to today, and the exact deglobalization thesis we mapped out in 2018 is now the consensus among global leaders. There is proof that the old system is breaking, just listen to the people who used to run it.

At the World Economic Forum earlier this year, Mark Carney bluntly defined the current state of international relations as a “rupture,” noting that it is not merely a transition. He warned that the old rules-based order no longer functions as advertised, with economic integration now being actively weaponized by great powers.

Meanwhile, U.S. Secretary of State Marco Rubio has explicitly declared that the era of globalization is over. He has consistently argued that the old economic consensus failed to moderate national rivalries, pushing instead for aggressive industrial policy, new trade barriers, and a focus on national security over cheap consumer goods.

The clearest proof of this rupture is the semiconductor war. Initial U.S. export controls were viewed in Beijing as a declaration of economic war. The response? According to the Australian Strategic Policy Institute, China now leads in 57 of 64 critical technologies—up from leading in just three a couple of decades ago. The attempt to contain China through tech restrictions ultimately backfired, incentivizing self-reliance and accelerating the very technological competition it sought to prevent.

Now, the U.S. is reacting in kind. Despite heavy political rhetoric regarding deregulation, the U.S. government spent heavily in 2025 to take direct equity stakes in major private companies like Intel and MP Materials. When the U.S. government starts directly buying 10% to 15% stakes in chipmakers and rare earth mines, they are no longer operating in a free-market global economy. This is what weaponized economic integration looks like from the inside.

Capital Chasing Security

The data and the rhetoric are finally aligned. We are watching the artificial intelligence arms race turn aggressively physical. Governments are finally waking up to the fact that they cannot power a sovereign AI grid or secure a defense supply chain with a multilateral trade agreement. They need secure transit and hard assets.

Capital is no longer chasing the lowest marginal cost. It is chasing security.

The transition is brutal. The symptoms are everywhere: sticky inflation, weaponized industrial policy, and a panicked rush into hard assets and physical commodities.

Since we have been warning about this exact trend for over half a decade, and looking at the current state of the fractured global board, we felt it was finally time to acknowledge the inevitable.

So, we wrote a premature obituary.

But every death brings a rebirth. As the illusion of a frictionless global economy is laid to rest, a new era is already rising from the ashes. This is the renaissance of the physical.

When supply chains fracture and fiat currencies are actively weaponized in great power competition, paper promises lose their premium. In times of deep systemic fear, capital instinctively flees the abstract and seeks out the tangible.

This is exactly why our conviction in precious metals and hard assets has never been stronger.

While the broader market panics over every geopolitical headline and scrambles to adjust their portfolios to the latest tariff threat, we are already anchored. Physical gold, silver, and critical industrial commodities do not rely on friendly diplomatic relations or multilateral trade agreements to hold their value. They carry no counterparty risk. They are the ultimate form of financial sovereignty.

We are simply holding the assets built to thrive in the reality of the new, fractured world.

 

 

Tara Mulia

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