The shifting global geopolitical and economic landscape, coupled with doubts about the sustainability of public finances, is making real assets—which governments cannot simply print—increasingly attractive.
By Géraldine Sundstrom
Investors must be realistic. We live in a world marked by uncertainty, multipolar rivalries, geopolitical instability, and technological transformations and advances. Disruptions to supply chains are mounting, with trade frictions in an economy fragmenting into rival blocs. This is a global transformation that is eroding the post-World War II architecture.
At the same time, the pace of electrification is accelerating. But the supply of critical minerals has not kept pace with demand, putting pressure on supply chains. Reliance on critical resources from specific countries increases vulnerabilities. This is the case with copper, for which demand has been growing by 3–5% annually since 2019, driven by electrification and renewable energy. However, China, the Democratic Republic of the Congo and Chile account for 62% of refined copper production. Demand for this critical mineral and other raw materials will rise, bringing with it risks of supply disruptions and price volatility.
As Canadian Prime Minister Mark Carney noted at the World Economic Forum in Davos, countries are realising that they need to bring back the production of key industrial goods, in what amounts to a push towards reindustrialisation and reshoring. So many governments are reaching the same conclusions: greater strategic autonomy must be developed in supply chains, energy, minerals, infrastructure, artificial intelligence, food and finance. Tensions over the Iranian conflict reinforce this sentiment.
It should be borne in mind that the multipolar rivalry in this new world order – described by Carney as a “rupture” – has already led NATO countries to a new target of investing 5% of GDP in defence and security by 2035, with 1.5% going towards security-related infrastructure, cyber resilience and logistics.
Germany alone plans to spend one trillion euros on infrastructure and defence over the next twelve years. It aims to modernise its transport networks, energy systems and digital infrastructure, whilst significantly increasing defence capabilities. Globally, annual spending on transport, energy and digitalisation infrastructure is forecast to rise from $4.4 trillion in 2024 to $6.9 trillion by 2050, according to PricewaterhouseCoopers’ Global Infrastructure Outlook 2025–50.
At the same time, energy demand is rising due to the development of artificial intelligence (AI) and the electrification of the economy. Demand for electricity for data centres and electric vehicles is expected to triple in the coming years, necessitating the modernisation of grids and energy storage. This requires major investment, both in infrastructure and in clean energy generation.
All of this increases demand for physical goods and real assets – whose intrinsic value derives from their physical properties – including precious metals, real estate and certain companies in the mining, energy, transport and infrastructure sectors, which supply the resources for tomorrow’s economy in this new era in which governments prioritise ‘strategic autonomy’.
Real assets: protection against AI
At the same time, these assets offer protection against the disruption caused by AI to established business models. These are HALO companies – Heavy Assets, Low Obsolescence – which possess high-quality physical infrastructure, benefit from barriers to competition, and can offer dividends that match or exceed inflation, with long-term capital appreciation.
In this regard, the resilience of companies with physical assets contrasts with the vulnerability of some companies with intangible products and services. This is the case for software-as-a-service companies, which have been affected since the start of this year by concerns that AI could undermine their business. Despite this, many companies with tangible assets are undervalued. The price-to-earnings ratio for infrastructure and utilities compared to the global index has shown discounts of 10 to 30% in recent years.
The fact is that all of this is driving demand for precious metals and real estate. Gold is underpinned by its scarcity – the entire global supply fits into just 22 cubic metres – and acts as a hedge against volatility and uncertainty. Demand from central banks and exchange-traded funds has risen, and its share of central bank reserves has exceeded 60% since 2022. Its price has reached record highs over the past two years. Although it goes through cycles, with average falls of 17%, it maintains a long-term upward trend.
For its part, the property sector acts as a diversifier and protects against inflation and fiscal uncertainty, making it particularly attractive in this global context of geopolitical upheaval. This is especially true in Europe, where demand for property is particularly strong in cities with a shortage of supply. The strength of the euro makes this investment in European property even more attractive.
Likewise, real assets provide protection against the long-term forces that are eroding the value of money. Public debt in the United States is set to reach 101% of GDP this year, with interest payments amounting to 4.6% of GDP by 2036. This increase in public spending on infrastructure and defence is accompanied by growing deficits in the US, Europe and Japan, raising concerns about fiscal dominance – that is, political pressure to keep interest rates low in the face of rising debt. Added to this are concerns about the politicisation of key institutions.
The result is a risk of a slow erosion of the value of money.
