One could argue as to which side will prevail militarily in Ukraine. But there can be no argument as to who is winning the economic war. The East, with its abundant resources and unmatched supply chains, hasn’t merely brushed off our economic sanctions. It’s turned them against us.

Beyond the thousands of deaths in Ukraine, the war has spawned crippling economic damage to some European countries and hurt countries around the world. One direct impact has been historically high food prices, which are hitting the poorest countries, and the poorest populations within countries, the hardest.

The U.S. is dealing with a combination of high inflation and growth headwinds. One striking statistic is that more than 20 million U.S. households are behind on their electric bills, a record.

The repercussions from the war have accentuated America’s dual plight of recalcitrant inflation and slowing growth. Europe, meanwhile, is in shambles. Germany, for example, the E.U.’s largest economy, faces potential deindustrialization without Russian gas. And European citizens could be facing their worst winter since World War II.

Ever since Russia launched its invasion of Ukraine almost a year ago, I’ve hoped for two things. First, that the U.S. and its allies would prevail. But beyond that, I hope that the war would serve as a wake-up call about resource scarcities and the need for the West to cooperate with the East.

Bet on Commodities

That’s still my hope. But regardless, for investors, the reality is that whatever path we follow, the market will remain exceedingly volatile with a likely downward bias. Commodity plays will continue to outshine, which is why I think investors should hold plenty of commodity-related plays in their portfolios.

It’s helpful to think of the commodity sector as having three parts. One is commodities most basic to sustaining life, i.e., food and energy (water, too, is obviously essential, but if you solve the energy problem, you also solve the problem of water scarcities via desalination).

The second consists of commodities that can serve as currencies: gold and silver. But that leaves a broad swath of industrial commodities that also are critical – to economic growth, to combating climate change, and more.

They range from rare earths to titanium to graphite to yttrium and much more and are needed in abundance both now and in the future. For many of them, the U.S. is dependent on other countries, including our political adversaries.

For example, China has a stranglehold on the world’s supply chain of rare earth elements and threatened to cut off export to the U.S. during the tariff disputes. The White House has issued an executive order on America’s supply chains to declare support for developing domestic supply chains for critical materials. That’s a step in the right direction but it won’t be an easy task.

Can Supply Satisfy Demand?

Even if you had access to resource deposits, extracting the resources is a capital-intensive endeavor. You need access great amounts of money and energy and materials to construct the mine and necessary infrastructure. And there are environmental concerns and getting permits takes a long time and could even fail.

Moreover, on the demand side, the demand is higher than ever before. The end result is that over time commodity prices will very likely head much higher, even if they could be volatile.

As I said earlier, I hope that the current crisis will serve as a wake-up call to the need for cooperation. If the world’s major powers can cooperate to ensure a smooth distribution of natural resources to where they are needed, there can still be a win-win situation for all.

But if the world’s major powers continue to widen the political chasm, things could get much worse than what we are experiencing now. I repeat again, for investors I believe the best protection now is to invest in commodities.

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