An internal Goldman Sachs analysis has concluded that the current global security environment is the most volatile since the Second World War, ranking it above even the Cuban Missile Crisis of 1962, according to a report circulating this week.
The bank's analysts reportedly built their assessment using the Federal Reserve's Geopolitical Risk Index, a measure developed by economists Dario Caldara and Matteo Iacoviello that tracks tension levels across more than a century of newspaper coverage, with sharp spikes historically tied to both world wars, the outbreak of the Korean War, the 1962 standoff with the Soviet Union, and the aftermath of the September 11 attacks. According to the analysis, today's readings sit above the level reached during those thirteen tense days in October 1962, when the United States and the Soviet Union came to the brink of direct conflict under President John F. Kennedy.
The core concern behind the assessment is the risk of a broader global war that could paralyze supply chains and choke off key shipping routes, compounding disruptions already rippling through the world economy. Goldman's commodities team has separately warned that continued conflict with Iran could push oil prices above 120 dollars a barrel should fighting drag on and traffic through the Strait of Hormuz remain suppressed, a scenario the bank says would fuel inflation on a global scale. That warning tracks with the bank's own recent commodity notes, which have already flagged the possibility of oil returning to triple digits given estimated Persian Gulf export flows running below 45 percent of pre-war levels.
Against that backdrop, the bank's recommendation to investors leans toward defense companies built around artificial intelligence, on the view that AI-driven military technology stands to benefit disproportionately from a world settling into a longer period of elevated conflict risk.
