USA & Venezuela

Yes, I'm aware that The President of Venezuela, Nicolas Maduro, has been captured and taken into US custody.

I know there's many questions regarding these developing current events.

First, I want you to know that the majority of Venezuelans are actually happy. I've been to Caracas, I've been to Maracay, and my contacts there tell me that people are on the streets celebrating. My contacts in Colombia are telling me that the public is happy and it's overall considered good news in Latin America. They're actually expressing their joy by sending me memes of pictures of Maduro in US custody.

Regarding consequences on precious metals, honestly, it's too early to tell what the impact will be in the immediate run, especially because it's a Saturday. We'll get some indication of its affect tomorrow (Sunday) night as we see the price movement in gold/silver.

There is a LOT of gold reserves in Venezuela. Currently, it's just small-producers at a small scale, an estimated 15% of those revenues going to the Venezuelan government. The remaining revenue benefiting drug cartels in possession of those territories.

As you probably heard, Trump wants to manage Venezuela in the interim, focusing on oil.

If the USA wants to go after the precious metals and rare-earths in Venezuela, that's really not going to have an impact in the short or medium run timeframe. That's because it'll take many years for mining operations to be setup at commercial levels (that's if they ever even choose to).

Of course, the bigger target is oil. Venezuela has the thick, heavy oil that the US is set-up to refine, and Venezuela has the largest reserves in the world. But since we're currently focusing on precious metals, I'm really just a spectator to see how this affects oil prices on Monday.

In the immediate run (like Monday and this week), we'll see how this affects precious metals. However, in the short run and medium run, the regime change in Venezuela should have no major impact on global gold production. Therefore, the price action on Monday or this week caused by this developing news will not change my sentiment on gold/silver.

If gold sees a spike on Monday, I won't get too excited as the reactionary price movement will probably normalize in the weeks ahead. And if we see a drop on Monday, I won't get concerned either.

But the way I'm thinking about this, especially for gold, is that other countries (such as China/Russia) are obviously not going to like this news of what the USA did. It just further reinforces them and other countries to de-dollarize and shift towards gold.

Just like how the West's confiscation of Russia's dollar reserves upon the start of the Ukraine war accelerated de-dollarization, this news will just further put other countries on edge, which is good for gold in the long-run.

Looking forward to Sunday night and Monday to see how the market reacts.