Stocks and bonds are gaining ground on signs of easing geopolitical tensions, but traditional safe haven assets are moving in the opposite direction as inflation risks build.

BNN Bloomberg spoke with Dan Rohinton, portfolio manager at iA Global Asset Management, about how rising interest rates, energy prices and shifting investor behaviour are pressuring gold, bitcoin and broader risk assets.

Key Takeaways

Volatility is expected to persist across asset classes as oil-driven inflation creates ripple effects through the global economy.

LINDSAY: So as you just saw, stocks and bonds are getting a lift today after U.S. President Donald Trump said the U.S. and Iran had “very good” conversations regarding the end of the war. Our next guest says the conflict has challenged the narrative of precious metals and crypto as a safe haven. Let’s get more now from Dan Rohinton, portfolio manager at iA Global Asset Management. Dan, good morning. It’s good to have you join us.

DAN: Good to see you.

LINDSAY: So why do you think this has been challenging that safe haven narrative so much?

DAN: Yeah, well, what’s interesting about the gold narrative — and silver as well, by proxy — is that it’s effectively been viewed as a safe haven. But the trade-off you take as a precious metals investor is zero per cent yield, right? Because gold doesn’t pay interest. So when you see higher interest rates from the Iran-U.S. conflict pushing rates higher, the allure of the shiny metal actually decreases.

What’s important to say in this conversation — and we’ve had little whispers of this in past discussions — is that there’s a lot of leverage and speculation, and that has compounded the price move. You could argue gold’s a little overdone, but the underlying catalyst has been the belief that the safe haven narrative is fully played out. Higher interest rates are hurting gold and silver quite disproportionately.

Then you take bitcoin as a separate discussion, where higher energy costs make mining more expensive. At the same time, the Iran conflict pushes stablecoin and other crypto-related legislation in the U.S. further back. So you’re seeing gold, bitcoin and silver act more like risk-on assets, when historically they’ve been more risk-off.

LINDSAY: It’s been interesting to watch the trickle-down effect as well, because gold had its worst week since 1983 recently, basically erasing its gains from the beginning of the year. That’s something similar to what we saw in the TSX last week, which is heavily reliant on gold and mining stocks. Do you see that connection as well?

DAN: Yeah, 100 per cent. The TSX has seen a huge increase in how sensitive it is to precious metals, which is ironic because it’s also a big energy index, and energy stocks have done really well given higher oil prices. So the TSX is a bit of a yin-and-yang type of index versus technology, which is really the S&P 500.

There’s a push and pull here. On balance, the TSX is probably a little oversold, but it’s also had a very strong past year, so you have to take that into account.

LINDSAY: Let’s talk about oil. We’re seeing prices drop today, but there are conflicting signals from the U.S. and Iran. What are you taking from what we’re hearing and seeing in the markets?

DAN: I think there are two things to consider. First, the domestic audience in Iran is more important than the foreign audience. Saying you’re negotiating with the U.S. isn’t acceptable domestically, so communications tend to happen through back channels, with public denials.

Second, there’s a concept in warfare called escalation dominance. What we’re seeing is that strikes have not targeted critical infrastructure like desalination or power plants — assets that would cause long-term damage. That suggests extreme outcomes are being priced down somewhat, but it doesn’t mean the conflict is over.

Markets are reacting accordingly. A sharp rally on a single headline shows there’s been a coiled-spring effect — after selling off, any positive news is met with aggressive buying.

LINDSAY: Iran has also said the Strait of Hormuz won’t return to a prewar state even after the conflict. What do you make of that?

DAN: When you think about global trade flows — liquefied natural gas, oil, petrochemicals, fertilizer — they have to normalize. Too many regions across Asia-Pacific depend on them. So normalization is a question of when, not if.

Whether that comes through negotiation or force is uncertain, but the assumption has to be that trade flows eventually stabilize.

LINDSAY: So we should expect continued volatility?

DAN: Yes, and not just in oil. Higher oil prices act like an income shock to the economy. Consumers pay more for gasoline and goods, which dampens sentiment. Central banks then react by delaying rate cuts.

We haven’t seen this dynamic in a long time because energy has been relatively cheap, but I’d expect ripple effects across broader capital markets.

LINDSAY: Before we go, I want to ask about SpaceX. Elon Musk is launching a joint venture with Tesla to build a semiconductor plant in Texas. What do you make of that?

DAN: This might be one of the hardest engineering challenges out there. Replicating or reinventing the semiconductor value chain is incredibly complex.

There’s a lot of value embedded across that chain — from ASML to TSMC to Nvidia and beyond. If Musk can vertically integrate parts of it, it could disrupt a huge portion of the global tech ecosystem.

It’s a big deal, but also an incredibly difficult undertaking.

LINDSAY: And what does it signal?

DAN: It tells you the world needs more chips — more compute power.

LINDSAY: And for Tesla specifically?

DAN: The Tesla narrative has shifted toward robotics and AI. Designing chips in-house to integrate with those systems is a key strategic move.

It could support the stock and reinforce what some call the “Elon premium,” especially with SpaceX expected to go public later this year. But it’s still a very complex path to execute.

LINDSAY: We’ll leave it there. Dan Rohinton, portfolio manager at iA Global Asset Management. Thanks for joining us.

DAN: Thanks, Lindsay. Reference