Key Points
- The interim accord took effect on electronic signature and Hormuz reopened toll-free. But the implementation talks collapsed; the fault line between the “paper agreement” and the “reality at sea” remains.
- Hostage-taking of chokepoints, nuclear proliferation, cheap drones: the age in which great powers can bend small states to their will is ending, giving way to coalition-building.
- The United States made Iran stronger through a single war; Russia, after years, cannot subdue Ukraine. The hegemonic vacuum is filled not by a new sole hegemon but by the solidarity of like-minded states.
- Two forces drive that transition toward order rather than disorder: a currency that has regained discipline (Warsh) and capitalism’s original frontier spirit, now turning to space and biology.
- Gold has overtaken US Treasuries as the largest reserve asset. But its price is prone to reversal as discipline returns; what endures is not the price but custodial agency.
- Our prescription is unchanged: harvest the short term, hold the long term, and lean into the front-of-curve backwardation (physical tightness).
Ceasefire: on the morning of the signature, what “opened” was on paper
I am writing this issue from Toronto. The United States and Iran reached an interim accord to extend the ceasefire (the 14-point “Islamabad MoU,” mediated by Pakistan and Qatar). President Trump and Iran’s President Pezeshkian signed it electronically; it took effect immediately, reopening Hormuz and lifting the naval blockade. Trump conceded a toll-free reopening, but “free” is a 60-day clock. Brent has fallen from its April peak (above 110 dollars at the prompt, higher still in physical cargo) to roughly 80 dollars, and a sense of relief has spread through markets.
Yet if the post-ceasefire world can be defined in a phrase, it is not “a world from which risk has departed” but a world in which the agreement on paper and the reality at sea have diverged. Tellingly, even as President Macron led the diplomacy at the G7 (Evian, France), the implementation talks in Switzerland were shelved on the 19th. That the practical negotiations collapsed the very week after signature is itself a mirror of the paper-versus- sea fault line. The absolute price eases on headlines, but the front of the futures curve remains in backwardation, signaling tightness, while ship counts and insurance premiums barely move. The absolute price looks at the “average”; the shape of the curve and the physical market look at the “path.”
Permanentization of the floor: what insurance, freight and stranded cargo tell us
The strait is “open in principle but, in practice, not yet open.” Right after the signature, large tankers switched on their transponders and began moving out of the Gulf, the first sign of
returning confidence. But that was a jump-start, taken even as Iran’s newly created strait authority warned vessels to wait for a formal operating declaration; many ships remain stranded. Reopening is not “flipping a switch”: it is a substantive reopening that must also include mine clearance and the working-off of stranded cargo.
Insurance and freight tell us how high the floor sits. War-risk premiums, 0.25% of hull value before the war, have leapt to several percent, costing millions of dollars for a single large-tanker transit. The reinsurance industry calls this a “permanent structural repricing,” and views full normalization as realistically a 2027 matter. The free signature, in truth, points to a horizon not of one year but of more than eighteen months.
Here non-ergodicity bites. With several tankers struck and crew killed, the rational shipowner does not act on the average; he waits until on-the-ground safety is confirmed. The world’s largest tanker operators are embodying precisely this discipline right now.
An “agreement” that is really a deferral
What this accord actually settled was only the extension of the ceasefire. Within the 60-day interim deal, the full removal of sanctions, the reconstruction fund and the release of frozen assets are all deferred, conditional on progress toward a “final agreement” that includes a nuclear deal. On the nuclear file, the text only says enriched uranium will be diluted under IAEA monitoring “by a mutually agreed method”; Iran retains a veto over any irreversible concession. The MoU touches neither ballistic missiles nor proxy forces. In short, “the agreement is designed from the outset to be only half-implemented.”
If Iran surrenders the cheap and reversible while keeping the irreversible trump cards, and still extracts sanctions relief, asset release and a fund in stages, it is a strategic blunder for Washington. Israel, left outside the tent, is a potential and identifiable trigger for a ceasefire collapse (β). That every problem has been pushed into the future is itself the limit of this deal.
The meaning: the end of great-power dominance, and the turn to coalition-building
This floor is not confined to one strait. What matters is that it is neither accident nor conspiracy, but a structure produced by globalization itself. The more the world is connected by a single thin corridor (Hormuz, straits, undersea cables, semiconductors), the more the bargaining power of whoever holds the choke point soars. As the proverb has it, “even an embankment of a thousand fathoms collapses from a single ant’s hole”: with a few mines and a swarm of falsely flagged, aging tankers, one can take a fifth of the world’s oil hostage. The more a small state is cornered by sanctions, the less it has to lose, and the more it fortifies the choke point and takes it hostage. A cornered rat bites the cat. A choke point, once seized, is therefore not relinquished after the ceasefire. In Russia’s shadow-fleet terms, the English Channel and the Baltic are becoming Russia’s Hormuz.
Military-technological innovation accelerates the asymmetry. Alongside the nuclear weapon as the ultimate currency, cheap arms such as drones and precision guidance have inverted the cost-effectiveness of the battlefield. In an age when a multibillion-dollar warship is threatened by a drone costing tens of thousands, the very advantage of scale erodes. Indeed, on the Federation of American Scientists’ tally, the only country to cut warheads between 2018 and 2026 was the United States (about 100 fewer), with the fastest growth rates in North Korea, China and India in that order. Yet the bulk of the net increase in absolute terms is China’s (about 380). This must be read precisely: what is happening is the coexistence of “diffusion of deterrence to small states” and “concentration in a great power (China),” and the common denominator of both is the relative retreat of the United States. Warheads drive the cost of conquest higher and give cornered small states an insurance policy for regime survival; in that sense, proliferation often works as a correction of subordination.
When the hostage-taking of choke points, nuclear proliferation and military innovation thus combine, the cost of seizing by force exceeds the value gained, and the age in which great powers can bend small states to their will comes to an end. Indeed, the United States made Iran stronger through a single war, and Russia, after years, cannot subdue Ukraine. Since February, with US mediation absorbed by the Iran war, the front has tilted toward Ukraine; in May, Ukraine reclaimed territory beyond Russia’s occupied line for the first time since 2023. What fills the empty center is not a new sole hegemony but coalition-building, the great theme of the twenty-first century: the solidarity of free and democratic states. At the G7, Macron brokered a Trump-Zelensky meeting, and pressure began to shift from Ukrainian concessions toward squeezing Russia. That Japan could be shown to be not a periphery but a core corner of this coalition was a stroke of fortune.
Multipolarity is not the end of the dollar: read price and agency separately
What matters here is that this multipolarity does not mean the end of the dollar. The visible signs of de-dollarization must be read in two layers.
The first layer is “price.” Gold has overtaken US Treasuries to become the largest reserve asset (ECB June report: at end-2025, gold 27% versus Treasuries 22%; dollar- denominated assets nonetheless remain the largest at about 42%). But the price of gold is prone to reversal as signs of discipline return: after the hawkish FOMC it fell to about 4,150 dollars an ounce, more than 20% below the record highs of early in the year. The price of gold rises and falls in a cycle of fear and discipline, and if the great powers regain restraint it flows back to the dollar. This layer is reversible.
The second layer is “agency.” Central banks have begun repatriating gold and avoiding vaults they cannot fully trust. Because a frozen vault cannot be restored (the 2022 freezing of Russia’s reserves is the precedent), this layer remains, half-irreversibly. It is the institutional version of the rule “hold your risk where you yourself can grip it.” Ironically, the
logic was voiced by Trump himself: returning Iran’s frozen assets, he said, is necessary “because otherwise no one would ever invest in the dollar again.” The very point of this newsletter, that the weaponization of sanctions and custody erodes the dollar’s credibility, was thus conceded by the man himself.
In other words, price can return to the dollar, but agency stays away from it. Confuse the two and you misread, either as “all the reserves that fled to gold will flow back” or as “the dollar is finished.” Correctly: it is the price that cycles, the agency that endures.
Even so, there is no substitute for the dollar. The renminbi is bound by capital controls, the euro has no unified safe asset, and gold is not a settlement currency. The dollar still accounts for about 57% of allocated reserves, and even amid the Iran turbulence US rates held and the dollar endured. Even China confines itself to gradual hedging; what it wants is “managed erosion,” not wholesale replacement at a stroke. The true threat to the dollar lies less in losing a limited war than within, in the swelling of debt and the politicization of the Fed.
If the great powers regain humility: the stability of the dollar and the inclusion of Iran
This is why the paradox holds. The more the great powers learn the price of rashness and regain restraint, the more order stabilizes and the price of gold flows back to the dollar. The dollar’s standing as the key currency is fixed not by coercion but, rather, by each country’s self-restraint. The more order stabilizes, the more even states outside the conflict are drawn back into the economic sphere, and, as Vietnam once was, even Iran will slowly be pulled from outside the wall of sanctions and blockade into the dollar economy. The restraint of the great powers is not a zero-sum retreat but the opening of a positive-sum of deeper globalization and mutual development. Note, however, that because the agency layer endures, this is not a full rewind to before weaponization, but a “re-stabilization that carries the dispersion of custody within it.”
The road to a stable dollar: Taylor, and the new Chair Warsh (the “onset” of correction)
That dollar stability rests, in the end, on the discipline of monetary policy. US May CPI rose 4.2% year on year, led by energy, and the April headline PCE was about 3.8%, nearly double the target. Yet the fed funds rate is held at 3.50 to 3.75%. Plug into the Taylor rule a neutral real rate of 0.5 to 1%, core PCE in the 3s, and a near-zero output gap, and the appropriate level is the 4.5 to 6% range. The current rate sits far below it: this is financial repression itself. The calming of oil prices by the ceasefire does not close this gap.
But what to watch is the change in direction, which became real on June 17. Chair Warsh’s first FOMC held rates by a unanimous 12-to-0 vote (3.50 to 3.75%), but with no votes for a cut and no dissents at all, a hawkish configuration in itself. On the dots, 9 of 18
participants now see a hike by year-end (zero in March); projections raised headline PCE from March’s 2.7% to 3.6%, and core PCE from 2.7 to 3.3%. Warsh withheld his own dot while repeating that the Fed “will deliver price stability,” trimmed the statement from 341 to 130 words, removed forward guidance, and stood up task forces for Fed reform. Markets unwound their pricing: the 2-year yield touched 4.22%, a 16- month high, the 10-year sat near 4.49%, the dollar reached about a one-year high, and the S&P fell. The flattening, with the front sold and the long end bought, is a sign of confidence in inflation control. Even Trump, a believer in rate cuts, has stood aside, saying he “leaves it to him.” Humility, which is the recovery of discipline, is the proof of a turn toward dollar stability.
To be precise, though, what has become real is the “onset” of correction, that is, the change in direction, not the correction of the level itself. A hold plus hawkish dots has not narrowed the Taylor gap (more than 100 to 200 basis points) by a single basis point. The correction of the level lies ahead, and in the transition, with guidance absent, uncertainty rises and volatility climbs of its own accord. This is not America’s story alone: inflation without productivity (low r-star, high inflation) is now a shared Western symptom, and the ECB faces the same configuration.
For the time being we must accept high volatility. Turned around, it is precisely in a phase where the real rate is near negative, repression lingers, and volatility on top of that rises, that one should not wait in cash and government bonds, but thicken real assets and asymmetric protection (convexity).
The frontier of space and biology: toward the elevation of humanity
International society and global markets, zigzagging, should be seen as having begun to turn toward the right road. Beneath this transition lies capitalism’s “demand for a frontier.” For profit to keep expanding, there must always be unclaimed ground. When the geographic frontier ran up against the finitude of the earth, the spearhead turned to the attention economy, which sells disposable time and attention, and the data economy, which commodifies behavioral histories: the “new continent within.” And now that the limits of the outward extension can no longer be papered over, capital turns again outward, upward, and toward life itself. Its symbol is SpaceX, which slashed launch costs by orders of magnitude through reusable rockets and opened orbit, once a state monopoly, to private capital.
Here are the two forms of lifeblood that sustain the transition: a currency that has regained discipline (the Warsh of the previous chapter), and capitalism’s original character driving toward this unclaimed ground, the frontier spirit. What pushes the hegemonic vacuum not into hollow disorder but into coalition-building and new exploration is, precisely, these two forces. From deterrence to orbit, and on to our own biology and lifespan, the objects humanity seeks to grasp widen.
But beware this century’s dialectic. While the nuclear weapon “diffused” old power, space and biology, being capital-intensive, threaten to “re-concentrate” new power in a few hands. The question for investment is whether one holds the “nodes” (the network pressure points that, if stopped, stop the whole, and, if held, generate bargaining power) on both sides. On the diffusion side these are middle powers, real assets and gold; on the re-concentration side, the core technologies of space and longevity biology, and the platforms that fence in attention and data. The opening of a frontier is, pushed to its end, the elevation of humanity itself, but its fruits flow simultaneously to the two poles of diffusion and re-concentration. Not betting on one side alone is the proper conduct toward this dialectic.
Conclusion: our posture, namely, harvest the short term, hold the long term
The ceasefire is the “high-floored convergence (γ)” of our scenario table; elevated oil, geopolitics and the de-dollarization floor are not erased by an agreement. We take profit on, and reduce, the short-term protection that bet on a war spike (β), while keeping the core (EMEA real assets, the short maturity of the key currency, convex protection, and physical gold). We hold physical gold at the core not for the allure of price but to grip the “agency” that endures even when price flows back. In addition, following the previous chapter’s dialectic, we layer a thin, asymmetric position on the re-concentration-side nodes as well, namely the core technologies of space and longevity biology and the platforms that fence in attention and data, so as not to bet on the diffusion side alone.
As long as stranded cargo persists even after the absolute price eases, the front of the curve stays pinned in backwardation and the physical premium stays high. So we do not chase the downside; we go after the roll yield and physical premium generated by front-of- curve tightness. That is the conduct of γ. Harvest the short term, hold the long term. As a CySEC-licensed EU-domiciled AIF with operations across several poles, V++ is one of the few channels through which a Japanese institution can access “agency.”
To summarize the post-ceasefire world: not “a world in which risk-off has been lifted” but “a world in which the floor has been permanentized.” The signature deferred the problems, the elevating factors remain, and the strait, though open on paper, is still closed at sea. The question is not “how much do I make on average” but “can I, alone, keep compounding without being carried off the field.” What matters is the “agency” of holding one’s own risk. This perspective appears, even more vividly, in the postscript on Japan.
[Glossary: contango and backwardation] A curve sloping up with the prompt below the deferred, reflecting oversupply, is contango; one sloping down with the prompt above the deferred, reflecting near-term tightness, is backwardation. Even if the absolute price eases on a ceasefire headline, if the prompt stays pinned in backwardation and freight and war- risk premiums stay elevated, that is the sign that “though eased on paper, the sea is still tight.” If supply truly returns, the prompt should ease and tilt toward contango; the persistence of backwardation is the very window through which to discern the “high-floored convergence (γ).”
[Glossary: estimating the neutral rate (r-star)] The neutral rate (r-star) is the real rate that neither overheats nor cools the economy; it cannot be observed, only estimated. The New York Fed’s Laubach-Williams model applies a Kalman filter to the IS and Phillips curves to estimate r-star, potential growth and the output gap jointly. The United States has potential growth of roughly 1.8% and r-star of 0.5 to 1%; Japan, roughly 0.5% with r-star near zero. Both carry wide error bands and cannot be stated with certainty, which is exactly why both the Fed and the Bank of Japan move “while feeling their way.”