macrotrading

As the global monetary system transitions toward Bretton Woods III, portfolios in 2026 should increasingly prioritize real assets, regional currencies, and instruments beyond direct U.S. dollar dependency.
From Dollar Dominance to Commodity Pricing Power
The early weeks of 2026 have delivered a clear signal: global markets are repricing risk under a new macro regime. Silver’s 10% intraday surge on the first trading day of the year and its more than 105% advance over the past six months—briefly pushing spot prices above $80—marks one of the most extreme commodity moves in modern market history.
This rally is not isolated. Across the metals complex, price action has been broad-based and persistent:
Copper: +37% YoYGold: +67% YoYLithium carbonate: +100%+
Short squeezes and speculative positioning may explain bursts of volatility, but they do not explain a sustained multi-year trend. Since approximately 2022, deeper structural forces have been reshaping the global macro-financial framework. The ongoing re-rating of commodities should be understood not as a cyclical anomaly, but as a manifestation of this regime shift.
The Erosion of Dollar Certainty
For decades, the U.S. dollar has functioned as the world’s default unit of account, settlement medium, and collateral anchor. As of mid-2025, the dollar still accounted for roughly half of global trade invoicing and remained dominant in FX markets, with U.S. Treasuries widely accepted as high-quality collateral.
However, the risk framework surrounding the dollar has materially changed.
The increasing weaponisation of the USD and U.S. Treasury infrastructure—combined with elevated uncertainty around U.S. fiscal sustainability, monetary policy credibility, and domestic political dynamics—has forced institutional investors to reassess tail risks. The probability-weighted consideration of frozen USD balances, restricted settlement, or impaired Treasury liquidity under compliance or national-security measures has moved from theoretical to actionable risk management.
In this context, diversification away from the dollar is no longer ideological—it is rational.
Zoltan Pozsar has described this transition as “Bretton Woods III”: a world in which the dollar remains liquid, but no longer fully trusted. Portfolio optimization under such conditions naturally increases exposure to:
Non-USD currenciesQuasi-monetary assetsReal assets priced outside direct dollar control
Relative equity performance supports this view. In 2025, MSCI Europe (+36.3%) and MSCI Emerging Markets (+34.4%) materially outperformed the S&P 500 (+17.9%), with EUR appreciation amplifying non-U.S. returns in dollar terms.
Why Commodities Sit at the Center of Bretton Woods III
Commodities occupy a unique position in this emerging regime. While policymakers can influence fiat currencies and sovereign bond markets, they cannot directly dictate the physical supply-demand balance of metals, energy, or raw materials.
Historically, commodities have functioned as “quasi-money”:
They are globally exchangeableThey retain value across political regimesThey can be indirectly bartered through trade even when settlement preferences shift
As geopolitical fragmentation, sanctions risk, tariffs, and supply-chain security become persistent features rather than temporary shocks, commodity prices increasingly embed a structural risk premium. Freight costs, insurance, inventory buffering, and strategic stockpiling all contribute to higher equilibrium prices.
An additional tailwind may emerge if the Federal Reserve’s policy reaction function becomes more explicitly politicized in 2026. Should easing occur in a manner inconsistent with underlying inflation dynamics, inflation expectations may de-anchor. Once businesses and investors shift toward worst-case planning, pricing power propagates rapidly through supply chains—making higher USD commodity prices structurally difficult to suppress.
How to Trade the Regime Shift
1. Cash and Currency Allocation
With the Federal Reserve still easing, liquidity support gradually resuming, and institutional risk rising into 2026, maintaining a high USD cash allocation appears increasingly unattractive on a risk-adjusted basis.
Viable alternatives within a diversified liquidity sleeve include:
EUR – A relatively predictable policy framework; the second-most important international currencyCHF – A traditional safe haven during systemic risk episodesAUD – Structurally leveraged to a prolonged commodity upcycle
A practical approach is not wholesale USD abandonment, but incremental reweighting—reducing excess USD exposure while increasing allocation to these currencies.
2. Metals Exposure via Spot + Options Overlay
Directional exposure to metals via ETFs (e.g., SLV) remains consistent with the macro thesis. However, elevated participation has driven both realized and implied volatility sharply higher. Notably, short-dated implied volatility in silver ETFs exceeds that of Bitcoin—an unusual historical relationship.
In this environment, a spot + options overlay offers superior risk-adjusted outcomes.
Suggested structure:
Long spot or ETF exposureSell quarterly out-of-the-money callsBuy quarterly protective puts
Expected payoff profile:
Upside: Returns resemble a call-spread; profits can be harvested and rolled as spot advancesDownside: Convex protection via puts; if trend reverses, hedge can dominate P&L while spot is reducedRange-bound: Skew normalization and time decay contribute positive carry
This structure allows participation in the secular trend while explicitly managing volatility and tail risk.
What Comes Next
Equity positioning and crypto allocation strategies under Bretton Woods III—where liquidity, geopolitics, and real-asset repricing intersect—will be addressed
Disclaimer
This article is for informational and educational purposes only and does not constitute investment, financial, or trading advice. All views expressed are analytical opinions and should not be relied upon for decision-making without independent research.
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