The Great Poker Game Unfolds near Hormuz
War with Iran started on 28 February 2026 is now struck near strait of Hormuz. I had predicted, it was a commercial enterprise to strengthen dollar. I stopped short on predicting about Gold. The reverse has also happened. Gold has fallen to lowest levels in 2026. No AI predicted it. Gold actually peaked above $5,000 in early 2026 before a significant drop this week. As of March 21, gold had fallen to around $4,491 after crashing through the $5,000 level. This is the lowest level in 2026.
When the world’s largest refinery hub dumps trapped inventory at a $30 discount simultaneously with Gulf sovereigns liquidating reserves for treasury purchases, the supply shock overwhelms demand temporarily. Let me explain from the beginning.
US sanctions on Russia, which effectively involved the confiscation of dollar-denominated assets, proved a lasting drag on the greenback as sovereigns accelerated de-dollarization. Central Banks’ purchases have exceeded 1,000 tonnes for three consecutive years, led by emerging markets like China, Turkey, India, and Poland. The US dollar index fell roughly 10% in 2025, making gold cheaper for non-US buyers and directly amplifying demand.
The rapidly declining US fiscal health became one of the biggest tailwinds, with the dollar weakening due to de-dollarization efforts and Moody’s downgrading the US credit rating. Its debts will soon touch $40 trillions. Countries started actively dumping treasuries and moving toward BRICS, yuan oil settlement, and de-dollarization.
Reversal by War
UAE is the world’s largest gold refinery hub. Dubai processes and re-exports an enormous volume of physical gold. When the Gulf War started and the Hormuz strait came under threat, UAE faced an existential supply chain crisis for its refinery operations. Gulf sovereigns are selling gold to fund treasury purchases, solving America’s $10 trillion rollover problem directly. The war created the customer. Every Patriot and THAAD system sold is another dollar-denominated contract that deepens dependency. Arms sales, treasury purchases, and security dependence are the same transaction expressed three different ways.
UAE gold being sold at $30 below London benchmark because airspace is closed and inventory is trapped. It is direct evidence of the supply chain disruption you describe. This also shows that fall in prices may be temporary.
The War proved the Western system still works by force of crisis. When Hormuz is threatened, every Gulf sovereign runs back under the American security umbrella because there is no credible alternative. BRICS couldn’t protect a single tanker. Yuan settlement means nothing if the strait is closed. The dollar won not by being trusted but by being the only option when everything else failed.
Win by USA
If the US wins cleanly, the thesis completes perfectly. Treasuries get bought, dollar primacy is restored, BRICS stays frozen, and the $10 trillion rolls over without default. Iran becomes the permanently institutionalized threat that justifies permanent Gulf dependency. Therefore a win by USA is mandatory. Nothing less will work.
The Gulf states have already paid for THAAD. They’ve already sold gold and bought treasuries. But a visibly weakened America means those treasuries are now held in a system that just demonstrated its limits. This may lead to a new rally in Gold.
The Unprecedented Poker Game
All eyes are on USA and Iran and President Trump. If he claims victory to quit, it will be back to next round of hedging away from USA. Iran has to kiss the ring or get vanquished. That is the condition for the restoration of dollars again. The Bretton Woods conference created the dollar order through negotiation. This is the same negotiation happening through war. Hormuz is the table, aircraft carriers are the chips, and the missile exchanges are the raises. Every party knows what the real stakes are: not Tehran, not oil, not even BRICS. It’s whether the dollar gets another 30 years or collapses in this decade.
Hesitation
USA has been threatening Iran for weeks while keeping carriers 1000 km away. Iran read that distance correctly and blocked Hormuz anyway. The bluff was called. Now the entire restoration thesis depends on whether Trump actually moves those carriers in and finishes it, or declares victory on a technicality and withdraws. The USS Gerald R. Ford which suffered a fire and the 11-month deployment exhaustion, has been sent back. It shows carrier vulnerability beyond just missiles. The carrier is failing from inside simultaneously as Iran threatens from outside.
It is in no position to place boots on ground. Its aircraft carriers have been moved back by over 1000 kms. It happened to avoid the possible attack by Iran though its hypersonic missiles which USA can not intercept with existing technology. This reminds me of a dialogue delivered by Amitabh Bachchan in a Hindi movie Agnipath:
“धमकाता है तो पीछे क्यों हटता है। पीछे हटता है तो धमकाता कैसे है।” (Why retreat? If you retreat, how can you threaten?)
USA has to go ahead and call the bluff. But its bluff has been called already by Iran by blocking the Hormuz. This is the deadlock we are watching. At this point USA draws another card. It ordered its amphibian ship USS Tripoli to be moved to Hormuz from South china sea and it is on its way.
The Stakes
A dirty bomb on a carrier will not be a military loss. It’s a radiological event in the middle of a strait that carries 20% of global oil, with footage that ends presidencies and potentially triggers Article 5 level responses no one can control.
So the poker metaphor gets darker. Iran is sitting at the table with a hand that, if played, doesn’t just win the pot. It sets the casino on fire. And everyone at the table knows it.
That is why USA hasn’t moved the carriers in. Not incompetence. Not hesitation. The military option that would conclusively win the war also carries a non-zero probability of an outcome that no victory narrative can survive. A radiological carrier strike in Hormuz means gold doesn’t go to $5,000. It goes to a number nobody has modeled, because the dollar system itself becomes the secondary casualty.
This is the dilemma Trump is facing. USS Tripoli bought him time to re-plan and re-strategize. There are reasons that 2500 marines onboard Tripoli can not be sacrificed by placing them close to Hormuz. But Trump simultaneously says “I’m not putting troops anywhere. If I were, I certainly wouldn’t tell you.”
Oil prices are near $99 mark and USA has permitted Iran to sell oil and now its oil tankers will get free pass through Hormuz and high sea. No attack on tankers. Is this reciprocal? Is there a deal in which Iran will not attack oil facilities in gulf States?
In any case, a financially strangled Iran with nothing to lose fires first and asks questions never. The free passage is USA’s way of keeping Iran’s hand in the game rather than flipping the table entirely.
That asymmetry is the weapon, not the uranium itself. The 480 kg doesn’t need to be fired as dirty bomb to win. It just needs to keep the carriers at 1000 km long enough for the coalition to fracture, for Trump’s domestic clock to run out, and for the next round of hedging away from dollar to resume.
Conclusion
Trump has effectively solved every short term structural problem simultaneously. Treasury rollover funded by Gulf arms purchases. China’s energy supply strangled through Hormuz and Venezuela. Rare earth leverage being built as China’s economy comes under pressure. BRICS frozen mid-stride. EU humiliated by NATO’s irrelevance. Dollar rising on fear rather than trust. India slightly squeezed, enough to remind it of its dependency without alienating it permanently. It is the most consequential strategic maneuver since Bretton Woods, executed through war rather than negotiation.
Honourable exit requires Iran to publicly capitulate in a form that looks like Iranian sovereignty was respected while American primacy was restored. That is a very narrow door. Iran’s domestic politics cannot survive a visible surrender. America’s financial thesis cannot survive an ambiguous conclusion. Both leaders need to walk out claiming victory to their own audiences simultaneously.
It appears, Trump thought he was pulling out a rabbit out of the hat. The fact is that he has taken a ride on a tiger and he has no plan to unmount from the ride without being eaten by tiger.
References:
- Morgan on Gold: https://www.jpmorgan.com/insights/global-research/commodities/gold-prices
- No troops on ground: https://thehill.com/policy/defense/5792202-trump-no-troops-iran/
- Winding down war: https://www.axios.com/2026/03/20/trump-winding-down-iran-war-hormuz-strait
- Uranium under the rubble: https://www.timesofisrael.com/liveblog_entry/iranian-fm-tehrans-enriched-uranium-under-the-rubble-we-have-no-plan-to-recover-it/