Putin's nuclear gambit has sent shockwaves through global markets, with geopolitical tensions reaching a fever pitch. The recent decree lowering Russia's nuclear threshold, coupled with outgoing President Biden's decision to green-light Ukrainian strikes on Russian soil, has set the stage for a significant escalation in the conflict. Investors will typically seek refuge in safe-haven assets, with gold continuing to be the traditional bulwark against uncertainty due to its appeal as a store of value in times of crisis.

The US dollar, another bastion of stability, will likely strengthen initially, however, there are significant concerns over the potential for direct US involvement in the conflict, reducing its appeal as a safe haven. More than ever, investors need to appreciate that they are vulnerable to changes in the geopolitical risk premium and consequently must prepare for sharp price corrections and heightened volatility as the conflict drags on.