The Iran war is straining US weapons stockpiles and raising doubts about Washington’s ability to protect the Persian Gulf.
If that weakens the petrodollar and pushes oil producers away from the US financial system, two assets face clear headwinds: the US dollar and US Treasuries.
The petrodollar system helped create structural demand for both.
If oil exporters sell more energy outside the dollar system, fewer oil dollars need to flow back through Wall Street and into Treasury securities.
At the same time, the US government needs to borrow staggering sums to finance its deficits, military commitments, entitlement programs, and interest expense.
That means rising supply of Treasuries could collide with weakening structural demand.
Watch the 10-year Treasury yield.
The 10-year Treasury yield is perhaps the most important financial benchmark in the global fiat system, as it drives valuations and market trends worldwide. It is widely—and erroneously—regarded as the risk-free rate of return.
The 10-year Treasury yield can be thought of as a key barometer of the US dollar-based fiat system—a critical measure akin to its beating heart.
Bond yields move inversely to bond prices. When bond prices fall, bond yields rise.
A rising 10-year Treasury yield signals trouble for the US dollar because it means investors are selling Treasuries, which pushes up the US government’s borrowing costs. That is why the 10-year Treasury yield is a major pain point for the US government.
The 10-year Treasury yield was 3.97% in late February 2026. Now it is around 5.26%, an increase of roughly 129 basis points. 129 bps might not seem like much, but with over $40 trillion in debt and growing, every basis point matters.
At today’s debt levels, every 1 basis point increase in the government’s average borrowing cost adds roughly $4 billion in annual interest expense. So a 129 bps rise is not trivial—it translates to nearly $516 billion in additional yearly interest costs, materially widening a budget deficit that was already around $1.8 trillion.
I expect the 10-year Treasury yield to keep climbing over the coming weeks and months—until it forces the Fed’s hand.
At that point, the intervention will be sold as “stability,” but the mechanism will be familiar: suppress yields by debasing the currency.
That feedback loop could become one of the defining investment stories of the years ahead.
That preparation makes much more sense when you view gold not as a commodity, but as a neutral settlement asset.
The last monetary transformation of comparable importance began when Nixon severed the dollar’s link to gold in 1971.
Gold traded at $35 per ounce under the old system.
By January 1980, it reached $850—a gain of more than 2,300%.
I think the monetary shift taking shape today could prove just as important.
For more than half a century, the petrodollar helped create structural demand for dollars and US government debt. It allowed Washington to run deficits and export dollars on a scale no normal country could sustain.
Americans have come to regard that privilege as a permanent feature of the financial landscape.
At first glance, depleted US missile inventories may seem unrelated to the future of the dollar. They aren’t. Both depend on the same thing: the ability of the US to convert its enormous financial power into real-world economic and military power.
Washington can create dollars without limit. It cannot create missile factories, rare-earth supply chains, control over the Strait of Hormuz, or confidence in the US security guarantee with a keystroke.
If the Iran war exposes the limits of US military power, pushes the Gulf states toward accommodation with Iran and China, weakens the dollar’s role in the oil trade, and accelerates the movement of global reserves toward gold, we could look back on this period as the moment the post-1971 monetary system entered its final stage.
What started with a shortage of missile interceptors leads to a much bigger conclusion: the Iran war is exposing the limits of both American military power and the monetary system that power has supported for more than half a century.
The signals to watch are clear.
Watch the oil producers.
Watch the dollar.
And above all, watch gold.
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